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RSGT completes US$280m equity sale to Saudi Public Investment Fund and COSCO Shipping Ports

RSGT completes US$280m equity sale to Saudi Public Investment Fund and COSCO Shipping Ports
The transactions imply an enterprise value for RSGT of US$880m

Red Sea Gateway Terminal (RSGT) has officially completed its 40% equity sale to Saudi Arabia’s Public Investment Fund (PIF) and COSCO Shipping Ports Limited (CSPL), with each party accounting for 20%.

The transactions imply an enterprise value for RSGT of US$880m and a total gross inflow of equity value for the founding shareholders of US$280m.

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

The hub is located in the Red Sea region on the main East-West trade routes, with close proximity to the main cargo end destinations on the West Coast of Saudi Arabia, capturing significant intra-Red Sea transhipment volumes.

RSGT aims to enhance its value proposition with the support of leading global ports operator CSPL, which can bring new momentum to its business volume growth. Both new shareholders will look to help drive future growth on seaside and landside logistics.

The investors hope that the deal will help to transform RSGT into both a regional and global logistics hub in line with PIF’s mission of unlocking new economic opportunities locally and globally.

Jens Floe, CEO of RSGT, said: “This is a significant milestone for RSGT, demonstrating both our strength as a business and the confidence which the industry and investment community have in our strategic planning and implementation.

“Working closely with PIF and CSPL, we will accelerate our shared vision, further strengthen our customer offering, and elevate our mandate to meet the increasing demand for terminal and logistics services. RSGT will continue to focus on developing a niche emerging market operator with a keen focus on ports in the Red Sea and East Africa.”

PIF is the economic engine of Vision 2030, which aims to drive the diversification of Saudi Arabia’s economy. The investment is in line with the fund’s 2021-2025 strategy that focuses on 13 priority sectors including transport and logistics.

In a statement, CSP noted that it 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.

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.

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.

RSGT will remain an independent terminal operator, servicing its customers across the global logistics chain. It will also continue to focus on the development, construction, operation, and maintenance of port terminals and on logistics services.

Floe added: “Moving forward, a key element of RSGT’s ongoing development plan, beyond domestic and targeted international expansion, is to further develop our modern port and supply chain facilities enabling us to better meet the needs of our global and local customers.”