AD Ports Buys Brazilian Terminals for $835 Million

Abu Dhabi Ports has finalized a significant acquisition, purchasing CLI, a Brazilian logistics and infrastructure firm, for $835 million. This strategic move marks the UAE-based port operator's debut in the Latin American market and represents its largest-ever acquisition. The deal encompasses two key terminals: one agricultural facility in the Port of Santos and another in the Port of Itaqui, located in Maranhão.

The transaction's valuation includes $500 million in equity value, with the remainder accounting for assumed debt. This expansion aligns with Abu Dhabi Ports' broader strategy to bolster food security infrastructure, particularly for the Middle East. Access to critical export gateways for agricultural commodities is a key driver for such investments, suggesting potential for further expansion within the region.

CLI, which stands for Corredor Logística e Infraestrutura, handled over 17 million tons of grains and sugar in the past year, contributing approximately 10% of Brazil's total grain and sugar exports. In the last fiscal year, CLI reported revenues nearing R$1 billion, with an EBITDA of R$556 million, though it registered a net loss of R$12.7 million.

The acquisition process for CLI began in early 2023. Initially, the sale focused on the 50% stake held by investment manager IG4, as the other 50% owner, Australia's Macquarie, was not actively seeking an exit. However, Abu Dhabi Ports engaged in discussions late last year, stipulating the acquisition of the entire company.

The deal's implied valuation of approximately 8x EV/EBITDA is considered robust, though market observers note that for finite assets like port terminals, traditional multiples offer less definitive valuation insights. The competitive nature of the bidding process was evident, as Abu Dhabi Ports needed to present a compelling offer to secure the full stake from Macquarie, which had invested in the assets four years prior.

IG4 initially entered the Itaqui terminal in 2020 through a debt restructuring. Two years later, it acquired the Santos agricultural terminal from Rumo, bringing Macquarie on board as a partner to finance the purchase. The CLI Sul terminal in Santos is one of eleven grain and sugar terminals operating within the port, highlighting its strategic importance in Brazil's export infrastructure.

Abu Dhabi Ports, valued at approximately $6 billion on the Abu Dhabi Stock Exchange, has a history of growth through mergers and acquisitions, including its $645 million purchase of Spanish firm Noatum four years ago, which brought international assets into its portfolio. BTG Pactual advised Abu Dhabi Ports on this transaction, with Machado Meyer serving as legal counsel. Citi advised CLI, supported by legal advisors Pinheiro Neto and Lefosse.