After Piraeus port, China’s COSCO now bids for Greek rail network

A sign COSCO is seen behind tree branches atop of the company's headquarters in Beijing November 8, 2013. REUTERS/Barry Huang

China’s COSCO is expected to make an offer for Greece’s rail network after becoming the sole bidder for the country’s largest port, two people familiar with the matter said, as the state owned shipping giant forges ahead with a plan to build a European transhipment hub.

Buying TRAINOSE and Piraeus Port would give COSCO maritime connections to the Suez Canal and rail links to the Balkans and central and Eastern Europe.

Bolstered by December’s merger with China Shipping Group , COSCO‘s focus on Greece is about building market share at a time of anguish in a bruised and oversupplied shipping sector, industry sources said.

It also fits with China’s “One Belt, One Road” policy of building a modern Silk Road to boost trade and create an outlet for Chinese industrial powerhouses caught up in the global downturn and slower growth at home.

COSCO was unchallenged in its $400 million offer for a 67 percent stake in Piraeus Port last month and is set to be named the preferred investor.

But it could face competition for the rail network, including from U.S. railroad holding company Watco, one of the individuals said, after Greece relaunched the tender in an effort to drum up more interest. TRAINOSE has an estimated value of dozens of millions of euros.

COSCO and Watco are interested in TRAINOSE,” said the source, who declined to be identified. “There is also a Greek group which is interested and is looking for a partner.”

A COSCO spokeswoman declined to comment on prospective bids for other Greek assets. She said the firm believed buying Piraeus would improve the port‘s competitiveness and efficiency, but declined to elaborate on detailed plans.

Watco could not be reached for comment and the source did not identify the Greek group.

Privatisation agency HRADF had invited suitors for TRAINOSE, the sole provider of rail services in Greece, to express interest from Feb. 1.

Officials in Greece have said it is too early to comment on specifics, but a sale is almost inevitable: a separate source close to the matter said that without a sale TRAINOSE could be forced to return millions of euros in state subsidies to the European Union.

The leftist government of Prime Minister Alexis Tsipras opposes privatisations and halted the sale of the port and other state assets after winning elections in January last year. The process resumed under a third international bailout of up to 86 billion euros ($94 billion) that was agreed in August.

GROWTH AT PIRAEUS PORT

Piraeus Port, near Athens, has flourished under the management of Cosco Pacific, a listed COSCO unit that took over under a 30-year concession in 2009.

It has been credited with growing container throughput from 166,000 twenty foot equivalent units (TEU) in 2009 to almost 3 million TEU in 2014.

Piraeus is already a success. To develop it further, one condition is that the infrastructure connections with other parts of Europe must be developed,” said Frans-Paul van der Putten, senior research fellow at Dutch think-tank Clingendael.

COSCO is also among the investors expected to bid for the development and operation of a 250 million euro Greek freight centre with access to the national railway network and PiraeusPort, a Greek government official said on Wednesday. Binding bids are expected to be submitted by May 31.

Piraeus, a gateway for COSCO and other Asian groups, is a faster route from Asia than northern European alternatives, and COSCO already attracts multinationals like Huawei and Samsung Electronics distributing into Europe and beyond.

It has a 2013 deal with TRAINOSE and U.S. electronics maker Hewlett-Packard , which uses Piraeus as the main distribution centre for its products in Europe.

“I think any port or related investments around the Mediterranean – not just in Greece but also in Turkey, North Africa and the Black Sea – will be of interest,” said Jonathan Beard, vice president at transport consultancy ICF International in Hong Kong.

Cosco Pacific owns stakes in terminals at the Suez Canal and Antwerp in Belgium, while rival Merchants Holdings has interests in terminals in Malta, Morocco and France.

Also read:

COSCO, China Shipping merger to create world’s 4-largest container shipper

Singapore’s Redwood Group, China’s e-Shang merge to create mammoth pan-Asian logistics platform

(Reporting by Angeliki Koutantou, Brenda Goh, Jonathan Saul, Renee Maltezou and Keith Wallis)

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
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