China Shipping to raise $2.4 billion in Shanghai IPO

Asia''s second-largest cargo-box carrier China Shipping Container Lines Co may raise as much as $2.4 billion selling shares in Shanghai to buy ships to carry the country''s surging exports.
In a Hong Kong stock exchange statement released on Monday 19 November, the shipping line said it plans to sell as many as 2.34 billion shares. It did not give a price range. The potential value of the sale has been calculated on yesterday''s HK$7.86 closing price for the company''s Hong Kong-listed stock.

China Shipping shares have surged almost six-fold this year in Hong Kong, as the country''s growing exports of toys, clothes and televisions have allowed it to raise freight charges on some routes by as much as one-fifth. Higher rates and China''s booming stock market spurred larger rival China Cosco Holdings Co to sell 15 billion yuan ($2 billion) of Shanghai-listed shares in June.

Analysts expect that mainland China investors will support the share sale and give a premium to the stock, as China still has limited investment channels. Chinese companies have raised at least 394.8 billion yuan in domestic share sales this year, more than the combined amount in the previous five years.

China''s benchmark CSI 300 Index has more than doubled this year. However, it has fallen 15 per cent from its 16 October peak amid investor fears that China will further raise interest rates.

China Shipping''s share sale will fund the purchase of new ships and related assets, as well as the repayment of loans, the company said in a 9 August Hong Kong stock exchange filing.

The company announced a $1.36 billion order to buy eight ships from Samsung Heavy Industries Co on 8 August. It issued 1.8 billion yuan of bonds in June to buy 12 vessels, as it seeks to expand its fleet to 162 ships by 2009. China Shipping said it plans to issue 5.5 bonus shares for every 10 held to holders of its Hong Kong-listed stock if the Shanghai share sale