DP World’s Parent May Sell Minority Stake in Company

DP World’s Parent May Sell Minority Stake in Company

May 10 (Bloomberg) -- DP World Ltd., the Middle East’s biggest port operator, said a private equity investor approached its parent Dubai World about buying a minority stake in the ports company.

Dubai World’s discussions with the private equity company “may or may not result in a transaction regarding a minority stake in DP World,” the Dubai government-owned company said today in a statement posted on the Nasdaq Dubai bourse Web site. The sale of the stake will come “largely from the free float.”

DP World, the world’s fourth-biggest ports company, operates 49 terminals in 27 countries and has benefited from growing global trade, especially from emerging economies in the Middle East and Asia. DP World shares rose as much as 5.6 percent, before closing unchanged at 36 cents on Nasdaq Dubai.

“Investors are seeing value in port assets around the world and their ability to generate cash flows when world trade rebounds,” Ian Munro, head of research at MAC Capital Advisors said in a phone interview from Dubai. He has an “overweight” rating on the stock. DP World “is a good buy at this price and the approach reconfirms our confidence in the business.”

Abraaj Capital Ltd., a Dubai-based buyout firm that manages about $6 billion, may buy a minority stake in DP World, Zawya Dow Jones reported today, citing government officials it didn’t identify. Abraaj spokesman James Cordahi said the company wouldn’t comment on speculation about its interest.

Share Sale

Other private equity investors in the Middle East include Egyptian buyout firm Citadel Capital SAE and Gulf Capital.

Dubai World raised $4.96 billion in November 2007 by selling a 23 percent stake in DP World at $1.30 apiece. The shares have fallen 72 percent since then.

There is potential for a sale to a private equity investor “both from free float and Dubai World’s own stake to release cash,” Munro, who estimates the shares may rise to 48 cents, said today.

DP World said March 25 that 2008 net income from continuing operations advanced 30 percent to $572.3 million. The number of 20-foot containers shipped through the 26 terminals in which it has majority ownership or operational control rose 15 percent in 2008 to 27.7 million, although volumes fell 8 percent in the first two months of 2009 amid the global credit crisis.

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