DP World And Kaplan Joint Venture To Invest In Australian Ports

by Lorys Charalambous, Tax-News.com, Cyprus

05 January 2007

Global marine terminal operator DP World and a consortium led by Kaplan Equity Limited (KEL), a private equity fund managed by Kaplan Funds Management, have announced their intention to engage in a joint logistics alliance in Australia.

The alliance, chaired by former Patrick Corporation Managing Director Chris Corrigan, will assist in the expansion of DP World’s logistics activities in Australia - P&O Automotive and General Stevedoring (A&GS) and P&O Trans Australia (POTA).

DP World said that the alliance will enable it to focus on the continued development of its core Container Terminals business in Australia, with the consortium applying its management expertise and strong financial backing to further develop the automotive and general stevedoring business and the landside logistics business. The new joint venture businesses will retain the P&O brand by continuing to trade as P&O Automotive and General Stevedoring and P&O Trans Australia.

The consortium includes KEL and the proposed management teams for A&GS and POTA. KEL intends to offer the Kaplan Diversified Infrastructure and Logistics Fund the opportunity to join the Consortium and participate in the investments. DP World will retain a 25% shareholding in A&GS and a 50% stake in POTA. DP World will retain a 100% interest in its current landside logistic operations in Adelaide. Existing investments by DP World in associated companies are also under consideration as part of the joint venture. The final transaction value is estimated to be around A$200 million (US$159 million) and is subject to a number of conditions.

Chris Corrigan will be appointed non-executive Chairman of the A&GS and POTA businesses. Don Smithwick, former Head of Patrick’s Automotive and General Stevedoring business, will be appointed as Managing Director of A&GS. Paul Digney will be appointed Managing Director of the POTA business. Mr Digney was previously Head of Patrick’s logistics division.

Chairman of DP World Australia, Tim Blood, said: “DP World’s decision to engage in these joint ventures is about growth and the company’s determination to build and strengthen DP World in Australia. We are very enthusiastic about combining the resources of DP World with the experience and proven track record of the Consortium.”

Corrigan added: “These are outstanding businesses with dedicated employees that have excellent growth potential in their own right. We expect that further strengthening the management teams and providing capital available for expansion opportunities will enable both businesses to achieve strong earnings growth for their shareholders. Customers will also benefit through seamless on- and off-wharf logistics services.”

Management of DP World and the Consortium are working together to finalise all outstanding matters to enable the transaction to be completed, which is targeted for the end of the first quarter of 2007. Until completion, DP World will remain in control of all the businesses. The Consortium will have management responsibility for the businesses from completion.

DP World is one of the largest marine terminal operators in the world and has the widest network of any, with 51 terminals spanning 24 countries and six continents.

Kaplan Funds Management (KFM) is an investment manager that has been operating since 1997. KFM offers a comprehensive investment management service for private investors, corporates and superannuation funds focusing predominantly on ASX listed securities. Funds under management as at 31 December 2006 were in excess of A$1.85 billion (US$1.45 billion).

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