|Investment date||January 2011|
TCP Participações is the second-largest shipping container terminal in Brazil, and one of the largest in Latin America. The terminal has a strategic advantage, as it is the only one in its catchment area with a direct on-dock rail connection to hinterland markets, allowing containers to be loaded directly onto the trains. Founded in 1998, TCP operates at the Port of Paranaguá, the second-largest port in Brazil, and a port of call for most container ships operating international and cabotage lines along the Brazilian coast.
GETTING INTO SHAPE
Advent took a 50% stake in TCP in January 2011, believing that this busy terminal had not begun to reach its potential. We were attracted to this high-growth sector marked by 10% volume CAGR in the 12 years prior to Advent’s investment. While demand existed, there was a scarcity of space, creating bottlenecks in all Brazilian ports, especially as it typically takes between seven to ten years to develop a new facility in Brazil. This scenario, coupled with the fact that TCP is one of only a few terminals in Brazil with rail connectivity, made an investment in the company very attractive.
Advent put together a multi-pronged value creation plan that included expanding current capacity and increasing productivity; growing volume and market share; and renewing and extending the concession contract, which was set to expire in 2023. Having successfully managed and expanded airports in the Dominican Republic and Mexico, Advent was able to draw on that experience to shape TCP’s expansion.
FROM A PORT OF CALL TO A LOGISTICS HUB
Working in partnership with the TCP management team and employees, we helped the company capture value along several of these dimensions.
By improving processes, purchasing new equipment and building a third berth, which was wide enough to accommodate some of the largest ships in the world, TCP’s annual capacity nearly doubled during Advent’s ownership from 800,000 TEUs in 2011 to 1.5 million TEUs in 2017. At the same time, TCP's average productivity tripled from approximately 30 moves per hour to 90 moves per hour, elevating its position from the tenth most productive terminal to the second most productive terminal in Brazil.
TCP began to offer its clients premium integrated door-to-port logistic services beyond container work in the port, including bonded warehouse storage and handling services.
“Now our clients benefit from having a single, one-stop-shop that allows them to control the entire cycle,” said Luiz Antonio Alves, CEO of TCP. “This has become a significant revenue stream, and a key differentiating factor for us since very few terminals in Latin America can provide these integrated services.”
TCP was also able to extend the concession contract for another 25 years until 2048, which should be a significant value driver.
These initiatives have driven strong financial performance at the company. Despite a flat container shipping market over the past decade, TCP's revenue and EBITDA grew at a compound rate of 11% and 12%, respectively, from 2011 to 2017.
“From the very beginning, the goal was to become far more customer-focused and concentrate on increasing productivity, rather than just running a traditional port,” said Jesper Kjaedegaard, an Advent operating partner and a TCP board member. “We were able to look past the existing operational constraints and use our relevant experience and integrated support structure to help TCP become one of the most productive terminals in Brazil.”
THE GLOBAL CHINA TRADE
During its six years of ownership, Advent helped TCP evolve from a simple container terminal to a fully integrated logistics company. In February of 2018, Advent sold its 50% stake to China Merchants Port Holdings Limited ("CMPort"), one of the world's largest container terminal operators.
The company is well positioned for further growth under CMPort’s ownership, which views TCP as the cornerstone of its entry into the Latin American market and the future hub of the rising commodity and goods trade flow between Brazil and China. We believe TCP will leverage CMPort’s international port operations experience and regional connections to help continue its success story.