Rising demand for cruises bodes well for the owner of 14 ports heading to the London stock market. Global Ports has announced plans to float on the Main Market and retail investors will get a chance to take part in the IPO (initial public offering).
The business is hoping to raise $250m which will provide new cash to make acquisitions and also provide money to existing shareholders selling down some of their holding.
Retail investors will be able to apply for a minimum £1,000 worth of shares in the offer via a range of stockbrokers. More details can be found on Global Ports’ website. The deadline is expected to be Thursday 11 May.
At present we don’t know the exact listing date or IPO price; neither have we seen the prospectus which is the important document you need to read before making an investment decision.
WHAT'S THE GROWTH PLAN?
Chief executive Emre Sayin says Global Ports is the only business of its kind to predominantly focus on ports specifically for cruise ships. He also says the group is the only consolidator in the market actively seeking to buy more cruise-focused ports.
It has identified a large number of potential acquisitions, nearly all owned by governments or states seeking to privatise assets.
‘We want to buy existing ports where we can make money from day one. Our model is to run them more efficiently and add retail outlets to make more money from customers, just like the airport industry did in the past,’ reveals Sayin.
It wants to expand in Europe, the Caribbean and Asia.
The company has two commercial ports in addition to the cruise ship sites, but we’re told these are merely to provide steady profit and generate cash to support expansion on the leisure side.
HOW MUCH IS IT WORTH?
Sayin refused to speculate about the potential valuation of Global Ports once on the stock market, neither would he put a figure on the potential dividend yield.
He would only say the company will start off with a standard listing on the London Stock Exchange before moving ‘in the not so distant future’ to a premium listing which would make the company eligible for inclusion in FTSE indices.
Global Ports made $115m revenue in 2016 and $81m earnings before interest, depreciation and amortisation (EBITDA). Net debt is presently 3.7 times EBITDA which is at the higher end of most investors’ comfort range.
Head of corporate finance Jan Fomferra says the money raised at IPO should help the net debt to EBITDA ratio move closer to the company’s targeted 2 to 2.5 range.
‘We’re comfortable with the leverage at the moment as this is a profitable business generating lots of cash.
‘We have high visibility of earnings as cruise ships typically publish their itinerary one to two years in advance. Cruise operators make sure they always fill their ships; our fees are based on passenger numbers per ship.’
