Private investors, returning to the global port industry following the credit crunch, are targeting projects in Africa, India and Latin America, as investment in Chinese ports becomes trickier, according to a report.
“Investors with an appetite for risk are likely to be rewarded with greater returns from emerging markets,” The Global Investment in Ports and Terminals said.
By contrast, investors who have been prominent in the development of Chinese ports, which have posted some of the fastest growth rates in the past decade, now face higher barriers to entry and fewer concession agreements, according to the report by Holman Fenwick Willan [HFW], a London-based global law firm.
There were 195 private investment projects in container, dry and liquid bulk and multi-purpose cargo terminals worth $38 billion between 2000 and 2009.
Some $20 billion was spent on 78 greenfield projects in Asia, the Pacific, Latin America and the Caribbean during the period.
Concession deals involved investment of $15.5 billion in 97 projects, and management and lease projects received $305 million for eleven projects.
“Private equity is returning to the market following the credit crunch. But I see long-term investment funds, such as pensions, gaining ground,” said HFW associate Matthew Gore.
China, India and Brazil have been attracting the highest number of private investments in recent years. China drew almost $4 billion of private funds in 2006-2009, India, $2.5 billion and Brazil, $1.5 billion.
Private investors will continue to play a prominent role in financing container terminals, particularly hubs catering for mega-ships that require significant upgrades to existing infrastructure, Gore said.
Singapore’s PSA International was the biggest investor in 2006-2009 spending $2.92 billion, followed by A.P. Moller-Maersk’s APM Terminals with $2.46 billion and Dubai’s DP World, $1.91 billion.
Competition is increasing as newcomers enter the industry, led by China’s COSCO Pacific, which paid $4.2 billion for a 35-year concession to run container operations at the Greek port of Piraeus.
The bid by International Container Terminal Services [ICTS] for Portek, the Singapore ports group, in June has put the Philippines-based company at the front of an emerging second tier of operators, including Turkey’s Yildirim Group, the report said.
“While much smaller in terms of volumes or capital, these companies are building up portfolios comprising feeder and second-string niche ports: sure signs that the smaller terminal market is set to become a lot more competitive,” the report said.
There is growing popularity in deals involving the liquefied natural gas and oil sectors focused on the Middle East, India and South America.
-- Contact Bruce Barnard at email@example.com.