Saudi Arabia’s PIF, Chinese firm buy into port operator

 Saudi Arabia’s PIF, Chinese firm buy into port operator

Saudi Arabia’s Public Investment Fund (PIF) and Chinese ocean container shipping behemoth COSCO Shipping Ports Ltd will each buy a 20% stake in Jeddah-based port operator Red Sea Gateway Terminal (RSGT).

The combined value of the 40% stake sale will be $280 million, regulatory filings show. The deal effectively values the port operator at $700 million.

The RSGT founders will retain the remaining 60% stake in the port company. These include the Saudi Industrial Services Co, Jeddah-based Xenel Industries Ltd and City Island Holding Ltd, which is a wholly owned subsidiary of the Malaysian utility and infrastructure conglomerate MMC Corp Berhad.

This 60% stake is held by the three companies via the Red Sea Ports Development Co, in which MMC Corp holds a 20% stake.

The deal will help RSGT in its expansion plans. In December 2019, RSGT had signed a 30-year build-operate-transfer agreement with the Saudi Arabian Ports Authority, as part of which it will invest $1.7 billion for upgrading and automating infrastructure facilities.

For PIF, the Saudi Arabian sovereign wealth fund, the investment makes sense as the oil-rich kingdom seeks to diversify its economy and reduce its dependence on fossil fuels.

COSCO Shipping Ports is part of Shanghai, China-based COSCO Shipping Lines Co Ltd, a multinational shipping company that manages the world’s third-largest ocean container capacity by volume.

COSCO has been expanding its footprint in West Asia. It holds a minority stake in Egypt’s Suez Canal container terminal and operates the CSP Abu Dhabi Port Container Terminal at Khalifa port.

Aman Malik

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