Global shipping magnate Maersk engaged Citi to explore strategic alternatives for its capital-intensive APM Terminals division, said two sources briefed on the situation.
“We are not selling a stake in APM Terminals, just exploring the idea of selling a share in some of our terminals,” said APM’s spokesperson Thomas Boyd in an emailed statement to Inframation. He added: “our monetization of asset program focuses on selling a minority share in some of our high value terminals—which means we would keep full operational control of these terminals. This allows us to raise cash for other investments.”
APM’s performance was relatively flat in 2017 amidst a very high growth year for Maersk. The division’s revenue was slightly off at USD 4.138bn as opposed to USD 4.176bn, year-over-year. Its EBITDA was also slightly down at USD 705m compared to the previous year’s USD 730m. It took a USD 168m operating loss due to a USD 621m impairment charge it took in “commercially challenged markets,” according to its annual report filed on 9 February.
The Denmark-based company reorganized its business units in 2017 around its shipping-and-ports business after reaching deals to sell its energy assets, Maersk Oil and Maersk Tankers, respectively in the 2H17.
By its own admission, Maersk said the ports business was becoming highly capital intensive and revenue-challenged at the same time because of ongoing capacity increases in many ports, according to its annual report. This has triggered higher capex associated with infrastructure and equipment upgrades, but lower utilization. Separately, carriers are looking for ways to reduce terminals costs.
APM now comprises 74 terminals worldwide. Three of its ports in Lazaro Cardenas, Mexico, Izmir, Turkey and Quetzal, Guatemala, commenced operations in 2017, while three others were divested and the Tacoma operations were shut down in September.
The Citi-mandated process could be difficult as Maersk would likely demur from partnering with a fellow shipper or even selling the business outright – such moves would be counter to its strategy of being both a shipping and port operator, said one of the sources.
On the other hand, an infrastructure fund would be willing to take a minority stake in the business, said a third source. The process also could result in certain ports being sold piecemeal, added a fourth source.
There are other ongoing opportunities in the ports space. As reported, Ontario Teachers’ Pension Plan (OTPP) engaged Macquarie and Canadian Imperial Bank of Commerce (CIBC) to run a process for its GCT Global Container Business. Highstar Capital’s interests in Ports America are also in play as it retained Campbell Luytens to run a process to transfer funds holding that asset, among others, to a new investor.
Globally, USD 11.4bn in 30 brownfield port transactions have closed year-to-date, starting on 1 January, according to Inframation Deals.
Citi declined comment on the situation.