Exclusive: Temasek's PSA considers multi-billion dollar exit from Hutchison Ports-sources

The skyline of Singapore's central business district is seen at dusk with PSA international port terminal in the foreground. Picture taken September 25, 2013. REUTERS/Edgar Su/File Photo
  • PSA in early stage of exploring selling its 20% stake -sources
  • PSA had acquired stake for $4.4 billion in 2006
  • Stake could appeal to Chinese port operators, shipping liners and global funds-sources
  • Hong Kong port affected by tough competition

SINGAPORE, Dec 9 (Reuters) - Port operator PSA International, fully owned by Singapore state investor Temasek Holdings, is evaluating selling its multi-billion dollar, 20% stake in the ports business of CK Hutchison Holdings (0001.HK), two sources familiar with the matter told Reuters.

PSA, the world's second-biggest container terminal operator, whose global network encompasses 160 locations in 42 countries, had acquired the stake in the Hong Kong-based conglomerate's ports business for $4.4 billion in 2006.

PSA is in the early stages of exploring an exit from CK Hutchison's ports business and some potential bidders have been tapped, said the sources, who did not want to be identified due to the sensitivity of the matter.

PSA declined to comment on a Reuters query and both Temasek and CK Hutchison, the conglomerate of retired billionaire Li Ka-shing, also declined to comment.

Reuters was not immediately able to ascertain the estimated valuation of PSA's stake being offered for sale.

The sources said PSA's move comes as it reviews its portfolio in the backdrop of muted global shipping activity.

One of the sources said he expects port operators, mainly from China, shipping lines and cash-rich global infrastructure funds to be among the potential bidders.

CK Hutchison's ports division is one of the world's largest port operators but its mainstay Hong Kong business has been affected by tough competition from mainland Chinese ports in the last few years.

Last month, U.N. agency UNCTAD forecast global maritime growth for 2023-2027 at an annual average of 2.1%, down from the previous three-decade average of 3.3%, with slow economic growth and the conflict in Ukraine hurting the outlook.

Besides the stake's valuation, a successful deal would depend on whether the buyers are acceptable to all parties, one of the sources said, adding that securing regulatory approvals from a number of countries was another key factor.

If a deal is reached, it could rank among the biggest sell downs by a Temasek entity. Temasek reported a nearly 6% rise in its portfolio value to a record S$403 billion ($297 billion) in the year to March 2022.

Temasek executives had said in June that the sovereign investor expects to slow down its investments due to the deteriorating global economy. Economic conditions have worsened since then, with global markets selling off along with a sharp increase in interest rates.

Editing by Jacqueline Wong and Kim Coghill

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