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Port operator China Merchants Holdings (International) has become the biggest shareholder of the Colombo South Container Terminal in Sri Lanka after signing an agreement to take a 55 per cent stake yesterday,
At an expected investment of more than US$500 million, the deal would be the single largest foreign investment by a private company in Sri Lanka, China Merchants said.
China Merchants chairman Fu Yuning  and the president of Sri Lanka, Mahinda Rajapaksa, were at the signing ceremony in Shenzhen yesterday, on the eve of the opening of the 26th  World University Games.  
Colombo International Container Terminal is the joint-venture company that will operate the terminal. Sri Lankan-listed Aitken Spence will hold 30 per cent of the joint venture and the Sri Lanka Ports Authority 15 per cent. 
The company has been granted the rights to manage and operate the terminal for 35 years. 
China Merchants, which owns stakes in ports moving about a third of the mainland's containers, made the investment to target rising trade in India and other South Asian nations, Fu said. 
The company has begun to expand overseas as rising competition pares margins at domestic harbours, according to Bloomberg.
'Sri Lanka's economy is currently at an important turning point and it is our country's strategy to enhance our ports-related economy,' Rajapaksa said.
When finished in 2013, Colombo South's 1,200-metre quay will allow it to handle the world's largest container vessels. It has a designed capacity of 2.4 million 20-foot equivalent units per year. 
Colombo South is an extension of the Port of Colombo, currently the only container port in the country. It has a designed capacity of 4.5 million teu a year. It moved 3.46 million containers in 2009, followed by four million teu last year, representing growth of 15.6 per cent year on year.
 China Merchants and Aitken Spence signed a memorandum of understanding in September last year to jointly develop the Port of Colombo.  
 China Merchants  manages and invests in terminals in Hong Kong, Shenzhen, Ningbo, Shanghai, Qingdao, Tianjin, Xiamen and Zhanjiang. The company handled 52.28 million teu last year, ranking it No 1 on the mainland and the fourth-largest container operator in the world. 
 The mainland port operator began investing overseas in 2008 when it entered into a preliminary agreement to take a 65 per cent share in a joint  investment in a marine logistics base and a general cargo port in Vietnam's Vung Tau province. 
Last year, it acquired a 47.5 per cent stake for US$154 million in cash in a joint venture with the China-Africa Development Fund  to run the Tin Can Island Container Terminal in Lagos, Nigeria. 
 China Merchants reported an 81.5  per cent jump in net profit to HK$5.88 billion last year. Revenue from port operations rose 17.6 per cent to HK$13.22 billion. 
The port operator's shares closed 2.77 per cent higher at HK$24.15 yesterday.



Colombo deal for port operator