COSCO announces IPO in Hong Kong

COSCO announces IPO in Hong Kong    Confirming months of speculation, China’s COSCO Holdings has started marketing its initial public offering in Hong Kong under which the government-controlled company will sell 36.6 percent of its share capital, Reuters reported.
   COSCO Holdings is a new entity comprising COSCO Container Lines and part of COSCO Pacific, the port and leasing arm of the COSCO group. COSCO Holdings and its bankers — HSBC, J.P. Morgan and UBS — intend to start a promotional “roadshow” of the IPO on June 13, with details of the stock price scheduled to be announced on about June 25 and the start of trading of the new stock planned for July 4, according to the Reuters report.
   The Hong Kong stock exchange said it does not comment on planned IPOs until the company concerned has published a formal prospectus.
   The IPO is reportedly aimed to raise “up to $1.7 billion” to help COSCO finance $1.8 billion of capital expenditures this year and next. Of the $1.8 billion capital spending, 30 percent would be used to buy vessels, over 40 percent allocated to buy containers, and 22 percent to invest in terminals.
   “China COSCO Holdings Co. Ltd., which is growing quickly thanks to China’s trade-driven economic boom, plans to spend $1.8 billion on an expansion that will see the capacity of its container ship fleet more-than-double to over 800,000 TEU by 2010 from 303,197 TEU as of March 2005,” Reuters said.
   COSCO’s IPO will be watched closely by industry analysts, carrier competitors and major terminal operators. The company’s prospectus will disclose for the first time the financial results and balance sheet of COSCO.
   The IPO will join several others planned in Hong Kong by companies from other business sectors. Its success may be threatened by the perception that the container shipping market may already have peaked after a three-year-long boom.
   Reuters said the IPO may attract strategic investments from Hong Kong billionaire Li Ka-shing, who controls Hutchison Whampoa and Hutchison Port Holdings, and from Singapore’s Temasek Holdings, which owns PSA and Neptune Orient Lines.