Tycoons commit US$25m each to Sinotrans IPO
Sinotrans Shipping, one of the country's largest shipping companies in terms of self-owned dry bulk fleet size, had brought in Li Ka-shing and Lee Shau-kee as cornerstone investors for its planned US$1.47 billion initial public offering this month, market sources said.
The tycoons have each committed US$25 million, the same contribution as five other cornerstone investors: China Merchants Group, China Shipping Group, China Cosco Group, Ping An Insurance and investment firm Citadel.
Sinotrans Shipping, a unit of state-owned Sinotrans Group, plans to sell 1.4 billion new shares, representing 35 per cent of its enlarged share capital.
A greenshoe, which allows underwriters to sell additional shares if there is demand, could add 210 million shares to the offering, increasing it by almost 15 per cent.
Sinotrans Shipping, which will kick off a global roadshow today, had set the price range at between HK$7.18 and HK$8.18 a share, representing 12.4 times to 14.1 times forecast earnings for next year, sources said.
BOC International and UBS are arranging the share sale.
The company, which engages mainly in dry bulk and container vessel time chartering, originally planned to raise US$1 billion from the share offering but raised the target by 30 per cent due to the strong market sentiment and the recent rally in shipping stocks.
Of the proceeds, 55 per cent will be used to enlarge the fleet size and 25 per cent will be set aside to acquire shipping companies.
The remaining 20 per cent will be used to repay bank loans and for general working capital.
A leading dry bulk ship-owning company in the mainland, Sinotrans Shipping operates 34 vessels, including 26 dry bulk carriers and three oil tankers, with a combined capacity of 2.16 million deadweight tonnes, according to a report by BOC International.
The company had already placed orders for another 13 new vessels, including eight dry bulk vessels and one oil tanker with a combined capacity of 1.13 million dwt, as well as four container ships with an aggregate capacity of 3,388 teu (20-foot equivalent unit), the BOCI report said.
The fleet owned by Sinotrans Shipping is relatively young and more efficient with its ships averaging 8.6 years old, much lower than the world peers' average of 15.2 years.
Dry bulk shipping and the oil tanker division accounted for 92.9 per cent of the company's turnover last year. The remainder was from the container ship business.
The retail tranche of the offering will open next Monday and close on November 15. The final pricing will be determined on November 17 and trading in the shares is scheduled to begin on November 23.
