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28 March 2024

Fitch upgrades Jafz rating after DP World acquisition

(FILE)

Published
By Staff

Fitch Ratings has upgraded Jebel Ali Free Zone’s (Jafz) rating to ‘BBB-’ with stable outlook after DP World’s acquisition of the company last year.

The upgrade and alignment of Jafz’s rating with its parent, DP World (BBB-/Stable/F3), reflects Fitch's assessment of strong links between Jafz and its new owner under its parent and subsidiary rating methodology.

Fitch expects the acquisition of Jafz by DP World to be positive for the group's operating efficiency at the Port of Jebel Ali in Dubai.

DP World’s ownership of Jafz will enable the group to improve the layout of the port access, allow it to expand its logistic capacity and access to support the ongoing growth of Jebel Ali port and improve integration of the port area with the new Al Maktoum International Airport,” the ratings agency said.

DP World, one of the world's largest port operators, last year acquired Jafz’s parent company Economic Zones World (EZW) for $2.6 billion (Dh9.54 billion).

“We assess Jafz having strong legal, operational and strategic links with DP World following its recent acquisition. The assessment includes presence of cross-default clauses, centralised treasury, common management and jurisdictions and strategic importance. The strong parent company ties form Jafz’s primary rating driver,” Fitch analysts said.

Jafz accounts for 20 per cent of Dubai's GDP.

The ratings agency said that the Jebel Ali Free Zone’s location near the Expo 2020 site is likely to generate benefits for both Jafz and its parent company when preparations and development get underway.

Jafz’s 2014 revenue increased 10 per cent to Dh1.688 billion, driven by improved occupancy rates and increased fee income.

The company maintained stable Ebitda margins generating Dh1.362 billion for 2014 as compared to Dh1.234bn for 2013.

Fitch's expectations are for more moderate growth levels and profitability margins to decline to historical levels in 2015 financial year and then be maintained over the forecast period.