China Merchants in $920m deal for 90% of Brazilian port

China Merchants Port agreed to buy a 90 percent interest in TCP Participações, the operator of Brazil’s second-largest container terminal, for 2.89 billion reais ($920 million; €773 million). 

The Chinese port operator is buying the stakes from investment fund Fundo de Investimento em Participações, Brazilian investment firm Soifer Participações Societárias (Soifer), Curitiba-based infrastructure investment companies Pattac Empreendimentos E Participações (Pattac) and Tuc Participações Portuárias (Tuc Pac), as well as two Spain-based investors – Galigrain, and Grup Maritim TCB. 

Soifer will hold a 6 percent stake in the operator after the deal is completed, while Pattac and Tuc Par will each hold approximately 2 percent. 

TCP and its subsidiaries run the container terminal concession in the Port of Paranaguá. The contract was renewed in April 2016 for an additional 25 years, ending in 2048. 

With a current capacity of 1.5 million twenty-foot equivalents (TEUs) of cargo each year, the facility is expected to boost this to 2.4 million TEUs per year – with expansion works expected to commence later this year and to be completed by late 2019. It can also handle the largest vessels operating in the Latin America trade lanes. The total assets of TCP stood at 3.22 billion reais as of this June. 

The transaction is subject to conditions including approval by the Brazilian antitrust and regulatory authorities. 

China Merchants Port expects the Brazilian port to be the future hub of the rising commodity and goods trade flow between Brazil and China, as it expands its business to Latin America. “The landmark acquisition demonstrates China Merchants Port’s confidence in the Brazilian economy and its commitment to contribute to the development of the country’s infrastructure and increased flow of business between BRICS countries,” said Bai Jintao, managing director of China Merchants Port. 

China Merchants Port currently runs several port facilities across China’s coastal areas, as well as in Asia, Africa, Europe and the Mediterranean region. Last month, it signed a concession agreement with Sri Lanka Ports Authority for a 99-year contract to build and operate the Hambantota port for $1.12 billion.