China Merchants Port : CMPort Formed Two Joint Ventures In Connection With Investment In The Djibouti International Free Trade Zone 2017-01-17

CMPort Formed Two Joint Ventures In Connection With Investment

In The Djibouti International Free Trade Zone

China Merchants Port Holdings Company Limited(The Company) is pleased to announce that on 16 January 2017, The Company has entered into agreements regarding the formation oftwo Joint venture companies, in connection with the proposed investment in the Djibouti International Free Trade Zone ('DIFTZ').One of them is a Joint Venture formed forthe purpose of investing in and financing thedevelopment rights to develop commercial andinfrastructure projects within the DIFTZ('Asset Joint Venture'), the other Joint Venture is established forthe purpose of operating and managing of certain commercialand infrastructure projects within the DIFTZ ('O&M Joint Venture').

The Asset Joint Ventureis formed by The Company, CMID (a subsidiary of China Merchants Group) and Cheer Signal (a wholly-owned subsidiary of China Merchants Shekou Industrial Zone), with each possess 40%, 40% and 20% interest respectively. The Asset Joint Venture mentionedwill form a Djibouti Asset Company with Great Horn (a subsidiary of Djibouti Ports & Free Zones Authority) and Port of Dalian Group Co., Ltd.('PDA'), for the purpose of investing in and financing thedevelopment rights to develop commercial andinfrastructure projects within the DIFTZ.

The O&M Joint Venture is formed by The Company, CMID, Cheer Signal, PDA andIZP (China) Network Technologies Co., Ltd. ('IZP'),with each possess 26.7%, 26.7%, 13.3% and 25% interests respectively. The O&M Joint Ventureaforementioned will establish a Djibouti O&M Company with Great Horn, forthe purpose of operating and managing the DIFTZ and certain commercialand infrastructure projects within the DIFTZ.

The Company has, in recent years, been actively exploring andcapturing available opportunities overseas in order to effectively add newgrowth drivers to its existing and sustainably growing ports business. The Port of Djibouti liesstrategically at the mouth of Red Sea thus making it an ideal transshipment hub formaritime cargoes passing in and out of East Africa, offers long-term growth potentialas the economic momentum in the proximity intensifies over time.The Company has over the years invested into the Port of Djibouti, including itsacquisition of a 23.5% interest in Port De Djibouti S.A. in December 2012. Complementing The Company's investment in Port De Djibouti, The Company, Great Horn, DPFZA,CMID, CMSIZ, PDA and IZP entered into the Investment Agreement on 15November 2016 in relation to the proposed investment and development of theDjibouti International Free Trade Zone. The Investment Agreement sets out theframework in accordance with which the parties are to cooperate and to set up therelevant vehicles to jointly implement the design, phased development, constructionand operation of the DIFTZ.

Theinvestment and development of the DIFTZ willlargely promote economic development of Djibouti and is a replication of the ChinaMerchants Group's 'Port-Zone-City' development model which has demonstratedhuge success in Shekou. We believes that Djibouti's ports development (including Port De DjiboutiS.A.) will also benefit from such a project.