The black cloud over mature Europe
With Europe plainly in the doldrums there is a commensurate degree of lack of interest in new port projects. Certainly in the mature markets of Europe there is a widespread recognition that there are diminished prospects for achieving a sensible return on investment at least over the first seven to 10 years.
Further, this reality is recognised at a financing level and thus achieving financing for mature market European projects has become more problematic.
It is notable that the UK’s London Gateway project only achieved financing with an equal mix of equity and debt, and with the finance only able to be drawn down once the equity has been invested. Equally, it is understood that it has been a hard road for DP World and its partners to achieve financing for its Maasvlakte 2 project.
Financiers are now very cautious on mature European market projects, which represents something of a 180 degree turn from past practice which has typically seen the banking community regard such projects as safe havens.
Another measure of this situation is that many projects under development either do or are forecast to enjoy significant shipping line backing – the new APM Terminals facility in Savona, Italy set to become operational in 2016 (which will inevitably be supported by sister company Maersk Line), and the new 550,000 teu terminal under construction at Calata Bettolo, Genoa for example. In the latter respect, the joint venture controlled by Mediterranean Shipping Company and Gruppo Investimenti Portuali is the hot favourite to win the concession.
Projects in the European Mediterranean were once viewed as the front-runners in terms of investing in growth European markets but generally speaking economies such as those of Spain, Portugal and of course Greece are down on their knees and as such are much less attractive to invest in. Even the potential fire sale of the Greek port assets is now questionable in terms of attractiveness with the prospects of Greece exiting the Euro having increased markedly in recent weeks.
If there are bright spots in Europe then they are in niches such as the Adriatic Sea and in Turkey, representing the more emerging zones of the European theatre of operations.