Bidders are circling one of Britain’s biggest and most strategically important ports ahead of Canadian owner Brookfield Asset Management putting it up for sale for £1.2 billion.

Investment banks are understood to have begun sounding out potential suitors for PD Ports, the Teesside-based business that also has operations in Felixstowe, Hull, and Immingham in Lincolnshire.

The South Tees Development Corporation (STDC), chaired by Lord (Ben) Houchen, a close ally of former prime minister Boris Johnson and the local Tory mayor who was once dubbed “the most popular politician in Britain”, is preparing to pull together a bid for PD Ports alongside joint venture partners.

But there are fears within Houchen’s camp that they will be excluded from the process, according to industry sources.

There has been bad blood between Houchen and Brookfield since an auction of PD Ports was called off in 2021 as the two sides became embroiled in a legal row over access rights. A High Court judge ended up ruling in PD’s favour. STDC was among the bidders for PD, and it was alleged that the corporation had used the legal proceedings to “to extract a ransom discount” to buy the business cheaply. The claims were denied by STDC.

Among those to have shown an early interest, according to City sources, are Peel Ports, the industrial conglomerate owned by billionaire John Whittaker alongside overseas pension and infrastructure funds, and Australian investment giant Macquarie.

Associated British Ports and DP World, the Dubai owner of the London Gateway port and P&O Ferries, are also among those understood to have been contacted over their appetite for PD Ports.

Advisers from Royal Bank of Canada and CIBC have been lined up to run a putative sale. A source close to Brookfield insisted that advisers had yet to be appointed to formally solicit bids.

PD Ports employs 1,400 people across 11 UK locations. Marketing material for the aborted sale disclosed that the company has 2,400 acres of freehold property and was generating £75 million of annual earnings before interest, tax, depreciation and amortisation. Sources close to PD Ports said this had since risen to £100 million.

The company began with the creation of the Tees Navigation Company in 1808 and it grew in importance as Middlesbrough and the surrounding area became England’s biggest iron producer, accounting for one-third of the nation’s output. The Teesside dock opened in 1963 and handled not only steel, but fertiliser produced by the nearby ICI works.

Brookfield, now chaired by former Bank of England governor Mark Carney, acquired PD Ports for £1 in 2009 and agreed to take on a mountain of debts that had overwhelmed the finances of the company.

PD is well placed to play an important role in the industrial revitalisation of the northeast through Teesside’s tax-efficient freeport status. It could also benefit from being next to Teesworks, a controversial joint venture between Houchen’s STDC and two local businessmen to redevelop a 4,500-acre brownfield site that was home to the SSI steelworks until its collapse in 2015.

Last week it emerged that lead developers Chris Musgrave and Martin Corney, who own 90 per cent of Teesworks, have agreed to renegotiate the size of their stake to provide taxpayers with better value.

Houchen had faced accusations of cronyism after handing the two men a majority stake in the regeneration project. A subsequent government inquiry found no evidence of corruption but raised “issues of governance and transparency that need to be addressed”.

All parties declined to comment.