DP World partners up with infrastructure fund to invest $3bn in India

The investment platform will look to acquire and develop ports, terminals, transportation and logistics assets in India

22/01/2018 16:27 AST

Dubai's DP World and India's National Investment and Infrastructure Fund (NIIF) have to set up a $3 billion fund that will invest in India, as the world's fourth biggest port operator looks to ramp up its investments in Asia's third largest economy.

The platform will look to acquire and develop ports, terminals, transportation and logistics assets in India, DP World said in a statement to Nasdaq Dubai, where its shares are traded. The investment mandate stretches beyond the traditional sea ports as the fund will also target river ports and transportation, freight corridors, port-led special economic zones, inland container terminals, and logistics infrastructure including cold storage, the company said without specifying how much equity it is putting up in the investment vehicle.

"DP World has been a part of India's growth story for nearly two decades and we are delighted to continue our success by joining forces with a strong strategic partner," said Sultan Ahmed Bin Sulayem, DP World group chairman. "We believe that our expertise in building best-in-class logistics infrastructure together with the NIIF's local knowledge and government partnership is the right combination to take advantage of the significant growth opportunities in India."

The move follows NIIF signing a $1bn deal in October with a unit of Abu Dhabi Investment Authority (Adia), one of the largest sovereign wealth funds in the world, to investment in India's energy, transportation and other infrastructure-related sectors. India's economy has struggled to maintain growth momentum, weighed down by the introduction of goods and services tax and demonetisation moves by the government. The country is in dire need of foreign investment and is encouraging players such as DP World to help it overhaul its ageing infrastructure which is a hurdle to growth. India needs $1.5 trillion of investment in infrastructure over the next decade, India's finance minister, Arun Jaitley has stated.

In May DP World also signed a memorandum of understanding with NIIF to develop the logistics sector in India, following the February 2016 visit of Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan and DP World Group Chairman Sultan Ahmed bin Sulayem, during which the company had announced intentions of seeking opportunities in the country worth over $1bn over the next few years. Prime Minister Narendra Modi is set to visit the UAE next month.

"This is NIIF's first investment and is a good example of how NIIF can work with international capital and expertise to invest at scale to build critical infrastructure in India," Sujoy Bose, NIIF chief executive said. "Efficient logistics and cargo movement are critical components for the continued growth and development of the Indian economy, and particularly the manufacturing sector," he said, adding that the investment fund will aim to invest in assets that will help reduce the cost of moving cargo.

DP World has 30 per cent share of the Indian market and operates six ports along the east and west coasts of the country. The value of goods exported and imported through company's operations reached almost $50bn in 2016, about 15 per cent of India's total non-oil imports and exports. The company has invested almost $1.2bn in India over the last 16 years and will invest another $1bn in brown and long term greenfield terminals, inland container depots and expanding existing inter-modal rail services, according to a company spokesperson.

DP World also plans to spend about $1bn every year for the next three years at home and abroad as it expands its investment portfolio and strengthen its global footprint. The company, which is set to post 10 per cent growth in its gross container volumes in 2017 on the back of a stronger-than-expected recovery in the global trade last year, has spent about the same amount on capex in 2017.

The National