AD Ports buys an $800 million stake in Dubai shipping firm

AD Ports Group, which operates 10 facilities in the United Arab Emirates, will take control of Dubai-based Global Feeder Shipping for $800 million as seeks to scale up its global operations.

The Abu Dhabi port operator, majority-owned by sovereign wealth fund ADQ, will buy 80% of GFS, a container shipping company, according to a statement. The transaction is fully funded through a loan and GFS’s existing management will remain in place, with the founders retaining the other 20% of the shares.

The acquisition will help AD Ports by linking its assets, including Khalifa Port near the UAE’s capital, more closely to “core markets” in the Persian Gulf, Red Sea, Indian Subcontinent and Turkey, the company said.

It’s AD Ports’ first major deal in neighboring Dubai, where DP World Ltd., one the world’s largest port operators, is based.

AD Ports said it will look to integrate GFS into its maritime cluster, which offers shipping, offshore and subsea services.

The company went public in January, raising $1.1 billion from an initial public offering. It is looking to grow organically and inorganically, Ross Thompson, head of strategy, said in an interview. While he has some concerns about the near-term outlook for global shipping as economies slow, he’s optimistic trade will grow in the region and particularly between the UAE and India.

GFS owns and operates 26 vessels with a total capacity of 72,500 twenty-foot equivalent units.

Citigroup Inc. advised AD Ports on the transaction.