The decision taken by the City of Hamburg to sell a 49.9% stake in its wholly-owned port operator Hamburger Hafen und Logistik (HHLA) created significant controversy in Germany. As an investment opportunity, DP World (Dubai), Deutsche Bahn (German Rail), Allianz (Insurance), 3i (UK investor), Macquarie Bank (Australian) and the German construction and services group Hoch Tief (HTAG) all threw their hats into the ring.<\/p>\n
All but the latter two were eventually eliminated from the bidding contest, and these were then invited to make a binding offer. It is not known exactly how much money each would have paid for the minority stake, but it is a matter of public record that DP World was prepared to stump up \u20ac1.6bn ($2.1bn).<\/p>\n
According to Peter Schmutzer, managing director of BMT Transport Solutions, the company asked by H\u00e4fen und Transport (HTAG) to undertake due diligence on its behalf,the market assessed DP World\u2019s bid as being too high. This, he remarks, was clearly a political statement on the part of the Emirates-based organisation, which valued highly a presence in the Port of Hamburg.<\/p>\n
Unfortunately, plans to attract a private investor had to be put on hold following agitation by port unions, who were worried that jobs might eventually be lost and terms and conditions of employment eroded. According to Mr Schmutzer, these fears were unfounded. \u201cHHLA is in a privileged situation, making money because the container market is booming and is well set to continue to do so for many years to come.<\/p>\n
As a result, this facility will require a steady level of capital investment as it expands, with a concomitant additional requirement for more skilled staff,\u201dhe says.<\/p>\n
A compromise deal has therefore been struck, with an initial public offering now scheduled for September, involving the disposal of just 30% of overall equity.\u201cThe 30% IPO is much safer than having one strong counterpart sitting on 49.9%. So, while I feel there was little cause for concern, it is understandable that this was the preferred route for the unions,\u201d says Mr Schmutzer, adding that the timetable adopted is a realistic one, while the shares will be a stable investment and give a long term, low risk return.<\/p>\n
BMT became involved in the due diligence process in December 2006 following a recommendation by an associate engineering consultancy (Atkins), which undertook the technical due diligence process. In March 2007, HTAG asked BMT to complete the overall assessment as part of a second phase, allowing the external consultant to build upon acquired knowledge derived during the first phase.<\/p>\n
\u201cIt was to HHLA\u2019s advantage to make all information easily and readily available,\u201d says Mr Schmutzer. \u201cSometimes important information is withheld (either on purpose or accidentally) and our challenge is to note and report what it is missing and\/or to locate this. This is a critical advantage that we bring to our clients where a profound understanding of the market allows us to easily identify where there are \u2018gaps\u2019 in the information being made available.\u201d<\/p>\n
The eventual report has to be independent, fair and unbiased, since it could be used as a document to enable the financing of a project in the future. Mr Schmutzer explains that the essentials that HTAG wanted BMT to look into were whether the growth rates that HHLA was talking about were realistic or not. If these could be substantiated, this would have enabled HTAG to calculate stable return on investment planning for the long term future.\u201cEssentially that is the most important issue for any investors who are looking to acquire, build or expand transportation assets, wherever they may be in the world today,\u201d he emphasises.<\/p>\n
When asked to summarise what BMT had learned as part of its involvement in the due diligence process,Mr Schmutzer notes the following: \u201cContainers are booming and will continue to do so for many years to come.We firmly believe that any investors would have been very keen to have acquired a 100% stake in HHLA had it been available. The risks are minimal and, in our assessment, it would have been one of the best buys worldwide that could have been made.<\/p>\n
\u201cContainers ports are a very safe investment, as the trade flow taking place at the moment is constant and growing and will do so for many years to come.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
HHLA\u2019 s decision to ditch a share sell-off in favour of a \u201c safe\u201d IPO is understandable says consultant BMT, in conversation with Alex Hughes<\/p>\n","protected":false},"author":8,"featured_media":6883,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[58],"tags":[],"sponsor":[],"class_list":["post-6882","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-container-cargo-handling"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/6882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=6882"}],"version-history":[{"count":1,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/6882\/revisions"}],"predecessor-version":[{"id":6884,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/6882\/revisions\/6884"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media\/6883"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=6882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=6882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=6882"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=6882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}