The young contenders

It is safe to say that both Abu Dhabi Ports (ADP) and QTerminals have money to spend, being part of cash-rich countries in the Gulf. There is a clear strategy in place amongst all countries in the Mid-East region to diversify economies and move away from such a high reliance on oil, petroleum and associated products.

These two operators are, therefore, under strict pressure to deliver value on their investments and this is the reason that neither are adopting a scattergun strategy in which anything and everything is being acquired.

According to one adviser in the ports transactional business, who wished to remain nameless, ADP has a reputation for hard negotiating and focusing on assets where value can be derived through expertise and investment, while QTerminals is known to be equally skilled in the review process of targets and will walk away from a potential deal rather than make what it believes is a bad decision.

“These are canny operators,” he said, clearly citing that both are extremely diligent and prepared to investment time, money and effort in assessing a deal.

Currently, both operators have limited international portfolios, as highlighted when compared to near-neighbour DP World and its large international portfolio. However, that is not to say that no progress is being made.

QT GOING GLOBAL

QTerminals has already reached out into the international marketplace and acquired Port Akdeniz-Antalya in Turkey from Global Ports holding for an enterprise value of US$140 million.

In its regulatory filing to the London Stock Exchange, Global Ports Holding Plc announced the deal had been reached following a “period of exclusive negotiations,” hinting at the preferred approach by QTerminals and one that is expected to be followed moving forward elsewhere with other targets.

Port Akdeniz-Antalya is a mixed-use facility, with an operating concession in place to 2028, handling over 150,000 TEU and around 600,000 tonnes of general cargo per annum. A small facility, with annual revenues of around US$48 million at the time of the sale, but clearly an operation in which QTerminals can invest and grow the business.

The other deal struck by QTerminals internationally was for the Port of Olvia in Ukraine. Subsequently rebranded as QTerminals Olvia, the three million tonnes-per-annum capacity facility handles a diverse mix of cargo, including bulk/general, ro-ro, high & heavy equipment, oversized cargo, machinery and equipment etc.

Before the Russian invasion of Ukraine, QTerminals was planning to invest US$120 million during the 35-year concession, although obviously this position may now change depending on any damage that has been caused.Yet leaving aside the current, unforeseen and unwarranted war being raged on Ukraine, the decision to invest by QTerminals made sense.

Ukraine’s traditional role as a major grain exporting hub meant that QTerminals can bring “food security” to food processing plants in Qatar’s free zones – like ADP, it couples finding the trade synergies that support Qatar’s requirements, while serving other countries including Spain, Italy, Greece and Libya.

Neville Bissett, Chief Executive, QTerminals, was recently quoted in the regional Mid East press emphasising that international investment opportunities should be a good fit with QTerminals and that identifying opportunities in Europe is one aspect of its development approach.

Clearly there is a strategy in place and not simply a matter of chasing anything and everything. A policy generally that has often led to confused and irrational developments.

ADP’S CLEAR INTERNATIONAL FOCUS

The Ports Cluster, part of AD Ports Group (ADP), owns and operates 10 ports and terminals facilitating trade and building capacity whilst connecting Abu Dhabi globally.

All the facilities bar one are in the UAE. The portfolio includes Khalifa Port, Zayed Port (and Free Port, plus Mussaffah Port and Fujairah Terminals, along with four other small facilities catering for everything from commercial marina traffic to fishing through to some general cargo and break bulk.

This leaves the sole true international operation as Kamsar Container Terminal (KCT), an independent commercial facility operated by ADP for Emirates Global Aluminium (EGA) in Guinea, West Africa. This terminal supports the adjacent 12 million tonnes per annum (Mtpa) mine as well as allowing early bauxite bulk samples from Guinea Alumina Corporation S.A. (GAC).

AD Ports Group, which operates ports, logistics and industrial zones, said the funds raised (AED4 billion, or US$1.1 billion) from the primary listing of AD Ports Group will be used to grow organically and via acquisitions, as the company plans to expand both locally and internationally, with specific focus on trade corridors connecting the UAE with, for example, the Mid-East, the Indian subcontinent and Africa. “Our main driver of strategy is to develop extensive trade corridors that are particularly important for Abu Dhabi,” said Ross Thompson, Chief Strategy and Growth Officer, AD Ports Group.

On this basis, it is reasonable to assume that Africa and India are ranked high on the target list.