DUBAI — DP World, the world's third-largest container port operator, is reportedly preparing for $2 billion Initial Public Offering before the end of this year amid speculation that it had shelved flotation plans and was opting to raise cash for its ambitious global expansion by issuing bonds.
The Middle East Economic Digest (MEED) reported that the Dubai-based company may sell $2 billion of shares this year in an IPO to be listed on Dubai Financial Market, indicating that the global port operator is reconsidering its recent stance against going public.
The reported IPO plan is in the wake of a successful $3.5 billion convertible Islamic sukuk bond the company issued partly to help fund expansion plans. Analysts said many investors bought bonds with the expectation of an initial public offering this year.
Sarah Lockie, DP World spokesperson, commenting on the MEED report, told Khaleej Times that there was nothing new to reported move. "Still no decision has been made. Options are the same as before. Not sure why the story is doing the rounds again."
DP World, which bought Britain-based P&0 port and ship operator for $6.85 billion in 2006, last year hired Deutsche Bank and Merrill Lynch to advise on a possible IPO, MEED said.
The MEED report, which quoted unidentified analysts close to the port operator, comes close on the heels of a statement issued recently by Sultan Ahmed bin Sulayem, the chairman of DP World's parent company Dubai World, denying an IPO move.
"I don't believe listing is an option now. Not at the current time, no. We evaluate what is the most efficient way of financing and if we prove that listing part of it will be cheaper, then we'll do it. So far, we've proven that issuing bonds is better for us," he said.
Analysts said DP World might have been prompted to re-evaluate its IPO stance to speed up plans to expand port facilities in China and India to meet its target of doubling capacity to 84 million 20-foot equivalent container units by 2016.
Bin Sulayem said recently that DP World was in talks to acquire Chinese port assets. The Dubai-based company's expansion in Asia follows the sale of six US terminals this year to American International Group because of political opposition in the country. The company operates 42 terminals in 22 countries, ranking behind PSA International and Hutchison Port Holdings.
In India, DP World's total investments are likely to reach $2 billion. It is investing $500 million in a container terminal in the Southern city of Kochi. It is also spending $190 million to expand the Kulpi port in West Bengal, which it acquired as part of its P&O acquisition.
DP World announced plans for the flotation in 2005. It hoped to raise as much as $5 billion on the London Stock Exchange last year, but postponed the offering due to market conditions