China Merchants Port Holdings (CMPH) has entered into agreements with its joint venture partners Djibouti Asset Company to provide a loan for the joint venture in order to fund the development of commercial and infrastructure at Djibouti Free Trade Zone.
Djibouti Asset Company is 30% owned by China Merchants Port, 60% owned by a subsidiary of Djibouti Ports & Free Zones Authority, and 10% owned by Port of Dalian Group. The company was established in January 2017 for the purpose of developing the Djibouti Free Trade Zone.
CMPH’s special purpose subsidiary for Djibouti investment will provide a $30m loan for the Djibouti Asset Company, while the other two shareholders will also provide loans to the company based on their shareholding percentage.
CMPH believes Port of Djibouti is an ideal transshipment hub for maritime cargo passing in and out of east Africa and offers long-term growth potential. The shareholder loans will act as a bridging facility before the joint venture secures financing.
In November last year, UAE port operator DP World took legal action against China Merchants for building an international free trade zone on Doraleh Container Terminal, a facility being disputed with Djibouti, claiming that China Merchants unlawfully procured and/or induced Djibouti’s breaches of its agreements with DP World.