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COSCO Shipping Ports acquires 20% of RSGT’s shares

COSCO Shipping Ports acquires 20% of RSGT’s shares
RSGT signed a 30-year BOT agreement in 2019

COSCO Shipping Ports (CSP) has completed the acquisition of 20% of the shares of Red Sea Gateway Terminal (RSGT), which is the leading container terminal operator at Jeddah Islamic Port.

RSGT currently has an annual container throughput capacity of 5.2m teu, making it the largest terminal at Jeddah, which is also the largest port in Saudi Arabia.

The hub is located in the Red Sea region where 13% of global trade passes through and is close to major shipping routes, with wide coverage of the container market in the Middle East and East Africa.

The operator plans to upgrade and increase the berth capacity while modernising the terminal yard and other supporting facilities.

CSP believes that the new infrastructure and facilities will firmly establish RSGT as the largest logistics gateway, and the busiest container terminal, in Saudi Arabia, and on the Red Sea.

China views Saudi Arabia as an important country within its Belt and Road Initiative (BRI), due to its location in the Gulf and its abundant resources making it a gateway to the Middle East and Africa.

In January, RSGT’s shareholders signed separate share purchase agreements with Saudi Arabia’s Public Investment Fund (PIF) and with CSP for the sale of 40% equity interest in RSGT for a total consideration of SAR1.05bn (US$280m).

The aforementioned two transactions imply an enterprise value for RSGT of SAR3.3bn (US$880m).

RSGT was founded by Saudi and international investors, including Saudi Industrial Services Company (SISCO), Xenel Industries, and City Island Holding Limited, a wholly-owned subsidiary of Malaysian conglomerate MMC Corporation Berhad.

These investors will retain a 60% shareholding in RSGT, which will remain an independent terminal operator.

In 2019, the company signed a new 30-year build, operate and transfer (BOT) agreement with the Saudi Arabian Ports Authority (Mawani), which envisages the investment of US$1.7bn in automation, infrastructure, and equipment through 2050, in order to reach an annual throughput capacity of approximately 9m teu.

Under the BOT Agreement, in April 2020 RSGT assumed operations of the North Container Terminal in Jeddah, raising its annual capacity from 2.5m teu to 5.2m teu.