Canada’s CPPIB to buy major U.S. port terminal operator

Canada Pension Plan's play furthers its infrastructure push

The Garden City container terminal at Savannah is operated by Ports America on behalf of the Georgia Ports Authority. (Photo courtesy Georgia Ports Authority)

Reuters — Canada Pension Plan Investment Board (CPPIB) said on Wednesday it had agreed to buy Ports America, one of the largest marine terminal operators in the U.S., from investment firm Oaktree Capital Management.

While no valuation was given in the announcement, the deal values Ports America at over US$4 billion, according to two sources familiar with the matter.

The transaction comes amid heightened interest in logistics, with supply-chain disruption in focus as the global economy recovers from the paralysis caused by the coronavirus pandemic.

“There are lots of tailwinds for logistics assets writ large, but our approach is for the long term and so this type of strategic ports asset will be important to the U.S. for decades to come,” Scott Lawrence, head of infrastructure at CPPIB, said in an interview.

Under the terms of the deal, which is expected to close by the end of the year, the Canadian pension manager will take full ownership of Ports America.

CPPIB had previously held a 9.4 per cent stake in Ports America. The pension fund also owns a 34 per cent stake in Associated British Ports, as well as stakes in toll roads, utilities and digital infrastructure providers in the Americas, Europe, Asia and Australia, according to its website.

Alternative asset manager Oaktree has controlled Ports America since 2014, when it acquired Highstar Capital and the infrastructure-focused investor’s funds, which included the Jersey City, N.J.-based ports operator.

“Ports America’s growth, track record of innovation and strong financial profile have positioned the company for success in today’s cargo management and terminal operations environment, and we fully expect the business will only benefit from this new ownership structure,” said Emmett McCann, managing director and co-portfolio manager of Oaktree’s Infrastructure Investing strategy.

Founded a century ago, Ports America has operations in 70 locations across 33 ports in the United States. It currently handles 13.4 million twenty-foot equivalent units (TEUs) annually, which includes 10 million tons of cargo, 2.5 million vehicles and 1.7 million cruise ship passengers.

In the bulk/breakbulk sector — which handles commodities including grains, vegetable oils, raw sugar and refrigerated products, among other non-food cargoes — Ports America operates facilities at 24 U.S. ports.

In the containerized cargo sector, which includes pulses and specialty crops among other goods, Ports America provides services at 28 terminals across 18 U.S. ports, which it said gives it about a one-third share of the container market in the country.

— Reporting for Reuters by Sohini Podder in Bangalore and David French in New York. Includes files from Glacier FarmMedia Network staff.

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