Acquisition of UK ports by private equity funds

Baird, Alfred J.

Abstract

Private equity (PE) ownership of port regulatory authorities and port land is primarily a feature in the UK. Most other countries retain public port authorities who lease/concession port land and operations to private terminal operators rather than selling it off, as has occurred in the UK. Motivations behind PE ownership of ports in the UK include gaining access to high profits, significant barriers to entry, and low risk. Case studies reveal that PE port owners focus on high profitability, albeit with limited potential for investment in creating new port assets because port surpluses are required to pay the interest on debt resulting from leveraged acquisitions. The PE exit strategy is to sell-on port assets, often to other PE owners, implying that ports concerned may continually carry a high debt burden, yet will have few new assets to show for it. This perennial debt burden is not connected with the creation of new port assets which might be expected to benefit port users and the wider economy. Thus, it is doubtful if the PE model of port ownership, operation and regulation is conducive to creating a competitive national economy. Indeed, the opposite outcome is more likely.

Citation

Baird, A. J. (2013). Acquisition of UK ports by private equity funds. Research in Transportation Business & Management, 8, 158-165. https://doi.org/10.1016/j.rtbm.2013.07.004

• Journal Article Type: Article
• Acceptance Date: Jul 17, 2013
• Online Publication Date: Aug 17, 2013
• Publication Date: 2013-10
• Deposit Date: Jul 28, 2014
• Journal: Research in Transportation Business & Management
• Print ISSN: 2210-5395
• Electronic ISSN: 2210-5409
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 8
• Pages: 158-165
• DOI: https://doi.org/10.1016/j.rtbm.2013.07.004
• Keywords: Private equity; Ports; United Kingdom; Policy
• Public URL: http://researchrepository.napier.ac.uk/id/eprint/6950