The key yacht repair and refit areas of Dubai Maritime City (DMC) and Al Jadaf are part of a $405m takeover of Drydocks World by the Dubai state-owned investment group DP World. The deal will consolidate all of Dubai’s state-owned maritime assets of ports and shipyards under one ownership. A separate deal involves the purchase of DMC for $180m.
DP World is implementing the takeover through its marine services arm P&O Maritime and the deal includes a capital injection of $225m. Drydocks World is the largest commercial marine ship repair yard in the Middle East, but the company is also responsible for managing the DMC and Al Jadaf areas which are important for repairing and refitting smaller craft including yachts, dhows and smaller commercial vessels such as tugs.
The shipyard sector has been hit hard by the downturn in the offshore market. The injection of $225m in capital is eight times Drydocks World 2016 annual EBITDA.
“Drydocks World bolsters our investment in the maritime sector through our subsidiary P&O Maritime,” says Sultan Ahmed Bin Sulayem, DP World group chairman and CEO. “We are acquiring a market leader in the Middle East with the potential to deliver near term synergies and new revenue opportunities over the longer term, particularly in ship conversion and in areas where POM has existing expertise.”
DMC controls 2.3 million square metres on a man-made peninsula and provides Economic Zones World FZE additional land as an alternative to the highly-occupied Jebel Ali Free Zone. The DMC marine precinct includes two synchrolift facilities with a 3,000 and 6,000-tonne lifting capacity.
“Dubai Maritime City provides us with stable leasing income from DMC’s existing industrial zone and spare capacity to develop industrial and commercial activities for the maritime sector in a prime location of Dubai,” Sulayem added. “We aim to develop the best-in-class Maritime City serving the needs of the maritime industry and leveraging on our expertise and experience from our ownership of the Jebel Ali Free Zone.”
Al Jadaf is the traditional small craft repair centre located on Dubai Creek, but with the development of the Dubai Canal it is gradually being shut down and its activities relocated to DMC or other places. Over recent years the volume of yacht-related work undertaken at Al Jadaf has grown being serviced by the 100 or so businesses providing a full range of maritime services.
The acquisitions will increase DP World's net debt to 2.9 times EBITDA compared to 2.6 times previously.