Hong Kong-listed COSCO Shipping has agreed to acquire an additional 16.82 percent stake in the operator of Qingdao Port for 5.8 billion yuan ($846 million; €787 million).
Part of the transaction will be settled by the transfer of COSCO’s 20 percent equity interest in Qingdao Qianwan Container Terminal, a joint venture company with Qingdao Port International and PTS Holdings which is valued at 3.2 billion yuan. The balance, worth 2.6 billion yuan, will be settled in cash.
When the transaction is complete, COSCO will own a 18.41 percent stake in Qingdao Port. The facility is one of the world’s largest comprehensive ports, ranked fourth in terms of container throughput among all Chinese ports in 2015, according to government statistics.
The two companies have also agreed to deepen cooperation in developing the Qingdao Port as an international shipping hub in Northeast Asia and co-invest in overseas terminal projects in the future. Potential investments include the Khalifa Port Container Terminal II project in Abu Dhabi, according to COSCO.
The pair will set up terminal project companies to allow for the joint management and operation of COSCO’s terminals in China and overseas in which Qingdao is also invested.
COSCO said the transaction allows it to optimise its investment portfolio and enhance the overall profitability of its terminal business. COSCO’s increased shareholding in the port will enable it to participate in the management of the entire facility. As for the port, the issuance of domestic shares and new H-shares gives it the chance to raise the dry powder needed to fund its international expansion.
COSCO was born out of the merger of China COSCO Holdings and China Shipping in December 2015, as part of reforms aimed at boosting the competitiveness of China’s state-owned enterprise in overseas markets.