Trucks wait and cargo containers are stacked at the DP World’s Vancouver marine terminal in 2015.DARRYL DYCK/The Globe and Mail
Caisse de dépôt et placement du Québec is teaming up with marine terminal giant DP World to invest in shipping ports around the globe, starting with two hubs on Canada's West Coast.
Dubai-based DP World and the Caisse plan to buy marine infrastructure together through a $5-billion investment platform. To begin with, DP World is selling stakes in its two Canadian port assets. The Caisse will pay $865-million for a 45-per-cent share of the container terminals on the Pacific Coast in Vancouver and Prince Rupert.
"Building exposure to infrastructure assets that contribute to the efficiency of trade is something we like a lot, because we think these are long-term, durable assets," said Michael Sabia, chief executive officer of the Caisse.
The deal to invest in the world's shipping infrastructure comes as Canada is exploring what to do with its government-owned ports. Last month, Ottawa said it had hired investment bank Morgan Stanley Canada Ltd. to consider options for the 18 Canadian ports it controls. The government is expected to decide on the possibility of privatizations in the New Year.
Mr. Sabia said such assets might be attractive to the pension fund. "We're pretty open-minded. If there are opportunities in Canada, that could be of interest," he said. In recent months, Mr. Sabia has been charting the potential to boost investment in Canadian infrastructure through his membership in Ottawa's Advisory Council on Economic Growth.
But the partnership with DP World, which operates 77 terminals and other businesses in 40 countries, gives the Caisse a wider scope for its investments. Mr. Sabia said the next investments could come from the South American markets of Brazil and Peru, where he sees growth potential. Other port facilities in South Korea and or Europe could also prove interesting to the investors in the future.
The Caisse and DP World have arranged their deal to allow up to a quarter of new investments to come from greenfield opportunities, meaning they would not turn down the chance to build something new from scratch.
Large Canadian institutions have been investing in ports across the world, drawn to their exposure to different economies and steady returns brought in as boats load and unload goods. Until now, the Caisse's main port investment was in Brisbane, Australia.
The evolution of the shipping business has called for more capital to upgrade and expand facilities and technology, with many businesses using larger vessels that require deeper ports and bigger cranes.
Both of the Canadian ports in this deal "are undergoing substantial expansion as we speak," Mr. Sabia said, adding that the process would continue for the next two years. The ports are increasing the number of containers they can handle, as well as improving road and rail access to allow goods to move smoothly to and from the ships.
Mr. Sabia said the track record for returns from the port facililties in Vancouver has been stable, while the container terminal in Prince Rupert had shown "substantial growth."
For DP World, a publicly traded company that has owned the Vancouver port facilities for a decade, it is a chance to shore up its balance sheet and prepare to make new investments. The company retains the larger 55-per-cent stake in the platform it has built with the Caisse.
"In CDPQ we have found a partner with shared vision who is willing to participate in the risk and reward of investing throughout the life cycle of trade-enabling assets across the globe," Ahmed Bin Sulayem, CEO of DP World, said in a statement.