EMEA: Bidders shortlisted for Euroports sale

17 August 2018 - 12:00 am UTC

CVC Capital Partners and DWS – formerly Deutsche Asset Management – have been shortlisted as part of the Euroports sale process ahead of final bids in mid-September, it is understood.

Macquarie did not submit an initial bid by the July 19 deadline, while strategic investors including DP World and APM Terminals have shied away from the deal, sources said. 

The shortlisted bidders are expected to make offers of around 11 times EBITDA, equivalent to around EUR 800m, for Euroports – a liquid, bulk and breakbulk port specialist comprising 15 terminals across Europe and China. Peer rival HES International was sold for around 13 times EBITDA earlier this year to Macquarie and Goldman Sachs.

The Euroports sale is part of a flurry of port deals in Europe. Separately, Macquarie has launched a strategic review of its flagship container port business, DCT Gdansk in Poland, advised by Goldman Sachs, Inframation reported earlier this month.

Current Euroports shareholders Brookfield (40%), Antin Infrastructure Partners (38.8%) and Arcus (21.2%) acquired Euroports for a significant discount during 2008 and 2009 from the now defunct Babcock & Brown. The shareholders have not received dividends in recent years while annual returns have been between 8.3% and 10.7%, according to the company’s accounts.

Pricing for the sale is expected to be relatively subdued due to Euroports’ solid but lowish annual growth of around 2% and its modest revenue increases (see chart). Coal shipping, facing a sharp decline across Europe, currently represents around 5% of Euroports’ EBITDA.

Euroports Holdings annual revenues, 2010-2017 (EUR m)
2010 2011 2012 2013 2014 2015 2016 2017
538 561 539 528 505 554 553 611.5

Sources with knowledge of the deal said Euroports’ growth story is based on expansion at China’s eastern port of Changshu, which has an 80% market share in the country for forestry-related goods, and the port of Gaolan, in Guangdong province in southern China, which opened last year. China provides 13% of Euroports’ circa EUR 70m EDITDA, although the sellers expect this to grow sharply. However one expert on bulk ports cautioned that Euroports’ terminals are “not the only way of getting pulp into China”.

Sources downplayed the impact on Euroports of the Trump administration’s steel tariffs and Washington’s reinstatement of sanctions on Iran. “Steel is not a key part of Euroports’ business,” said one insider, adding that trade with Iran has a limited impact on the company. They also played down the growing threat to the bulk port sector of container terminals. One source said Euroports’ Antwerp business has declined, but largely due to pressure from other bulk terminals rather than containers. 

Euroports is expanding its warehouse facilities at the port of Tarragona, building new rail links around the port of Liege and last year finished the renovation of its dedicated sugar terminal in Antwerp. A new all-weather terminal for storing steel, paper and other cargo, is currently being built in Ghent, where Euroports already has a terminal. Euroports will operate the new terminal, which is being built next to ArcelorMittal’s existing mixed cargo bay. 

Globally, the bulk terminals market is expected to reach USD 7.4bn by 2023 from USD 5.2bn two years ago, according to Stratistics MRC. This is driven by rising industrial output and increasing use of bulk commodities and its affordability in emerging countries.

CVC, a London-based private equity firm, is showing increased interest in European infrastructure, acquiring in February a 15% stake in listed Spanish utility Gas Natural Fenosa, and 25% in oil and gas storage business Compañia Logistica de Hidrocarburos last year. It also owns stakes in UK motorway services operator MOTO and Polish energy transmission business PKP Energetyka Sale.

DWS, which has a long history of owning and managing ports, is considering selling its 37.5% stake in the pulp and paper-focused Port of Lubeck in Germany, Inframation reported in June.

Notable global bulk terminal operators

Company Name Country EBITDA (2015) EBITDA (2016) EBITDA (2017) 2017 Container Volume (TEU*)
Yilport Holding Turkey USD 465m USD 208m** 4.3m
Thessaloniki Port Authority SA Greece EUR 26.9m EUR 23.9m EUR 18.8m 3.6m
Puerto Ventanas SA Chile EUR 34.5m EUR 43.3m EUR 40.5m 1.3m
Global Ports Investments PLC Russia USD 291m USD 224.3m USD 201.6m 4.2m
Euroports Holdings S.a.r.l Netherlands EUR 67.7m EUR 57.6m EUR 70m
DP World Ltd United Arab Emirates USD 1.9bn USD 2.3bn USD 1.2bn 70.1m
China Merchants Port Holdings Co. Ltd China HKD 13.7m HKD 14.7m HKD 15.3m
APM Terminals Netherlands USD 220m USD 764m USD 705m 39.7m
Source: Inframation
*twenty-foot equivalent unit, used to measure cargo capacity
**denotes estimated value