The acquisition of 80% stake in Hutchison Port Holdings Ltd, a unit of C K Hutchison Holdings Ltd, for $19 billion by a consortium comprising BlackRock Inc., Global Infrastructure Partners and Terminal Investment Ltd will help the Hong Kong-based port operating giant to bid for Indian port contracts as the ownership change removes an impediment that blocked it from doing so.
Chinese companies or firms with Chinese links are barred from participating in Indian port deals because of the sour political relations between the two counties. As a result, Hong Kong billionaire Li Ka-shing owned C K Hutchison Holdings, whose ports unit Hutchison Port Holdings is one of the world’s top container terminal operators, was unable to participate in Indian port auctions so far.
To be sure, Hutchison Port Holdings did participate in a couple of tenders many years ago but was denied security clearance by the government.
PSA International Pte Ltd, a unit of Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore, holds the remaining 20% in Hutchison Port Holdings. PSA is operating container terminals at Chennai port and Jawaharlal Nehru port.
The deal makes the new owners of Hutchison Port Holdings a formidable force in tenders issued by Indian port authorities for running container terminals like the ones planned at Vadhavan port in Maharashtra and Galathea Bay in the Great Nicobar Island.
“The presence of Hutchison Port Holdings will enlarge competition for Indian port tenders,” said a port industry source.
The transaction gives New York-based BlackRock, the world’s largest asset management firm, control of 43 ports comprising 199 berths in 23 countries-its largest infrastructure investment to date.
Terminal Investment Ltd is the container port operating unit of Geneva-based Mediterranean Shipping Company S A, the world’s container shipping line. It runs a container terminal jointly with Adani Ports and Special Economic Zone Ltd (APSEZ) in Mundra and also holds a 49% stake in the container handling facility run by APSEZ at state-owned Kamarajar Port Ltd in Tamil Nadu.
Mediterranean Shipping Company has also gained a 49% stake in Dakshin Bharat Gateway Terminal Pvt Ltd, one of the two container terminals operating at state-owned V O Chidambaranar Port Authority (VOC Port), also in Tamil Nadu, after it bought Bollore Africa Logistics in a global transaction couple of years ago. This deal is awaiting security clearance from the Union government, per procedure framed for port contracts.
The purchase of Hutchison Port Holdings comes amidst calls by U.S. President Donald Trump to free two key ports–Balboa and Cristobal–along either side of Panama Canal from what he claims is owned by Chinese and Hong Kong-based companies.
Trump has also threatened to take control of the Panama Canal–which connects 1,920 ports across 170 countries– considered strategic for Washington as some three-fourths of all ships sailing through the waterway originate in or are destined for the United States, arguing that the presence of Chinese and Hong Kong companies posed a security risk for the transit.
The acquisition includes the 90% stake held by Hutchison Port Holdings in Panama Ports Company that owns and operates the ports of Balboa and Cristobal in Panama.
But it excludes interest in the Hutchison Port Holdings Trust, which operates ports in Hong Kong, Shenzhen and South China, or any other ports in China.
“I would like to stress that the transaction is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports,” Frank Sixt, co-managing director, C K Hutchison Holdings, said in a statement while announcing the deal.
“This transaction is the result of a rapid, discrete but competitive process in which numerous bids and expressions of interest were received. As a result, the transaction valuation agreed in principle is compelling, and the transaction is clearly in the best interest of our shareholders,” Sixt added.
(source: ET Infra)
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