A sensitive matter in port deals has been the ability for financial funds to re-sell, or “flip”, their interests, thereby monetising a return for their investors.
Ports have resisted efforts of deep-pocketed financial players to exit deals. In a few cases, they have demanded that sellers set aside capital (in escrow, or through undertakings) to fund improvements, sometimes referred to as a “flip tax”.
In New York, GCT, Rreef Alternative Investments (part of Deutsche Bank) and Ports America were all embroiled in such controversies as they acquired assets from Orient Overseas, Maher Terminals, and P&O Ports, respectively.
Investment funds are now wiser to these “exit charges” and will negotiate hard to strike deals while the court is in their favour.
