PIF, COSCO SHIPPING Ports Acquire Stakes in Red Sea Gateway Terminal
Completion of transactions subject to approval from Saudi Arabian Ports Authority (Mawani)
The Founding Shareholders of Red Sea Gateway Terminal Limited (RSGT) have signed separate Share Purchase Agreements with the Public Investment Fund (PIF) and COSCO SHIPPING Ports Limited (CSPL) through its wholly-owned subsidiary Sound Joyce Enterprises Limited.
The agreements are for the sale of 40% equity interest in RSGT (with 20% to each to PIF and CSPL respectively) for total consideration of $280 million. The aforementioned two transactions imply an enterprise value for RSGT of $880 million.
The completion of both transactions is subject to the approval of the Saudi Arabian Ports Authority (Mawani), as well as other customary approvals.
Having commenced operation in 2009, RSGT was founded by leading Saudi and international investors (Founding Shareholders), including Saudi Industrial Services Company (“SISCO”), Xenel Industries, and City Island Holding Limited, a wholly-owned subsidiary of MMC Corporation Berhad (Malaysian conglomerate with extensive port operations).
Upon completion of both transactions, PIF and CSPL will become shareholders of RSGT (with 20% shareholding each), while the Founding Shareholders will retain the remaining 60% shareholding in RSGT.
RSGT will remain an independent terminal operator, focused on servicing its existing and future customers in the global logistics chain.
The company signed a new 30-year build, operate and transfer agreement with Mawani in December 2019 (the “BOT Agreement”), which envisages the investment of $1.7 billion in automation, infrastructure, and equipment through 2050, in order to reach an annual throughput capacity of approximately 9 million TEU.
Under the new BOT Agreement, in April 2020 RSGT significantly expanded its handling capacity having assumed the operations of the northern section of Jeddah Islamic Port (previously known as the North Container Terminal or “NCT”).
As a result, RSGT’s annual throughput capacity increased from 2.5 million TEU in 2019 to 5.2 million TEU.
RSGT’s CEO Jens O. Floe said: "Adding PIF and CSPL as shareholders will accelerate RSGT’s domestic and international growth plans. The transactions highlight the strong commercial proposition and service excellence of RSGT [whereas the new shareholders are expected to further strengthen our customer value proposition].
As the sovereign wealth fund of Saudi Arabia, PIF is the economic engine of Vision 2030, with a clear strategy to drive the diversification of the Kingdom’s economy and become a global investment partner of choice.
The development of RSGT into both regional and global logistics hub supports PIF’s mission of unlocking new economic opportunities across the Kingdom and deploying patient capital to support emerging sectors with significant long-term growth potential.
RSGT will play a significant role in achieving these objectives, capitalizing on the country's strategic location along the main Red Sea shipping routes.