China Merchants buys East African port stake for $185 m

HONG KONG, Dec 31 (Reuters) - China Merchants Holdings (International) Co Ltd said it will buy a 23.5 percent stake in Port de Djibouti S.A. for $185 million, its third port investment in Africa after Lagos in Nigeria and Lome in Togo.

The Chinese port operator agreed to buy the stake from Djibouti Ports & Free Zones Authority, it said in a statement late on Sunday.

China Merchants purchased the Togo stake in September and the Nigeria stake in 2010. China Merchants has a healthy balance sheet, and a strong cash flow generating ability from the existing assets, UBS said in a research note on Monday, which likely means it has enough money for new port investments.

Last Friday, China Merchants paid 1.79 billion yuan ($287.16 million) for a 25 percent stake in Shenzhen Chiwan Wharf Holdings Ltd, lifting its interest in the terminal operator to about 34 percent.

China Merchants has teamed up with COSCO Pacific Ltd and China Shipping Terminal Development (Hong Kong) Ltd to invest a total of $135 million to buy a 30 percent stake in Taiwan’s Kao Ming Terminal in Kaohsiung.

Each party will hold a 10 percent effective stake in the terminal.

Shares of China Merchants eased 0.6 percent on Monday but have risen about 10 percent this year. They underperformed the blue chip Hang Seng Index, which has surged about 23 percent since the beginning of the year.