PD Ports agrees 3i-backed takeover

The board of UK ports operator PD Ports has recommended a take-private offer from Endeavour Ports Limited, a holding company owned by 3i Group and an Australian syndicate comprising Industry Funds Management (IFM), Challenger Infrastructure Fund (CIF) and Challenger Life.

The consortium has offered 140.5 pence in cash for each PD Ports share, valuing the existing issued share capital of PD Ports at approximately £246 million (€361 million; $425 million). Endeavour will also assume £276.4 million of debt as part of the offer. According to a press release, debt will be provided by The Royal Bank of Scotland.

Acquisition vehicle Endeavour is 50 percent owned by IFM, 18.4 percent by CIF, 16.1 percent by Challenger Life and 15.5 percent by 3i. The infrastructure team of 3i worked on the deal according to a 3i spokesperson.

Infrastructure deals have proved to be attractive to private equity firms of late. 3i, which made four partner hires to its infrastructure team in June, acquired UK parking services and traffic management company NCP for £555 million in July. The firm reportedly beat off competition for NCP from Australian investment bank Macquarie, which closed its £1.5 billion Macquarie European Infrastructure Fund in July 2005. The bank acquired The Isle of Man Steam Packet Company, an operator of freight and passenger ferry services, for £225 million from Montagu Private Equity in October of this year.

David Harding, chairman of PD Ports, said in a statement that the 140.5 pence a share offer represents a premium of 42 percent over the price of 100 pence per PD Ports share at which the company’s IPO on AIM took place in July 2004. The company subsequently listed on the London Stock Exchange in December of the same year.

Melbourne-headquartered IFM is an investment firm specialising in the management of private investment products across infrastructure, private equity and private debt, and listed equity portfolios.

Sydney-based Challenger Financial Services Group owns Challenger Life, which has invested over A$3 billion (€1.88 billion; $2.22 billion) in property, infrastructure and fixed interest assets, and Challenger Infrastructure Fund, a publicly-listed fund that holds interests in UK companies Inexus, the North of England Gas Distribution Network, Wales & West Utilities, and Arquiva.

Endeavour Ports was advised by Lexicon Partners, while Hawkpoint advised PD Ports.

PD Ports Group owns and operates Teesport on the North East coast of England, the second largest port in the UK by tonnage according to the firm, and operates in ports on the rivers Humber, Trent and Ouse and the Isle of Wight. In the six months ended 30 September 2005, PD Ports reported unaudited consolidated revenues of £86.1 million and operating profits of £18.1 million.