Magellan Group Diversifies Portfolio with €700 Million Acquisition of Danish Ship Finance

Key Takeaway

• UAE's Magellan Group acquires Danish Ship Finance for over €700 million, marking its first major investment to diversify its portfolio.
• Magellan plans further investments worth $200 million in real estate, luxury, and healthcare sectors this year.
• The acquisition highlights the competitive dynamics between Abu Dhabi and Dubai in attracting family offices and private capital.

Magellan Group Acquires Danish Ship Finance

United Arab Emirates-based investor Magellan Group has agreed to purchase Danish Ship Finance for over €700 million. This acquisition marks Magellan's first significant investment as it aims to diversify its portfolio. Magellan, which has its roots in the marine services industry, plans to expand into advisory and services businesses. Chief Investment Officer Ahmed Omar stated, “What we want to do is see how we can help grow the business, whether it’s adding advisory, adding syndications, helping build up on the client roster.” Magellan also aims to potentially advise other banks on structuring similar deals in maritime finance.

The majority of Danish Ship Finance is being acquired from Nordic private equity firm Axcel and two Danish pension funds, which had purchased the company for approximately $613 million in 2016. Post-acquisition, Magellan will own 90% of the company’s shares, while the Danish Maritime Fund will retain its 10% holding. The acquisition is being funded by proceeds from the sale of another business to an arm of Abu Dhabi National Oil Co., the UAE’s largest producer. Magellan, which operates out of London, Dubai, and Abu Dhabi, was founded by Hassan El Ali, who previously sold Zakher Marine International to Adnoc Logistics & Services, netting about $1.1 billion for Magellan to invest.

Future Investment Plans

Magellan Group is not stopping with Danish Ship Finance. The firm sees potential for three more deals to close this year, with a total value of around $200 million. These deals are targeted in the real estate, luxury, and healthcare industries, according to Ahmed Omar. The group’s London-based branch, Magellan Capital, will be responsible for buying and owning Danish Ship Finance. This acquisition strategy is part of Magellan's broader goal to build a diverse and robust portfolio.

Abu Dhabi vs. Dubai: Family Office Dynamics

The acquisition comes amid a broader context of competition between Abu Dhabi and Dubai to attract family offices and private capital. Abu Dhabi, with its $1.5 trillion in sovereign wealth funds, is seen as the "capital of capital," offering a myriad of flexible and discreet structures for billionaires’ investment entities. Christina Wing, founder of Wingspan Legacy Partners, noted, “They’re incredibly private. We don’t even know their names. We spoke to one, and not only did we have to do all the NDAs, we had to do it for over a year before we even knew the client’s name. In the US, that’s one day.”

Dubai, on the other hand, is known for its lifestyle appeal and a freewheeling atmosphere that attracts a diverse range of wealthy individuals. The city has seen a surge in wealthy families, particularly from Russia, following geopolitical tensions. Dubai’s financial hub, the Dubai International Financial Centre (DIFC), has recently opened the DIFC Family Wealth Centre, which offers a registry for family offices and various advisory services. Arif Amiri, CEO of DIFC Authority, emphasized the center’s commitment to “the highest levels of privacy and confidentiality.”

Management Quotes

• Ahmed Omar, Chief Investment Officer of Magellan Group:

  "What we want to do is see how we can help grow the business, whether it’s adding advisory, adding syndications, helping build up on the client roster."
  "Magellan could potentially help advise other banks on structuring similar deals in maritime finance."
  "Magellan sees three more deals potentially closing this year with a total value in the range of about $200 million. The companies being targeted are in the real estate, luxury and health-care industries."