DP
World, the third-biggest container port operator, plans to raise as
much as $3.5 billion in a share sale that may begin next month, said
two people with knowledge of the project.
Dubai-owned
DP World aims to sell as much as 30 percent of its shares to the public
to help fund expansion, according to the people, who declined to be
identified because the proposal is private. The sale needs the approval
of Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, they said. The
shares will be listed on the Dubai International Financial Exchange
and may also be offered on the London Stock Exchange, the people said.
An
IPO is one of the options ``on the table,'' DP World Chairman Sultan
bin Sulayem said in a telephone interview late yesterday, declining
to be more specific about the sale. State- owned DIFX will be re-branded
as a Nasdaq Stock Market Inc. venture under an agreement reached with
the U.S. exchange by DIFX parent Borse Dubai last month.
DP
World, which last year bought Peninsular & Oriental Steam Navigation
Co. for $6.8 billion, plans to spend about $3.5 billion on new projects
over the next five years, Chief Executive Officer Mohammed Sharaf
said in a June interview. The company has said it aims to double handling
capacity to 84 million 20-foot container units a year by 2016 to catch
up with bigger rivals Hutchison Port Holdings Ltd. and PSA International
Pte.
DP
World was forced to agree to sell U.S. assets acquired from P&O
after pressure from U.S. lawmakers who cited security concerns. It
intends to buy or expand port facilities in China and India as trade
booms in the world's two fastest-growing economies, bin Sulayem said
in July.
Good
Reception
The
IPO ``should get a good reception,'' Shailesh Garg, a ports analyst
for London-based consulting company Drewry Shipping said in an phone
interview from Mumbai late yesterday. ``There are lots of opportunities
for growth in China and India particularly, so it would be a good
time to raise extra finance for that.''
DP
World is worth about $10 billion, Drewry Shipping estimated after
the P&O acquisition last year. A sale of 30 percent of its shares
to raise $3.5 billion would value the company at about $10.5 billion.
Deutsche
Bank AG, Merrill Lynch & Co., Shuaa Capital PSC, and Dubai Islamic
Bank PJSC are advising DP World on its IPO, Chief Financial Officer
Yuvraj Narayan said last year. The ports company is ``committed''
to an IPO by January 2008 after selling convertible bonds, he said.
Convertible
Bonds
Through
the state-run Ports, Customs & Free Zones Corp., DP World sold
$3.5 billion of convertible Islamic bonds in January 2006 that mature
in January 2008. If an IPO does not happen by maturity, investors
get an extra 6 percent yield on the securities instead of shares.
``Either
DP World can go to the debt market to refinance, which will be hard
given current market conditions and the size of the deal, or it can
go for the IPO,'' said Joe Kawkabani, managing partner of Dubai-based
Algebra Capital Ltd. ``So we think it likely the IPO will take place.''
