WASHINGTON: Harbour services provider Global Ports Holding is preparing for its IPO on the London Stock Exchange with a target price range of between 735p and 875p. This will give it an expected market capitalisation of between £462m and £539m. The $75m (£58m) of new money it is looking to raise will go towards making acquisitions in the Caribbean and Asia, and expanding its existing presence in the Mediterranean.
Operations at the group are split nearly evenly between commercial and cruise ports. The commercial side centres on ports in Turkey and Montenegro, while the latter also exports a portion of Serbia’s goods. The leisure part of the business is the world’s largest independent cruise port operator and the only current consolidator of cruise ports. It operates by buying and privatising existing government-owned ports and ‘giving them a makeover’, making it a capital-light business. Management said most cruise ports are underdeveloped, more akin to airport terminals 20 years ago. Global Ports aims to make these terminals a more pleasant experience for travellers.
In the year to December 2016 the company reported $115m in revenue with pre-tax profits of $5.2m. During the last three years adjusted cash profits grew at a compound annual growth rate of 14 per cent, which management believes will be maintainable as ports schedule their operations around two years in advance. The company will also look to use the connections of former EU trade commissioner Peter Mandelson, who joined the Global Ports board ahead of the listing.
Healthy cash profit margins of 69 per cent in cruise ports and 72 per cent in commercial, along with an average cash conversion of 85 per cent over the past three years, point towards good dividend potential. This makes Global Ports one to consider for those hunting for income, with management aiming to pay a minimum dividend of $25m to shareholders this year. An analyst at IG Group said the business looked fairly valued given its exposure to the cruise industry, which has remained resilient over recent years, while increasing affluence and rising wages among older people should mean this remains a strong market. Retail investors with at least £1,000 to spend can participate in the IPO by applying for shares through stockbrokers. The deadline for applications to be lodged by intermediaries is 5pm on 11 May.
