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Acquisition of UK ports by private equity funds.

Baird, Alfred

Authors

Alfred Baird



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.

Journal Article Type Article
Publication Date 2013
Deposit Date Jul 28, 2014
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
Publisher URL http://dx.doi.org/10.1016/j.rtbm.2013.07.004