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Dubai’s DP World Said to Be Eyeing Stake in Russia Shipper Fesco

26 May 2017

Dubai’s DP World Ltd. is considering taking a stake in Russian cargo carrier Far Eastern Shipping Co., according to people familiar with the matter.

The global container-terminal operator may inject funds into Fesco and take control of at least 20 percent of the company, said the people, who asked to not be identified because the talks are private. A deal could close as soon as next month, they said. Fesco’s chairman and major shareholder Ziyavudin Magomedov signed a broader Russia partnership agreement with DP World last year.

DP World’s interest in Fesco comes as the Russian company seeks to restructure debt after failing to pay interest on dollar bonds for about a year. The ship operator, which also runs Vladivostok’s port and Trans-Siberian rail services, has been hobbled by the weak ruble and depressed sea-cargo rates.

A DP World representative in Dubai declined to comment on specific investments. The company is looking at a range of infrastructure opportunities in Russia, including existing ports and greenfield developments, the representative said in an email reply to Bloomberg News. The company set up a venture with the state-run Russian Direct Investment Fund last year.

Representatives for Fesco and Magomedov’s investment company Summa Group declined to comment.

Moscow-listed Fesco has a market value of about $160 million, based on data compiled by Bloomberg. Magomedov and private equity firm TPG control 49.9 percent of the company.

Under the agreement signed last year, Magomedov’s Summa and DP World will look for infrastructure investments in Russia. 

Holders of Fesco’s dollar bonds rejected a 50 percent cash payout offer last year and instead asked for at least 85 percent of face value. The company’s $421 million of notes due May 2018 are indicated at about 67 cents on the dollar, according to data compiled by Bloomberg.

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