China Merchants’ Acquisition of Two Port Terminals in India and Vietnam Delayed, Reason Subject to Speculation

On August 28, state-owned China Merchants Port Holdings (CMPHdisclosed that the acquisition of two port terminals that were part of a portfolio of 10 global terminals acquired by the company as a result of an agreement with French shipping conglomerate CMA CGM have been stalled due to pandemic-related delays.  It is being speculated, however, that these delays, which are affecting a 50% stake in Mundra Port in India and a 25% stake in the Gemalink Terminal in Vietnam, are actually due to tension between these countries and China, including their increased scrutiny of investment of this type. 

The agreement between CMA CGM and CMPH reportedly stipulated the former’s offloading  of 10 port holdings to a Cyprus-based joint venture company, Terminal Link SA, which is 49% owned by CMPH and 51% owned by CMA CGM.  CMA CGM finalized transfer of the first 8 port terminals (listed below) to Terminal Link in March 2020, which was facilitated by a nearly $968 million financing package offered by CMPH to Terminal Link.

  • Ukraine: Odessa Terminal, 50%
  • Singapore: CMA CGM-PSA Lion Terminal, 49%
  • Jamaica: Kingston Freeport Terminal Limited, 100%
  • Netherlands: Rotterdam World Gateway B.V., 30%
  • China: Qingdao Qianwan United Advance Container Terminal, 24$
  • Vietnam: Vietnam International Container Terminals, 47.25%
  • Thailand: Laem Chabang International Terminal, 14.5%
  • Iraq: Umm Qasr Terminal, 100%

The substantial financial role CMPH is now playing in the joint venture and CMA CGM’s increasing focus on other business ventures are possible indicators that CMPH will eventually assume a much larger equity position in Terminal Link.  Although the plausibility of this scenario remains unclear, including how and when the acquisition would transpire, such an event, if it happens, would give the Chinese firm sole access to the portfolio of 10 global port terminals.

Via Terminal Link, CMPH also maintains an indirect equity position in Greece’s second largest port in Thessaloniki, which is a critical and strategic gateway into European trade networks.