Port of Shanghai opens capital to China Merchants
Shanghai International Port (Group) Co. Ltd., the operator of the fast-growing port of Shanghai, will sell RMB5.6 billion ($677 million) worth of new shares to the Chinese state-owned shipping and port operator China Merchants Holding in a bid to raise capital. As part of a radical transformation, the Shanghai port operator will also be converted into a joint stock limited company.
Shanghai International Port (Group), which is planning to develop a giant container complex at Yangshan, is currently wholly owned by the municipal government of Shanghai. China Merchants is a business conglomerate controlled by the state of China but listed on the Hong Kong stock exchange.
China Merchants said that Shanghai International Port (Group) will increase its registered capital to RMB18.6 billion ($2.2 billion) from RMB5 billion ($604 million). By acquiring 5.6 billion shares in the port at a total cost of RMB5.6 billion ($677 million) in cash, China Merchants will secure a 30-percent stake in the port of Shanghai.
The other shareholders of Shanghai International Port (Group) will be the municipal government of Shanghai and subsidiaries, which will own 70 percent of the port company between them. The municipal government will appoints the chairman of Shanghai International Port (Group) and three other directors, while China Merchants will name the company’s vice chairman and another director.
The proposed capital infusion and related transactions are subject to approvals by China’s Ministry of Commerce and by China Merchants’ shareholders, among others.
China Merchants’ stock rose 4 percent to HK$14.60 ($1.88) Thursday on the Hong Kong stock exchange.
The group’s port business already includes Modern Terminal Ltd. in Hong Kong and Shekou Container Terminals Ltd., China Merchants Port Services (Shenzhen) Co., Ltd., Shenzhen Chiwan Wharf Holdings Ltd. and Chiwan Container Terminal Co., Ltd. on the mainland.
Shanghai International Port (Group)’s activities include container and general cargo handling, waterway transport of containers, manufacturing and leasing of containers, harbor towage, shipping agency services, cargo forwarding agency service, fuel and domestic supplies to ships, manufacturing and repairing of ships, property service, travel and hotel services.
The port of Shanghai, China’s largest, is widely expected to overtake Singapore and Hong Kong to become the world’s largest container port in the future.