China Cosco Shipping acquires majority stake in Greek port

A container ship of Cosco is docked on a quay at the Port of Qingdao in Qingdao city, East China's Shandong province, August 8, 2016.[Photo/IC]

ATHENS - Marking a milestone agreement for Sino-Greek collaboration, China Cosco Shipping on Wednesday acquired a majority stake in Piraeus Port Authority (PPA) through the Athens Stock Exchange, it was reported Wednesday.

The Chinese company signed a memorandum of understanding at the Hellenic Republic Asset Development Fund (HRADF), formally completing the transfer of a 51 percent equity holding in PPA and the custody of an additional 16 percent stake.

Cosco Shipping Hong Kong, wholly owned by Cosco Shipping, thus officially became the controlling shareholder of the port, and took over its management and operation.

President of Cosco Shipping Wan Min visited the Athens Stock Exchange, accompanied by HRADF chairman Stergios Pitsiorlas, and rang the bell at the opening session, marking the debut of a new era at Greece's largest port.

Gao Wenqi, Charge d'Affaires of the Chinese Embassy in Greece, Charalampos Gotsis, chairman of the Hellenic Capital Market Commission and other Greek and Chinese officials attended the ceremony.

"I was delighted and honored to represent Cosco Shipping and ring the opening bell at the Athens Stock Exchange," Wan said addressing the ceremony.

The Piraeus project represents a key milestone in the Belt and Road Initiative, and the port's growth and prosperity will boost economic development both in China and Greece, ushering in a new era of trade cooperation and cultural exchange between east and west, he said.

Wan stated Cosco Shipping will embark on a new series of operational investments that will streamline the port's performance as well as improve its international position, and help PPA reach its full potential to become one of the leading ports in Europe. "Cosco Shipping will not only operate a state-of-the-art port that will boost trading links between Asia and Europe, but will also help create jobs and invigorate the Greek economy," he added.

HRADF's chairman Pitsiorlas said the deal was "an important moment."

"The cooperation at Piraeus port is not just an economic collaboration but has strategic characteristics. Greece, via the Piraeus port, can indeed become China's gateway into Europe to the benefit of China and Greece," he told Xinhua.

Athens Exchange Group chairman Iakovos Georganas said the day may prove a historic one for the Athens Stock Exchange. "It is more important to underline that the Greek economy is approaching the recovery stage. Next year, the Greek economy will achieve growth after seven years of recession. This important transaction is a potential beginning for the recovery," he said.

The majority of PPA shares were sold to Cosco Shipping. A total of 12,750,000 shares were sold for 22 euros per share, totaling 280.5 million euros ($313.52 million).

Wednesday's deal is the first overseas acquisition transaction signed by Cosco Shipping following its establishment, a landmark initiative for the group to expand its global network, the firm said.

According to the concession contract, Cosco will acquire the 67 percent stake in PPA for 368.5 million euros in two stages.

Cosco Shipping will also invest 293.8 million euros in a series of mandatory projects in the next five to seven years, including the expansion of the cruise port, the upgrading of the ship-building zone, and the construction of a multi-storied garage in the Ro-Ro vessel port.

In the future, the group plans to step up its investment to develop the Piraeus Port into one of the largest container transit ports in Europe, one of the biggest home ports for cruise operators in the world and the logistics distribution center in the Mediterranean.

Cosco Shipping will improve supporting facilities, so as to boost the ship repairing capacity and seek opportunities for repairing offshore equipment. The group will also reform the Ro-Ro vessel port, which will make the port the largest auto terminal in the Mediterranean.

Furthermore, it plans to accelerate the construction of the China-Europe Land-Sea Express Line to boost economic growth in eastern and southern Europe.

According to HRADF, the total value of the agreement amounts to 1.5 billion euros and includes among others the offer, the mandatory investments over the next decade and the expected revenues from the concession agreement for Greece, amounting to 410 million euros.

The total amount takes also into account the expected dividends and interest receivable by HRADF as well as the estimated investments (apart from the mandatory) until the expiration of the concession in 2052.

Cosco Shipping was declared in February preferred investor for the sale of the controlling stake in Piraeus port after winning an international tender.

On June 30, the deal was ratified by the Greek parliament shortly before Greek Prime Minister Alexis Tsipras' visit to China.

Greek and Chinese officials and entrepreneurs as well as independent analysts have welcomed the acquisition as a win-win cooperation step.

The privatization of PPA is expected to help debt-laden Greece boost growth and exit the debt crisis through the transformation of Piraeus into a leading transit hub for products and services from Asia to Europe.

PPA's privatization will help create 125,000 jobs, according to a survey of the Foundation for Economic and Industrial Research, one of Greece's leading think tanks.

The ground to reach the landmark agreement was paved by the remarkable results of Cosco Shipping's presence at Piraeus in recent years.

Since 2010, Cosco Shipping's subsidiary Piraeus Container Terminal has been operating Piers II and III at Piraeus port under a 35-year concession agreement. The international financial crisis and the Greek debt crisis seem to have cast no shadow over the Mediterranean port.

Its cargoes loaded and unloaded totaled 3.36 million TEUs (20-foot equivalent units) in 2015 compared to 880,000 TEUs in 2010. The port is now ranked 39th globally up from 93rd in 2010 in terms of container capacity.