DP World Delisting Unsettles Sector

(MENA) Group to Return to Full State-ownership

Marine cargo-handling firm DP World has announced plans to delist from Nasdaq Dubai, potentially adding further pressure on the company’s finances.

The Dubai-based group is one of the world’s largest port operators and controls extensive breakbulk cargo-handling capacity. The group cited the board’s decision that the disadvantages of remaining listed outweigh the advantages.

“Even though we share the company’s view, we believe the decision to delist will further deteriorate its already higher leverage. Moving forward, a lot will depends on the company’s ability to generate significant synergies from the recently concluded bolt-on acquisitions,” said James Harley, Spokesperson for research consultancy Drewry.

Downgrade Tipped

The delisting will return the group to full state-ownership and allow the government to repay more than US$5 billion to banks.

The group has expanded aggressively in recent years, but has been hit by global trade tensions over the last 24 months and faces pressure to reduce costs.
The group has been placed on review for a downgrade by ratings agency Moody’s.

As one of the largest regional maritime cargo handling groups, DP World is seen as a bellwether for the sector, and investors are now watching closely to see how the firm proceeds.

At the start of the month, DP World signed a partnership agreement with Zhejiang Zhidi Holding of China to explore the establishment of a next-generation logistics hub in Dubai but how the group will fund future expansion such as this remains to be seen.

“With China being the top trade partner of Dubai and the UAE, we are happy to see the increasing interest from Chinese companies to invest in Dubai and strengthen their presence in Jebel Ali Free Zone,” said Mohammed Al Muallem, CEO of DP World.