Chinese consortium to invest in Turkey’s No 3 container terminal

China's two largest port operators, Cosco Pacific and China Merchants Holdings (International), have teamed up with CIC Capital Corp to acquire a 65 per cent stake in Turkey's Kumport container terminal for US$940 million, as the "one belt, one road" initiative encourages Chinese companies to strengthen ocean links for future growth.

Cosco and China Merchants will each have 40 per cent stakes in the joint venture, with CIC Capital, an investment arm of China's sovereign wealth fund, holding the remaining 20 per cent. The venture will be called Euro-Asia Oceangate.

Kumport is the third-largest container terminal in Turkey and can handle vessels of up to 18,000 20-feet equivalent units (teu). It has six berths and capacity of 1.84 million teu, which can be expanded to 3.5 million teu.

The consortium has its eyes on the port's strategic position.

"Turkey is situated along both the 'Silk road economic belt' and the '21st century maritime silk road', and with the Chinese government's pursuit of the 'one belt, one road' initiative, strong growth in demand for container ports and logistics services is expected in the future," China Merchants chairman Li Jianhong said.

Daniel Meng, an investment analyst at CLSA, said there "was no doubt the central government will support this kind of strategic acquisition".

Analysts say Kumport was a good investment even without the "one belt, one road" strategy.

"The port is in a good location. It is the only one of three serving the large Istanbul market to be on the European side of Bosphorus Strait, a gateway to the Black Sea," said Andy Lane, a partner at Container Transport International Consultancy.

Meng said the economic growth of Turkey was promising, and added that "there will be increasing demand for transshipment in the Black Sea area".

Li said last month overseas projects would be given more weight in China Merchants.

Cosco, which operates two piers in Greece, is looking to potential business synergy between Kumport and those piers.

Some analysts said the price was not cheap. "Some projects under way in Turkey only cost US$400 million to build 1.5 million teu of capacity," Lane said.