Australian Fund Manager Buys Majority Stake in UK’s Largest Port Operator

Hull UK British port — ABP operates 19 ports including in the industrial area in the east at Hull (ABP)

IFM Investors, an Australia-based global fund manager with a focus on UK infrastructure, emerged as the winning bidder in the sale of Associated British Ports (ABP). The company, which was formed through a government privatization effort in the early 1980s, reportedly handles approximately a quarter of the UK’s seaborne trade.

The Financial Times had first reported in February that the Canada Pension Plan Investment Board and OMERS (Ontario Municipal Employees Retirement System) were planning to sell their stakes, which collectively represent approximately 64 percent ownership of ABP. In August, Bloomberg reported the final round of bidding had been narrowed to three investment fund managers, Apollo Global Management, KKR, and IFM Investors. India’s Adani Group had reportedly also expressed interest but was not identified as one of the finalists.

Terms of the deal were not reported, but Bloomberg cites sources saying ABP was valued at approximately £10 billion ($13.4 billion). Bloomberg calls the deal one of the largest in the UK this year.

“This transaction represents an attractive opportunity to realize the value of our long-term investment and recycle capital into new opportunities,” said James Bryce, Managing Director, Head of Infrastructure, CPP Investments.

ABP currently operates 19 ports around the UK, including in England, Scotland, and Wales. Its locations include Southampton, the UK’s third-largest container port, Humber, which is a major industrial area in the east around Hull and Immingham, and South Wales. In announcing the sale, OMERS also highlighted that ABP has continued to invest in its ports, support UK trade and develop new opportunities linked to the energy transition, including through major projects such as the Immingham Renewable Fuels Terminal, Green Port Hull, and Southampton's Horizon cruise terminal.

The company was formed to take over the British Transport Docks Board during the wave of privatizations during the era of UK Prime Minister Margaret Thatcher in the early 1980s. It remained a public company until 2006, when a group of investors, including Goldman Sachs and OMERS, acquired the company for £2.8 billion. The Canadian Pension Plan acquired its stake in 2015. CPP held 33.9 percent while OMERS held 30 percent. Other investors include Singapore’s sovereign wealth fund and Kuwait Investment Authority’s Wren House Infrastructure.

IFM is reported to manage more than US$100 billion in infrastructure equity and debt. It says it has a “longstanding commitment to mobilizing pension capital into UK infrastructure.” It manages assets from Australian pension funds along with Britain’s NEST (National Employment Savings Trust). Other investments are reported to include Manchester Airports Group and Anglian Water.

“Attracting investment from a fund managed by IFM Investors is a powerful endorsement of our business, our people, and our strategy. We are excited to unlock further growth opportunities, together with IFM Investors and our other shareholders, continuing ABP's long-term investment benefitting our customers, our local communities, and the UK,” said Henrik L. Pedersen, CEO of Associated British Ports.

IFM cited ABP’s position serving some of the country’s most important trade and industrial regions. It said it would support continued development of ABP’s infrastructure and operations.
Ports and logistics infrastructure has become a sought-after investment. In addition to the shipping lines, which are working to increase their shore operations and protect routes, investors have been competing for the investments. A.P. Moller Capital recently announced several large investments, including a Singapore-based port operator and an agreement to acquire a majority stake in Euroports Group, which has operations in Europe and China.