[photopress:cosco.jpg,full,alignright]China Cosco Holdings runs Asia’s largest container line. It intends to get bigger. It is setting up one of the biggest share sale in China this year which may raise as much as RMB15.1 billion ($1.98) and it will be used to buy new ships.
The company is based in Tianjin and will sell 1.78 billion shares in Shanghai at RMB7.60 to 8.48 each. The sale will probably be the fourth biggest of those approved in China so far this year.
The money will be used for a dozen new ships and to buy a 51% stake in Cosco Logistics from its state-owned parent Cosco Group and another RMB401 million for projects being developed by the logistics unit.
Edward Wong, an analyst with Quam Ltd. in Hong Kong, said, ‘The outlook for container shipping has improved and freight rates are recovering. It’s also the right time to raise funds as investors are still willing to pay a higher valuation for Chinese stocks.”
It will be sailing into competitive waters. The global container fleet’s capacity may increase about 14% over the next two years, while demand may expand 12%. This according to Credit Suisse Group.
Cosco runs 139 vessels with a combined capacity of 399,237 twenty-foot equivalent units. AP Moeller-Maersk A/S, owner of the world’s largest container line, had a total capacity of 11.3 million units so Cosco still has a way to go.
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