AD Ports Group on Thursday announced that it had signed an agreement to acquire an 80 per cent equity stake in Dubai-based Global Feeder Shipping (GFS), a global container shipping company.

The total purchase consideration for the 80 per cent stake amounts to Dhs2.9 billion ($800 million), implying a 100 per cent Enterprise Value of Dhs3.7 billion ($1.0 billion), with the acquisition being fully funded through a new acquisition loan.

This earnings and value-accretive strategic investment significantly broadens AD Ports Group’s global feeder shipping footprint and contributes to its long-term strategy to become one of the world’s premier short-sea and feeder shipping players.

GFS’ LTM financial performance was strong, with revenue of $1,085 million, Ebitda of $521 million (Ebitda Margin of 48 per cent), and net profit of $481 million.

The company has built one of the largest fleets of container ships globally, featuring 26 owned and operated vessels with a total capacity of 72,500 TEUs, covering the Middle East, Indian Subcontinent and Southeast Asia with services connecting the UAE to India, Pakistan, Sri Lanka, Egypt, Sudan, Djibouti, Yemen, Kingdom of Saudi Arabia, Bahrain, China, South Korea, and Vietnam, among others. AD Ports Group will look to integrate GFS into its Maritime Cluster, which already offers a comprehensive portfolio of shipping, offshore and subsea services. Aligning GFS services with AD Ports Group companies Safeen Feeders and Transmar will make AD Ports Group the world’s largest independent feeder company by vessels owned, with an owned fleet of 35 vessels, and the third largest globally by volumes carried with a total container capacity of 100,000 TEUs.

The acquisition will boost AD Ports Group’s trade activities and connectivity to core markets and enhance its feedering business, providing significant economies of scale through an expanded route network and fleet. In addition, the acquisition will further strengthen the company’s hub and spoke model by linking core markets in the Gulf, Indian Subcontinent, Red Sea, and Turkey to its key port assets, including Khalifa Port.

GFS’ integration with Safeen Feeders’ services has the potential to generate significant operational synergies.

Subject to regulatory approvals, the transaction is expected to close in Q1 2023. GFS’s existing management will remain in place, with the founders retaining a 20 per cent stake in the company.

Falah Mohammed Al Ahbabi, Chairman of AD Ports Group, said, “At the direction of our nation’s wise leadership, AD Ports Group has been on a development journey throughout 2022, driven by both organic growth and prudent investments. Our acquisition of a majority stake in GFS, which is the largest external investment in our company’s history, will deliver a step-change in the range of services we can offer and significantly enhance our global connectivity.”

Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO of AD Ports Group, said, “Our Maritime Cluster has delivered remarkable returns in 2022, reflecting the significant market appetite for shipping, offshore and subsea services, and integrating GFS into our operations will enable us to increase our customer base, broaden our global footprint and build upon this significant momentum. As always, we thank the UAE’s wise leadership, whose support has enabled us to achieve today’s historic announcement.”

Amir Maghami, Chairman of GFS, said, “Our priority has always been to continuously improve our systems and processes to serve global trade, and under the ownership of AD Ports Group we will be able to deliver a new level of service and support for international customers.”

Citi acted as the financial advisor and A&O as the legal advisor, while Roland Berger completed the commercial due diligence and KPMG the financial and tax due diligence for AD Ports Group in this transaction.

Meanwhile AD Ports Group and Fugro formalised a collaborative relationship through the signing of an agreement that sets out combined goals to utilise remote and autonomous technologies in the region.

The agreement was signed by Captain Mohamed Juma Al Shamisi, Managing Director and Group CEO, AD Ports Group and Mark Heine - Fugro CEO.Fugro is leading the development and deployment of remote and autonomous solutions by establishing a global network of remote operations centres and autonomous vehicles that support the maritime industry for a safe, sustainable, and liveable world.

By bringing together Fugro’s industry knowledge and AD Ports Group’s expertise, this partnership will create a platform to implement remote and autonomous technology, and to create guidelines that will ensure the UAE is prepared to welcome, and benefit from, the use of latest industry advancements.