China Cosco Holdings expects to raise at least US$350 million from strategic investors for its upcoming initial public offering, market sources say. Singapore government investment holding company Temasek, the private investment vehicle of Henderson Land Development chairman Lee Shau-kee and Cheung Kong (Holdings) and Hutchison Whampoa had committed to investing, the sources said. Formal agreements have yet to be signed, but the verbal commitments from the three investor groups are regarded as very firm. The US$350 million might end up being 'on the conservative side' but it was unlikely that the number of strategic investors would increase, one source said. Based on an expected share offering of between US$1.5 billion and US$2 billion, about 17.5 to 23 per cent of the offer could be secured before the roadshow starts on Monday. The company's integrated approach allows it to offer a business with relatively stable cash flow in the form of its 52.34 per cent-owned container terminal unit Cosco Pacific, while the container shipping side provides growth opportunities on the back of China's rapid economic expansion. However, fund managers said valuation would be the key to whether they invested and, so far, joint global co-ordinators HSBC and UBS have been tight-lipped on that issue. Because Cosco Pacific is already listed in Hong Kong and trades at a forward price-earnings ratio of 13.5 times, the company will also need to tread carefully in its attempt to offer attractive valuations. 'They face a dilemma because if they price too low, Cosco Pacific will suffer,' said Yang Liu, managing director at Atlantis Asset Management.