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China Cosco offer raises HK$9.52 billion

China Cosco Holdings Co (中國遠洋控股), the nation's biggest container shipper, raised HK$9.52 billion (US$1.22 billion) in a Hong Kong initial public offering, after pricing the stock at the low end of its sale range, bankers involved said.

China Cosco sold 2.24 billion shares at HK$4.25 each, the bankers said, asking not to be identified. The Beijing-based company offered the shares to investors at between HK$4.25 and HK$5.75 each, said the bankers. The company plans to start trading its shares in Hong Kong on June 30.

China Cosco, which more than doubled its profit last year, raised less than the maximum it sought because of concerns shipping rates will fall next year on excess capacity, said investors such as Tim Leung at IG Investment Management (Hong Kong) Ltd. The company is betting more trade to and from China will spur demand for sea freight and boost container traffic."We're not interested in China's shipping industry because the growth cycle is almost stretched to the limit and a profit slowdown is expected" said Leung, who helps manage US$370 million of Asian stocks and didn't buy the shares. "Overall, the sector isn't attractive."

Freight rates, which soared during a four-year boom in Chinese exports to the US and Europe, may decline next year as fleets expand, London-based Drewry Shipping Consultants Ltd forecasts. Capacity may grow 16 percent next year, almost twice as fast as demand, Drewry said.
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