Speculation is rife that Hutchison, PSA’s parent Temasek, COSCO and APM Terminals are also all eager to join the fray.
And keep in mind that DPW, formerly Dubai Ports International, paid US$1.3bn for CSX Terminals just a year ago which rocketed the state-owned operator into the premier league.
Temasek is anxious not to be the only one left standing in this ongoing game of musical acquisitions. If they keep missing out there’ll be nothing left for them. Which is why it’s tempting to speculate on possible alliances between Temasek/PSA and its Far East neighbours in the shape of Hutchison (yes, it has been rumoured) and COSCO.
Understandably there are potential concerns amongst regulators in Europe and the US as to the implications of Hutchison acquiring P&O Ports given their existing portfolios. But whatever the outcome, there are likely to be fewer big beasts in the jungle of the future.
But don’t imagine global terminal operations will be ruled entirely by a bunch of boring oligarchs and state apparatchiks. ICTSI (p7) and Portek (p28) are proof that a well thought out niche market approach can work well too, albeit on a smaller scale.
Then there’s Macquarie. The Australian bank’s infrastructure funds have successfully forayed into China (US$93m on a 38% stake in Changshu Xinghua port on the Yangtse) and are now raiding into the UK. Having made a couple of non-port acquisitions an approach has been made to PD Ports, operators of Teesport. Again the rumour mill is grinding. Peel Holdings (Clydeport, Manchester Ship Canal) recently acquired Mersey Docks & Harbour Co (Liverpool, Sheerness). Wouldn’t they be interested in PD? Then there’s Forth Ports (Grangemouth, Tilbury)?
It all makes for fascinating speculation. Certainly it suggests the industry – global terminal operations – is coming of age once merchant banks start setting up infrastructure funds as investment vehicles.
That said, a few questions remain:
Given the volumes these enhanced ‘super groups’ command, what sort of economies of scale are they hoping to achieve and what kind of return on investment do they expect to see?
Do the price tags currently being bandied around for P&O take account of potentially damaging factors relating to various aspects of certain of their individual businesses?
Are real commercial principles driving the acquisition strategies of government-owned bodies such as Temasek/PSA and DP World or is there another agenda?
What part is the current UK hype regarding billion dollar plus acquisitions playing in fuelling the price for UK-owned port businesses?
Aside from getting carried away by the “sexy” aspects of doing mega deals serious thought needs to be given to the realities of delivering the next generation of port services at the right price.
