The OOIL deal represents a financial high in terms of the valuation of terminal assets – to an extent that it has surprised many seasoned observers of the container handling sector. It perhaps also represents a benchmark in terms of the interest of financial institutions in the sector, which appears set to remain, if not escalate, over the medium term at least.
Traditionally,the key investors in container terminal and port assets have been port entities themselves, as epitomised by international terminal operators, and following on from them shipping lines – such as OOIL’s parent – which have recently seen this as an “essential” in terms of supporting their core business as well as a healthy area of business diversification.
Interest in the sector today, though, from an investment perspective has broadened considerably to the point that many port entities may not fully recognise the scale of change underway. Investment banks, investment funds, infrastructure funds,pension funds and others are all now crowding in on the international ports sector seeing it as an attractive area of investment and what can be called the “next sexy utility”.
For many traditional investors – port interests investing in other ports around the world – this represents new competition and a challenge to be faced up to.This new trend, however, has positives – it puts into the frame a range of organisations prepared to accept higher levels of risk than those traditionally accepted by the banking industry, it also introduces certain institutions that have immense financial clout that are prepared to invest for the longer term not a quick “in-out” strategy.
This scenario at one end of the scale offers support to the higher levels of investment required in high capacity terminal facilities and at the other presents new opportunities to the emerging world.
Mature markets, generally speaking, offer more or less guaranteed levels of return – which some investors prefer – and emerging markets have greater risk but also potentially greater returns and as such are interesting to other new generation investors.
Typical of those investors which can embrace much higher levels of investment are those parties that are now looking to acquire 49% of HHLA, the public sector-owned leading terminal operator in the port of Hamburg.
The investment options are opening up for the international ports sector – what now needs to happen is for the industry to identify and exploit how to achieve the best returns from this. Carly Fields