Crossing the East China Sea and South China Sea, Ningbo Oceanic introduces strategic investors from Beibu Gulf Port, seeking to raise nearly 1.1 billion yuan to buy ships and containers.

On the evening of April 2, Ningbo Ocean Shipping (SH601022) disclosed a private placement plan to raise total proceeds of no more than approximately RMB 1.1B, drawing market attention.

According to the prospectus, the company plans to issue A-share stocks to its controlling shareholder Ningbo Zhoushan Port Co., Ltd. (hereinafter referred to as “Ningbo Zhoushan Port”) and to a strategic investor, Beibu Gulf Port Co., Ltd. (hereinafter referred to as “Beibu Gulf Port”), in a targeted manner. Ningbo Zhoushan Port and Beibu Gulf Port will each “share the cost” in cash, with each contributing approximately RMB 547 million to participate in the subscription.

All of the funds raised will be used to expand the main business. Specifically, the company will purchase four 2700TEU (standard-container) container ships and the supporting containers. This move will not only significantly increase the company’s transport capacity and optimize the fleet structure, but will also create a synergy with the introduction of the strategic investor.

Total proceeds to be raised of no more than approximately RMB****1.1B

According to the announcement released by Ningbo Ocean Shipping on April 2, the company plans to issue A-share stocks in a targeted manner to two specific parties—the controlling shareholder Ningbo Zhoushan Port and the newly introduced strategic investor Beibu Gulf Port—at a total issuance size of approximately 145 million shares, accounting for 11.11% of Ningbo Ocean Shipping’s total share capital prior to the issuance.

The pricing benchmark date for this issuance is the announcement date of the resolution of the company’s second session of the board of directors’ twentieth meeting. The issuance price is set at RMB 7.53 per share. This pricing is based on 80% of the average trading price of the company’s A shares over the 20 trading days prior to the pricing benchmark date, and is not lower than the audited net asset value per share from the most recent period.

The subscription arrangement shows that Ningbo Zhoushan Port and Beibu Gulf Port will each invest approximately RMB 547 million in cash and subscribe for approximately 72.7019 million shares each. After the transaction is completed, Ningbo Zhoushan Port will remain the company’s controlling shareholder. Beibu Gulf Port will become a shareholder holding more than 5% of the shares in the listed company (including this figure) and will be deemed to be an associate party of the company. The shares subscribed by both parties will be subject to a 36-month lock-up period.

The prospectus clearly states that after deducting issuance expenses, the funds raised in this offering will be allocated to two projects: the container ship procurement project and the container procurement project. Of this, approximately RMB 892 million will be used to procure four 2700TEU container ships, and approximately RMB 203 million will be used to procure supporting containers. The company stated that this is intended to expand transport capacity, cultivate new profit growth drivers, and so on.

Working together to deepen cooperation with Beibu Gulf Port

This private placement is not only a transaction at the capital level; more importantly, it brings in Beibu Gulf Port as a strategic investor. Based on their respective strengths, both sides will jointly formulate the company’s future development strategy and share market development opportunities in the shipping industry.

As the core seaward outlet of the Western Land–Sea New Corridor, Beibu Gulf Port connects China’s southwest region with the “ASEAN” market, offering notable advantages in geography and policy.

Ningbo Ocean Shipping, on the other hand, has advantages in shipping resources such as route planning and transport capacity.

The goals of cooperation include helping Ningbo Ocean Shipping realize its strategic vision of “a comprehensive shipping service provider that is leading in Asia and links to the globe,” assisting Beibu Gulf Port in building an international gateway port and an international hub seaport.

The cooperation encompasses two areas: port services and integrated logistics. Specifically, it includes:

In terms of deepening port service cooperation, Ningbo Ocean Shipping will, in line with Beibu Gulf Port’s development needs, while maintaining stable operations of existing routes, leverage the regional complementary advantages between Beibu Gulf Port and the Yangtze River Delta to help expand Beibu Gulf Port’s business scale and improve port cargo throughput, supporting its construction as an international gateway port and international hub seaport for the Beibu Gulf region. Beibu Gulf Port will, in coordination with Ningbo Ocean Shipping, improve operational efficiency by reducing vessel layover time, jointly build premium domestic-trade routes, promote the healthy, stable, sustainable development of the routes, help Ningbo Ocean Shipping expand its transport volume and leverage scale advantages, and become “a comprehensive shipping service provider that is leading in Asia and links to the globe.”

In terms of integrated logistics business cooperation, both sides will actively advance business cooperation. Under market-oriented principles, they will provide customers with more comprehensive port logistics services to enhance competitiveness. At the same time, both sides will jointly strengthen customer marketing and negotiate the development of “premium routes,” increasing the density of existing routes and enhancing the appeal of cargo sources.

In addition, at the level of corporate governance, after the completion of this issuance, Beibu Gulf Port will have the right to nominate 1 non-independent director to Ningbo Ocean Shipping. This means that Beibu Gulf Port will participate more deeply in Ningbo Ocean Shipping’s operational and management decision-making.

Daily Economic News