Haifa Port privatization attracts strong global interest

Port of Haifa / Photo: Eyal Izhar, Globes
Port of Haifa / Photo: Eyal Izhar, Globes

Leading ports and shipping companies have applied to take part in the tender, but contrary to earlier expectations, not one is from China.

The privatization of the Port of Haifa has attracted an extraordinary degree of interest. Eighteen applications were filed today with the Government Companies Authority from Israel and overseas. Despite expressions of interest in the past, however, not a single Chinese company was among the applicants.

The Government Companies Authority, headed by Yaakov Kvint, said that the large number of approaches received, among them approaches from leading international players in ports and shipping, was an indication of the great interest in the sale process and of the strategic and financial potential of acquiring the company.

Israel Shipyards Ltd. announced that it had submitted an application to participate in the tender together with Dubai-based DP World, one of the world's largest sea terminal operators which in the past bid to operate ports on the East Coast of the US. The formation of the partnership for the purposes of bidding for Haifa Port was first reported by "Globes".

Shemen Industries Ltd. (TASE;SHMN), controlled by Belgian-Jewish businessman Chaim Fink, also announced that it had filed an application to take part in the tender. Other Israeli companies that have filed applications are the Shapir Group; Clal Industries; investment funds Allied Holdings, Generation Capital, Keystone Capital, Tene, and Aluma Infrastructure Fund together with Meir Shamir; Danny Ungar; and the Livnat family's Taavura Group and Maman Cargo Terminals and Handling (TASE: MMAN). Another applicant is Clal Industries controlling shareholder Len Blavatnik.

Among the prominent overseas companies taking part are Belgian company Euroports, one of the largest cargo terminal operators in Europe; Global Ports Holding (GPH), the largest passenger terminal operator in the world; a British ports operator; SSA Mexico, a large terminals operator from the US; and an Indian terminals operator.

New directions for Haifa Port

The Israeli applicants which have not so far linked up with foreign strategic partners will be able to do so further down the track, subject to approval from Government Companies Authority head Kvint. The Government Companies Authority told "Globes" that the earlier in the process that a strategic partner was brought in, the higher would be the chances of obtaining approval. The state has determined that partnering with a player with logistics capabilities will entitle a consortium to a bonus worth NIS 200 million for its bid.

The new Haifa Bayport north of the existing Port of Haifa, which will open towards the end of 2021, is operated by state-owned Chinese company SIPG. The new port will be much more efficient, modern, and economical than the Port of Haifa, but it will be allowed to deal only with loading and unloading of containers.

The assessment is that Haifa Port will try to develop in other directions. This assessment is strengthened by the identities of the applicants to take part in the sale process. Ungar, for example, owns one of the world's largest vehicle transportation companies, while Euroports is Europe's largest general cargo terminal operator.

Global Ports Holding is the largest operator in the world of cruise terminals. It operates the ports of Barcelona, Malaga, and other ports around the Mediterranean. The company is constructing a new seafront at the port of Nassau, the most popular cruise destination in the Caribbean.

Turkish company Yilport Holding Inc., which operates many ports around the Mediterranean, is a member of the Global Ports Holding consortium. The controlling shareholder in Yilport is Robert Yuksel Yildrim, who holds 24% of CMA CGM, one of the world's largest container companies. Yilport and Global Ports Holding are members of a consortium led by Israeli businessman Eli Tilles, a veteran of Israel's ports industry, who represented the Nakash group at the time of the acquisition of the Port of Eilat.

Those filing applications in the privatization tender will be required to deposit a NIS 5 million bank guarantee and sign a confidentiality agreement as a condition for access to the Port of Haifa information room. The information room will be opened on November 15 after approval is obtained from the ministerial committee for the sale of state shares in government companies.

The information room will be open for six weeks, and at the same time the Government Companies Authority will carry out checks at the Competition Authority and other government agencies to ensure the fitness of the applicants from the points of view of competition and state security.

The state is also due to publish a "vital interests ordinance" to ensure that national interests are preserved after the port is privatized. The ordinance should provide a final answer to the question whether foreign state-owned companies will be allowed to operate the port, and if so, with what restrictions. A draft of the ordinance will be sent to the applicants in the next few days. After the information room stage, the applicants will be required to sign sale agreements as a condition for submitting bids to buy the company. Under the privatization plan, the state undertook that NIS 1 billion of whatever amount is paid will remain with Haifa Port Company Ltd.

The Government Companies Authority will have to find a solution that will allow the consortium of Shlomi Fogel to view sensitive information about Haifa Port Company. Israel Shipyards, controlled by Fogel, Assi Schmeltzer, and Sami Katzav, owns the Israel Shipyards Port in Haifa. Fogel's intention of bidding for Haifa Port has aroused criticism from other applicants, who argue that he is ineligible to bid because of his holding in a competing port.

The strategic investor will be required to meet criteria designed to ensure that it is financially strong, but beyond that preference will be given to an investor "with experience in containers or maritime transport." Bidders for the port must have at least three years experience in operating a maritime terminal, including handling cargo of at least 2 million tonnes annually. Israel Shipyards meets this condition.

The Port of Haifa handles 29 million tonnes of cargo annually. It is the second Israeli port to be privatized, following the sale of the Port of Eilat in 2013 to Papo Maritime, owned by brothers Avi, Rafi and Joseph Nakash.

Published by Globes, Israel business news - en.globes.co.il - on October 29, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Port of Haifa / Photo: Eyal Izhar, Globes
Port of Haifa / Photo: Eyal Izhar, Globes
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018