Sinotrans Shipping Ltd, poised to sell shares in Hong Kong, aims to almost quadruple its dry-bulk shipping fleet in the next five years because of China's rising commodities imports.
The shipping line plans to raise its dry-bulk capacity to as much as five million deadweight tons from the present 1.3 million deadweight tons by buying new vessels, it said in a statement issued yesterday at a media briefing about its 11.45-billion HK dollars (US$1.5 billion) initial public offering.
Sinotrans Shipping plans to expand its fleet as China's imports of coal and iron ore have helped cause dry-bulk shipping rates to surge. The Baltic Dry Index, a measure of chartering rates for different sized vessels, has surged about 160 percent in the past 12 months, Bloomberg News said.
The Hong Kong-based firm said it also plans to boost its oil tanker fleet to as much as 1.8 million deadweight tons from 832,000 deadweight tons over five years.
Response from investors to the IPO "has been very encouraging," said Daniel Ng, head of corporate finance at BOC International Holdings Ltd, one of the two banks managing the sale. "People are just trying to gauge where dry-bulk is heading."
Hong Kong tycoons Li Ka-shing and Lee Shau-kee are among investors to have signed up for the sale, which is co-managed by UBS AG. The shipping company is selling 1.4 billion new shares at 7.18 to 8.18 HK dollars each.
Sinotrans Shipping had a fleet of 34 ships, comprising 26 dry-bulk vessels, three oil tankers and five container vessels as of June 30, according to the statement.
The company, a unit of China National Foreign Trade Transportation (Group) Corp, is expected to price its shares on Saturday, with trading due to begin on November 23.
(Shanghai Daily November 12, 2007)