x Abu Dhabi, UAEThursday 27 July 2017

Istithmar may sell shipping subsidiary

Speculation increases that Istithmar World, an investment arm of Dubai World, will sell Inchcape Shipping Services to raise up to $700m

Speculation increased yesterday that Istithmar World, an investment arm of Dubai World, will sell Inchcape Shipping Services to raise up to US$700 million (Dh2.57 billion). A sale of the London-based global shipping agency could help Dubai World free up cash as it looks to restructure its holdings and reach a standstill agreement with creditors for $22bn of debt. Reports circulated yesterday that private-equity firms have begun preparing to bid on Inchape. They include the US companies Advent International, TPG Capital and Kohlberg Kravis Roberts, and Cinven, Charterhouse Capital Partners and Montagu Private Equity from the UK.

A spokeswoman for Istithmar declined to comment yesterday. "From Dubai World's standpoint, they've got debt obligations coming due over the coming years and they've got to sell assets to meet them," said Khuram Maqsood, the managing director of Emirates Capital. "I think they're keen on finding cash wherever they can." The company recently wound down an executive jets management business run by Istithmar World Aviation, and sold several properties late last year, including the W Hotel in Manhattan at auction, and two buildings in London.

Inchcape is one of the largest marine management firms in the world, with 245 offices in 63 countries employing a staff of more than 3,800. It promotes itself as the only major shipping services company globally accredited by Lloyds Register, and generates 30 per cent of its revenues from the Gulf. The company traces its origins to 1847, when two Scotsmen formed a general merchant partnership, Mackinnon Mackenzie and Company, in Calcutta.

The company provides offshore support to oil tankers, cruise lines, and container and dry bulk vessels, including crewing and spare parts. Istithmar World bought the company in 2006 for $285m from Electra Investment Trust, a private-equity firm based in London. Merrill Lynch acted as financial adviser to the sale, which was financed with a combination of debt and equity. The debt, including both senior loans and mezzanine financing, was obtained from the Royal Bank of Scotland.

Other Dubai World subsidiaries have been linked with asset sales in recent weeks. The conglomerate is considering an $884m initial public offering of the Australian assets of DP World, the global ports operator, Australian media have reported. DP World would keep a major stake in the new entity, the reports said. * with Reuters @Email:igale@thenational.ae