Napier Port is one of five main ports on the coastal shipping route of New Zealand. As a strategic trade gateway for regional produce, the efficient and effective operation of the port is critical to the current Hawkes Bay economy and with increasing numbers of cruise ships, is now assisting in attracting significant tourist dollars to the region. The Port sought fresh funds to help finance the ports developing masterplan and develop the "6 Wharf" development to expand facilities to handle significant growth in cargo volumes, accommodate larger shipping vessels including cruise liners and provide greater resilience capability during times of natural disasters.
"The most crucial element in our future strategy is the development of a wharf capable of handling the next generation of larger vessels," Napier Port Annual Report said.
GHD Advisory was asked to provide comprehensive vendor technical due diligence assistance and vendor documentation to help minimise uncertainty around the ports plans and assets, and support the sales process for the port's owner Hawke's Bay Regional Investment Company Ltd (HBRIC) who was offering shares in the Port of Napier via an IPO.
To respond to timing pressures, GHD Advisory adopted a two staged approach, with the first stage being aligned to a "transaction readiness" stage (3 months), and the second stage running in parallel to the "transaction execution" phase in the event there was a desire to start the transaction process sooner.
GHD Advisory provided a unique mix of technical experience in all aspects of port infrastructure and a proven transaction focused due diligence methodology acquired from significant buy and sell side due diligence experience within the port industry in Australia and New Zealand including:
- Our understanding of the marine and landside opportunities and constraints affecting the ports and other facilities - invaluable in developing a robust overview of how to optimise the port and its operations.
- Provided due diligence services to review existing Asset Management Plans and documentation to enable an update of capital expenditure forecasts for fixed assets and a mobile port plant.
- In conjunction with risk identification and mitigation GHD Advisory identified areas of potential value upside such as capacity enhancement, optimal investment paths and development opportunities.
Investors paid NZD2.60 a share (at the top of the range) through an IPO for 45 percent of the port company with new shareholders seeing the value of their investment rise significantly within the first hours of trading. The IPO raised NZD234 million.
The owners HBRIC can focus on core environmental investments knowing that the port's master plan is funded. From the sale proceeds, NZD110 million will be used to repay debt and partially fund the construction of new 6 Wharf.