{"id":72448,"date":"2023-08-01T00:00:00","date_gmt":"2023-08-01T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/logistics\/2023\/08\/01\/agility-hedges-dsv-investment-with-eur-1-3-bn-equity-collar-in-the-second-transaction-of-the-type-this-year\/"},"modified":"2023-08-01T00:00:00","modified_gmt":"2023-08-01T00:00:00","slug":"agility-hedges-dsv-investment-with-eur-1-3-bn-equity-collar-in-the-second-transaction-of-the-type-this-year","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/logistics\/2023\/08\/01\/agility-hedges-dsv-investment-with-eur-1-3-bn-equity-collar-in-the-second-transaction-of-the-type-this-year\/","title":{"rendered":"Agility hedges DSV investment with EUR 1.3 bn equity collar in the second transaction of the type this year"},"content":{"rendered":"

<\/span>Agility to draw down some EUR 1.3 bn from hedging agreement:<\/span>Kuwait's Agility has entered into a derivative transaction with Morgan Stanley, Citibank, National Association, and HSBC,<\/span> to hedge its investment in Danish global freight forwarder DSV for the second time this year, the company said in a <\/span>statement<\/a><\/span>. Agility will be able to begin drawing down up to EUR 1.3 bn within a few weeks, according to the statement. <\/span>Enterprise Logistics was unable to receive a comment from company representatives ahead of dispatch time. <\/span><\/p>\n

The details:<\/span> The<\/span> company is set to receive EUR 1.3 bn of relatively \u201ccheaper liquidity\u201d as the agreement is funded for 8 mn of Agility\u2019s shares in DSV, <\/span>which amounts to a 4% stake.<\/span> This in turn is expected to strengthen Agility\u2019s balance sheet, the statement said. The collar agreement will be accounted as a fair value hedge, and be reflected in Agility\u2019s financial statements at fair value through comprehensive income.<\/span><\/p>\n

Background:<\/span> Agility is DSV\u2019s second largest shareholder, with an <\/span>8.8% stake in the company<\/a><\/span>. The logistics giant purchased the stake when it sold its subsidiary, Global Integrated Logistics (GIL), to DSV in an all-share agreement in <\/span>2021<\/a><\/span>. Agility <\/span>moved to hedge its investment<\/a><\/span> in DSV in April via another funded equity collar agreement that saw the company rake in EUR 1 bn of relatively cheap liquidity. <\/span><\/p>\n

What\u2019s a collar agreement, you ask? <\/span>It\u2019s a form of <\/span>derivative where the investor sells a call option on a long stock position and buys a protective put option at the same time. It protects against downside risk in share price by creating a range of values (the \u201ccollar\u201d) within which the asset can trade during a specific time period.<\/span><\/p>\n

The rationale:<\/span> \u201cGiven continued market uncertainty and the significance of the DSV stake on Agility\u2019s overall value, Agility has undertaken this hedging transaction, out of prudence, to protect the value of the investment and shareholders\u2019 value,\u201d the company said in the statement. The derivative does not \u201cimply that the company is selling its DSV shares,\u201d it said, adding that it will enable Agility to \u201cbenefit, to some extent, from the increase in the DSV share price, while at the same time limiting the impact of a possible decline in DSV stock price in the future within the agreed limits.\u201d<\/span><\/p>\n

The company had a good 1Q 2023:<\/span> Agility saw its bottom line rise 20% y-o-y to KD 15.3 mn in 1Q 2023, according to its <\/span>most recent earnings<\/a><\/span>. The Kuwaiti warehousing and industrial developer\u2019s revenues soared 142.7% y-o-y to KD 320.5 mn during the quarter.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The company drew down EUR 1 bn earlier this year from a similar hedging agreement<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"open","sticky":false,"template":"single-feature.php","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[877],"tags":[605,17,594],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-72448","post","type-post","status-publish","format-standard","hentry","category-finance","tag-capital-markets","tag-enterprise-logistics","tag-finance","wpautop","entry"],"acf":{"mongo_id":"96fcaa88-a231-46d8-89f4-323820f2975f","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2023\/7\/1301.jpg,https:\/\/www.agility.com\/en\/media-center\/","photo_position":"above","homepage_title":"","full_issue_title":"Agility hedges DSV investment with EUR 1.3 bn equity collar in the second transaction of the type this year","related_issue":[72443],"teaser":"The company drew down EUR 1 bn earlier this year from a similar hedging agreement","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2023\/8\/.0aeab980-8ddf-4066-a67f-8aaf27edeba6.mp3"},"yoast_head":"\nAgility hedges DSV investment with EUR 1.3 bn equity collar in the second transaction of the type this year - 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