DP World cements position as ‘Gateway to Africa’

DP World says the deal will bolster South Africa’s position as Africa's logistics hub and connect the continent's producers to a global network of trade infrastructure.

UAE port operator DP World has offered to buy up 12.7bn rand ($890 million) worth of shares in South Africa’s Imperial Logistics.

The deal will create a sprawling network of inter-continental trade lanes for African producers across land, sea and economic zones, DP World said.

“DP World aims to improve connectivity between African producers along fast-growing trade lanes to the rest of the world.”

DP World said the acquisition will also help to cement its position as a ‘Gateway to Africa’ for transporting cargo.

“The acquisition of Imperial will help DP World to build better and more efficient supply chains for the owners of cargo, especially in Africa. Imperial’s operations are complementary to our network of ports, terminals and logistics operations on the continent,” said Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World.

The company, owned by the government of Dubai, added that the takeover of Imperial’s logistics and market access, seals its transformation into an “advanced logistics company” with a more diversified and integrated portfolio.

DP World, which handles 10% of the world’s container traffic, is betting big on the African continent.

In May 2016, it signed a $442m agreement with the government of Somaliland, to operate a regional trade and logistics hub at the Port of Berbera, which recently opened the first phase of its expansion.

The port, based on the geo-strategically important Gulf of Aden, is a maritime corridor for up to 20% of global trade annually, including a considerable chunk of the Gulf’s oil and gas exports, experts say.

Vaccine deal

Imperial, which offers logistical support across healthcare, consumer, automotive, chemicals and industrial commodities across 26 countries in Africa and Europe, has also been awarded contracts to import coronavirus vaccine doses.

The deal with South Africa’s government is expected to close by the second quarter of 2022, says Chiedza Madzima, the head of operational risk at Fitch Solutions.

“In November 2020, Imperial invested in and partnered with Lori Systems to expand its e-logistics technology solutions across Africa,” she notes.

Another delisting

Commenting on the deal, South Africans lamented the stock exchange’s loss of a valuable asset:

“Taking advantage of the economic slump. Another good business to leave the JSE,” said Gauteng based Dean Ginsberg, a portfolio manager at Old Mutual.