China Merchants buys Brazil's TCP

Latin American container terminal deal fuels company's global plans

China Merchants Port Holdings Co Ltd has completed the acquisition of the second largest container terminal in Brazil, the biggest port acquisition ever made in Brazil or Latin America in general.

The $924 million transaction marks the first merger and acquisition CMPort made in Latin America and its first M&A in mature overseas port assets with a controlling stake. It also means CMPort now has a presence in five continents, an important step in becoming a top in the port service provider on a global scale.

CMPort is a subsidiary of the State-owned China Merchants Group. After the transaction, the existing capacity of Brazil's Paranagua Container Terminal (TCP) is expected to increase from the existing 1.5 million twenty-foot-equivalent units to 2.5 million TEUs by the end of 2019. The port handles about 10 percent of the total export and import cargo in Brazil.

According to Reuters' previous report, TCP is Brazil's most profitable port.

"TCP is an important step for CMPort to enter Brazil, and is expected to facilitate the flow of commodities and goods between Brazil and China in the future," said Bai Jingtao, managing director of the company.

"China Merchants Port will also use its global port operation experience to help TCP continue its success story as one of the leading port industry leaders in Brazil and Latin America," he said.

According to Bai, CMPort has surpassed the 100 million TEUs milestone by the end of 2017, making the group the country's biggest container port developer. The group has also invested in overseas projects such as Colombo International Container Terminal in Sri Lanka and Port de Djibouti in the Republic of Djibouti.

The acquisition in Brazil will further enhance its global competitive edge and international influence, said Bai. "We will also work hard to make the TCP project an example of win-win cooperation."

CMPort has shown an increasingly strong interest in expanding its global presence. Last month, CMPort announced its intention to acquire 50 percent of interest in Port of Newcastle in Australia for about $126.6 million, the first step for the company to invest in Oceania.

In the same month, the company raised 500 million yuan ($79 million) in "Panda bonds"－renminbi-dominated bonds－to help fund its takeover of Port of Hambantota in Sri Lanka, after the country granted a 99-year lease on the port to China for $1.12 billion at the end of December last year.

"Port sector is a vital part of transportation in the maintenance of the country's economic safety, and the situation is we are big but not strong enough," said Zhu Lucun, deputy head of Transport Planning and Research Institute of Ministry of Transport. "One of our emphasis in the future is to build an international shipping center with global influence. And through the construction of ports, we aim to accelerate the building of a global logistics network to connect the economies involved in the Belt and Road Initiative."