Teachers pension fund pays industry record valuation for four port facilities
Orient Overseas (International) Ltd (OOIL) sold its North American container terminals for US$2.35 billion yesterday after intense interest in container port assets pushed the deal to an industry record valuation.
The private investment arm of Ontario Teachers Pension Plan, which manages a C$96 billion fund for the Canadian province's 264,000 working and retired teachers, agreed to a cash deal for OOIL's four terminals in New York, New Jersey and Vancouver, including US$60 million in debt.
'This acquisition represents solid, robust assets, has little vulnerability to market or economic vagaries, and features a very attractive growth profile,' said Jim Leech, a senior vice-president of Teachers' Private Capital. 'It is well-priced from an investment-value perspective and offers the long-term cash flow we look for as a pension plan.'
Based on the terminals' net profit of US$36.1 million last year, the deal represents a historic price to earnings multiple of 65 times, far exceeding even the rich valuations of the past year for premium assets such as Hutchison Port Holdings and Peninsular and Oriental Steam Navigation. Analysts had expected OOIL's port assets to fetch up to US$1.5 billion.
'It is a very good price,' said Geoffrey Cheng, a transport analyst for Daiwa Securities.
'There must be value in areas we have not been made aware of, such as the expansion works they have planned.'
