Brookfield Asset Management Inc. is acquiring a majority stake in the Oaktree Capital Group, LLC, which owns Ports America.
Brookfield and Oaktree have just announced an agreement whereby Brookfield will acquire approximately 62% of the Oaktree business in a cash and shares arrangement.
Oaktree owns a majority stake in Ports America Holdings through Highstar Capital, which Oaktree acquired in 2014. CPP, one of Canada’s largest pension funds, also holds a 10% equity stake in Ports America.
Highstar Capital has tried to sell Ports America separately previously. In 2016 a deal with Yilport was in the works, but never eventuated.
Ports America claims to be “the largest U.S. terminal operator and stevedore, with operations in every major port in the nation”. While it operates at over 40 locations, the Ports America business is actually asset light compared to global terminal operators with as many sites. This is because Port Authorities and other entities own quay cranes and other assets at many of its locations, and Ports America provides contract stevedoring to shipping lines that lease the terminals. This is one of the reasons, it is understood, that negotiating a sale has been difficult.
For Brookfield, the acquisition is not really an infrastructure play. Oaktree specialises in “alternative investment strategies” and is the largest distressed investor in the world. Analysts in Canada (Brookfield’s home market) are viewing the deal as Brookfield expanding into the credit market, rather than seeking synergies or expansion the infrastructure sector.