Sinotrans Group plans USD 1.3 bln bulk shipping IPO
Chinese logistics giant Sinotrans (Group) Co’s resources shipping unit plans to raise more than USD 1.3 billion in a November IPO in Hong Kong, taking advantage of a global shipping boom, sources said on Thursday.
The parent of Hong Kong-listed Sinotrans Ltd partners with global players such as Deutsche Post’s, DHL and Korean Air, is applying to the Hong Kong exchange for its estimated HK USD 10 billion-plus (USD 1.3 billion) initial public offering, five sources close to the deal told Reuters.
The application was moving “very quickly”, a source familiar with the situation said. If it goes through, the state-run firm planned to use the proceeds to expand its fleet.
The Sinotrans group operates 35 bulk cargo vessels and several oil tankers with a total capacity of more than 2 million deadweight tones, sources said.
China’s unabated demand for energy and raw materials to fuel galloping economic growth has fuelled strong demand for bulk cargo ships and sent the Baltic Exchange’s dry freight Index to record levels.
Strong demand and capacity constraints in the world’s major shipyards have elevated vessel prices, especially for bulk cargo vessels. Capesize prices rose 29 percent from the end of last year to end-July and Panamax prices gained 15 percent in the same period, according to Clarkson Research Services Ltd. Although a potential slowdown in U.S. economic growth may affect world demand for manufactured goods, those were mostly carried by container ships, analysts said.
Since Sinotrans’ ships are mostly registered in Hong Kong, the company would be listed in the territory as a red chip — a Beijing-backed or funded company incorporated outside of mainland China, a banking source said.
UBS and BOC International are co-sponsors of the deal.
Shipping is a cyclical business so it would be more appropriate for a separate listing, and Sinotrans Ltd would continue to be the group’s listed logistics flagship, the sources said.
Sinotrans Ltd has said its parent would soon wrap up a plan to inject infrastructure assets, including terminals and storage facilities, into the listed arm.
(USD 1=HKUSD 7.784)
