Investment 'could strengthen' group's long-term presence in global market
China Ocean Shipping (Group) Co, the country's largest State-owned shipping conglomerate, is considering acquiring a 60 percent stake in Greece's largest port, which is at Piraeus, according to media reports on Monday.
The amount of the deal could reach 1 billion euros ($1.33 billion), according to a Reuters report, which said that COSCO plans to present the investment proposal after Athens decides what procedures it will follow on the privatization of its two largest ports in Piraeus and Thessaloniki.
A China Ocean Shipping (Group) Co container ship at a port in Nantong, Jiangsu province. [Photo / China Daily]
Greek Finance Minister Yannis Stournaras, during a speech on television on Monday, said the Chinese group had "shown an interest" in increasing its investment in Piraeus. He did not disclose further details, Reuters said.
COSCO declined to comment on the matter.
The company has already made a substantial investment in the Piraeus port. It spent 4.3 billion euros on a 35-year management lease for the No 2 and No 3 piers, which it has been operating since June 2010.
COSCO also announced investment plans to improve port facilities, build a new pier and almost triple the volume of cargo the port can handle.
The company pays 100 million euros a year to the Greek government to maintain its presence at the port.
The Greek port has generated moderate profits for the group compared with its financial losses over the last two years, COSCO's financial statements showed.
In 2011, the group posted a loss of 10.5 billion yuan ($1.69 billion), and analysts said it is heading toward another annual loss in 2012.
During the first three quarters of 2012, China COSCO Holdings Co Ltd, the group's Shanghai-listed unit, suffered a loss of 6.4 billion yuan, the largest loss among the more-than-2,000 listed companies.
Two consecutive years of losses will put the company on the special-treatment list of the Shanghai Stock Exchange, which would limit the daily trading movement of its stock to 5 percent, compared with the standard 10 percent. Three years of losses could result in its being removed from the exchange.
Industry analysts said now may be a good time to invest in the port, as its asset value has been hurt by gloomy market prospects in the industry.
Meanwhile, although the revenue from COSCO's port business cannot offset its loss from the bulk cargo and container-shipping business, investment in the port could strengthen the group's presence in the global market in the long run.
"As global trade is increasingly relying on China's growing imports, it is very important for shipping companies such as COSCO to strengthen their global presence," said Han Yichao, an analyst with Changjiang Securities Co.
In 2011, the Piraeus port handled more than 20 million passengers and 1.7 million containers, the port said.