April 23, 2024

Square Feet: Kai Tak, Hong Kong’s Old Airport, Reopens as a Cruise Ship Terminal

Starting Wednesday, passengers approaching the old runway will do so at crawl speed — and from the sea, rather than from the air. After 15 years of lying idle, the former airport will reopen its gates to the world’s travelers — as a cruise ship terminal at the southern end of the old runway.

Gleaming silver, and 850 meters, or about half-mile long, the new terminal building has airy immigration and check-in halls reminiscent of, yes, an airport. A large, manicured rooftop garden with 360-degree views of the Hong Kong skyline will open to the public in the next few months. And the terminal’s two berths will be able to accommodate the largest cruise ships in the world — behemoths more than 300 meters long that can carry thousands of passengers.

The first of those giants — the 15-deck, 310-meter Mariner of the Seas, operated by Royal Caribbean International and carrying more than 3,000 passengers — is scheduled to dock at the terminal Wednesday evening.

The new terminal cost 8.2 billion in Hong Kong dollars, or about $1 billion, and was designed by the architectural firm of Norman Foster, whose other designs include plans for the renovation of the New York Public Library. Mr. Foster’s firm also designed the larger airport that replaced Kai Tak in July 1998.

For now, most of the old airport, including the area where the terminal building once stood, lies empty, the shiny new cruise terminal awkwardly isolated at the far end of the former runway. The nearest neighborhoods — Kwun Tong and Kowloon Bay — are somewhat rundown, and until planned public transportation connections are completed in the coming years, the terminal building’s rooftop gardens will be tough for ordinary visitors to reach.

While Hong Kong is home to one of the busiest container ports in the world, cruise companies held off factoring the terminal into their itineraries until it was actually finished. Just 19 ships are scheduled to dock at the new terminal in the next 12 months.

Still, industry executives say they believe that traffic will gradually increase as cruise activity in Asia picks up, and Hong Kong policy makers see the project as crucial to expanding tourism in the city.

Gregory So, the Hong Kong secretary for commerce and economic development, said at a media briefing last week that the new terminal would “greatly enhance the berthing capacity for cruise ships in Hong Kong, thereby enhancing our competitiveness and attractiveness.”

The decision to convert the old airport site is, in essence, a bet on Asia’s growing appetite for travel.

Over the last few decades, thanks to rising affluence and improved transport links, Asia has evolved from being primarily a destination for wealthy Westerners to being an increasingly important source of new travelers — Asians journeying to places within the region and beyond. Travel from mainland China, in particular, has soared, making the country both the biggest source of foreign tourists in the world, and the biggest spender in global tourism, according to the World Tourism Organization.

This growth has yet to extend into the cruise ship segment, which remains overwhelmingly focused on travel within the Mediterranean and the Caribbean. Just under two-thirds of the roughly 21 million people in the world who will take a cruise this year will come from North America, and about 27 percent will come from Europe, according to Cruise Market Watch, an American firm that compiles data on the industry. Only about 7 percent come from Asia.

In part, that is because Asians have only recently begun to approach travel as something that involves relaxation and leisure, rather than an activity focused on shopping and sightseeing, said Liu Zinan, chairman of the Asia Cruise Association and vice president of Asia for Royal Caribbean.

The lack of terminals that accommodate cruise ships also has hampered growth in the region.

“Compared to the Mediterranean and the Caribbean, there is a paucity of destinations for cruise ships to go,” said Jeff Bent, managing director of Worldwide Cruise Terminals, which manages the new terminal in Hong Kong. “Cruise lines have fewer options to put together interesting itineraries.”

That is changing rapidly as port cities and cruise companies race to expand their capacities in the region.

“The market potential for cruising in Asia is huge as the total potential number of cruise passengers could reach 3.7 million by 2017, and double to over seven million by 2020,” said Pier Luigi Foschi, the Asia head of Carnival Cruise Lines, which opened an office in Singapore last month to spearhead its operations in the region.

Singapore opened a large new cruise ship terminal last year, which, like the new center in Hong Kong, can handle ships as large as 220,000 tons. The terminal expects 100 ship calls in the coming cruise season, which runs from October to May.

In Hong Kong, the debut of the Kai Tak Cruise Terminal opens the city to superlarge cruise liners, which are too large to dock at the existing Ocean Terminal, just across Victoria Harbor from the city’s skyscraper-studded financial district.

And in mainland China, new operations have been developed in several coastal cities.

“Hong Kong, Shanghai, Tianjin, Singapore — they are all racing with each other to become leading cruise ports in the region,” said Mr. Liu of Royal Caribbean. Hong Kong’s geographic location and hotel and transport infrastructures, he added, mean the new terminal will be an important feature on tour operators’ itineraries.

Anyone who might want to reminisce over the old Kai Tak Airport and its legendary flight approach, however, will have to look elsewhere. The new building retains little of the site’s former incarnation, though a park being planned alongside it will have an “aviation theme.”

Calvin Yang contributed reporting from Hong Kong.

Article source: http://www.nytimes.com/2013/06/12/business/global/hong-kongs-old-airport-reopens-as-a-cruise-ship-terminal.html?partner=rss&emc=rss

DealBook: Goldman Sachs to Exit Chinese Bank With $1.1 Billion Stake Sale

A branch of Industrial and Commercial Bank of China in Huaibei.ReutersA branch of Industrial and Commercial Bank of China in Huaibei.

Goldman Sachs plans to raise about $1.1 billion by selling its remaining stake in the Industrial and Commercial Bank of China, ending its lucrative seven-year investment it what has grown to become the world’s biggest lender by market value.

The Wall Street bank is selling its shares in I.C.B.C. at a price range of 5.47 Hong Kong dollars to 5.50 Hong Kong dollars each, raising total proceeds of about $1.1 billion, a person with direct knowledge of the transaction said Monday.

The sale ‘‘takes out the entire remaining stake,’’ the person said, who spoke on condition of anonymity because the information on the planned sale is not yet public.

Goldman has been reducing its stake in the Chinese lender over the last year, including a deal in April 2012 involving shares worth $2.5 billion at the time. Most of those shares were sold to Temasek Holdings, the Singaporean sovereign investment firm.

The sale comes as China’s banks have been confronting slowing profit growth, as the nation’s economy has become less reliant on traditional bank lending. Net profit at I.C.B.C. rose 14.5 percent last year from 2011, its slowest growth in five years.

Chinese companies are increasingly able to tap alternate sources of financing, including offshore bond markets, while local governments have turned to off-balance-sheet financing that is tied to the nation’s huge but more loosely regulated market for alternative investment products.

Goldman first bought into I.C.B.C. in 2006, before the Chinese lender’s initial public offering in Hong Kong, paying $2.6 billion for a stake of around 5 percent.

At the high end of 5.50 Hong Kong dollars a share, the sale price on the remaining stake represents a slight discount to the stock’s closing price of 5.56 Hong Kong dollars on Thursday.

The shares rose 1.44 percent on Monday on news of the pending sale. Shares in I.C.B.C. have risen 2.6 percent so far this year, compared with a 2.1 percent decrease in the main index that tracks mainland China companies listed in Hong Kong.

Article source: http://dealbook.nytimes.com/2013/05/20/goldman-sachs-to-exit-chinese-bank-with-1-1-billion-stake-sale/?partner=rss&emc=rss

Inside Asia: On China’s Border, Underground Banking Flourishes

ZHUHAI, China — In an underground mall just a stone’s throw from the Chinese border with Macau, a row of 30 small shops with identical golden plaques does a brisk, though shadowy, trade with mainland Chinese visitors, many of them bound for the gambling hub.

“Good rates. Better than the banks,” shout salesmen jostling to usher clients into the shops, where thick wads of bank notes — usually 100 renminbi, or about $16 — change hands and shuffle noisily through electronic cash-counting machines. Licensed as liquor and dry-goods stores, with shelves stacked with rice wine and cigarettes, many serve as underground bankers with remittance agents in back rooms.

“It’s very simple,” said one agent, Choi, who like others interviewed for this article would give only his surname because of the illicit nature of his business. “You give me renminbi here. Then we deliver Hong Kong dollars to you in Macau. We can move tens of millions each day.”

As the Chinese economy and financial markets mature and gain in sophistication, so, too, does a vast underground banking industry offering swift, cheap and low-risk cross-border fund transfers that moves hundreds of millions of dollars’ worth of money each day. Much of that activity is conducted openly on the streets of Guangdong Province, where businesses and individuals depend on underground networks to get around strict currency controls, both for legitimate commercial purposes and to safeguard assets beyond the reach of the authorities.

Beijing is finding it increasingly difficult to stem the tide of speculative and illegal cash. In the decade since China began cracking down on money laundering, the government has amended its criminal laws and strengthened commercial banking rules, but looser restrictions on capital transfers have made it easier for hot money to be channeled across the border.

“China’s financial markets are not that mature,” said Yu Yongding, an economist at the Chinese Academy of Social Sciences and former adviser to the central bank. “There are lots of capital controls that certainly have contributed to these kind of activities, while corruption and money laundering also play an important role.”

In Guangdong, Pearl River Delta cities like Zhuhai, Shenzhen, Guangzhou and Dongguan are major underground conduits for Chinese hot money. The province, where imports and exports amounted to $984 billion last year — a quarter of Chinese foreign trade — has served as a portal for capital flows since China’s economic opening three decades ago. Collectively, the cities are a hotbed of underground banking that also extends to Macau and Hong Kong. Macau, a gambling center, and Hong Kong, a global financial hub, are special administrative territories of China, with financial systems separate from the mainland’s.

In Zhuhai alone, more than 1 billion renminbi is transferred daily through underground networks, according to six agents who spoke to Reuters — part of a tight-knit group of some 100 agents operating in the border area. “Our business has gone up some 30 percent in the past three years,” said one agent, who gave his name as Li.

Besides retail-level agents clustered around the borders at Zhuhai, which is adjacent to Macau, and Shenzhen, which is adjacent to Hong Kong, there is another echelon of shadow bankers existing across Guangdong Province, out of public view, often working from secret offices, with deals conducted between trusted, well-connected parties, often with just a phone call.

“I went to see a friend in this business once,” said a Hong Kong businessman, Chan, who has run a factory in Guangdong for more than 20 years. “It was just a tiny room filled with bank notes. Can you imagine how much money there was? They’re everywhere. In every village, town and city.”

Global Financial Integrity, a Washington group that works to stop the cross-border flow of illegal money, estimated that $2.83 trillion flowed illicitly out of mainland China from 2005 to 2011, with Hong Kong the largest recipient.

Article source: http://www.nytimes.com/2013/05/21/business/global/on-chinas-border-underground-banking-flourishes.html?partner=rss&emc=rss

I.P.O.’s Set for Hong Kong Raise Hopes for Revived Activity

HONG KONG — A unit of Sinopec Group and the brokerage firm China Galaxy Securities are introducing initial public offerings in Hong Kong on Monday, seeking to raise a total of as much as $3.5 billion.

Sinopec Engineering, a unit of Sinopec, the largest Asian oil refiner, is offering 1.33 billion shares in an indicative range of 9.8 Hong Kong dollars to 13.1 dollars each, putting the deal value as high as 17.4 billion dollars, or $2.24 billion, two people close to the deal said Sunday.

At the top end, the deal would be the largest I.P.O. in Hong Kong since People’s Insurance Co. of China raised $3.56 billion in late November.

The offer values Sinopec Engineering at 9 to 12 times its forecast earnings in 2013, said the people close to the deal, who declined to be identified because details of the deal were not yet public.

Meanwhile, China Galaxy Securities, whose larger rivals include Citic Securities and Haitong Securities, is offering about 1.5 billion shares in an indicative range of 4.99 dollars to 6.77 dollars each, the people said. The range is equivalent to a price-to-book ratio of 1.19 to 1.49 times. The ratio is used to compare a company’s book value with its current market price.

The company had planned for a dual listing in Shanghai and Hong Kong, but gave up plans for a simultaneous offering in mainland China after the country’s securities regulator froze I.P.O. approvals late last year.

Such large I.P.O.’s have been eagerly anticipated in Hong Kong and their success could set off a wave of other deals in coming months involving companies like hotel operators and banks looking to sell new shares.

The two deals underscore a pickup in activity after I.P.O. issuance in Asia outside of Japan plunged 56 percent to $3.3 billion in the first quarter, making it the worst start to a year for new share listings since the first quarter of 2009, according to Thomson Reuters data.

I.P.O.’s in Hong Kong are down 20 percent so far in 2013 from the same period of 2012, to $1.05 billion, data show. After being a global I.P.O. hub for several years, the city had only $7.72 billion worth of deals in 2012, the lowest volume since the 2008 global financial meltdown.

Hong Kong’s lackluster performance is in sharp contrast to Southeast Asia, where a string of deals including BTS Infrastructure Fund and the real estate investment trust Mapletree China, backed by Temasek Holdings, have kept bankers busy.

Other large deals that are likely to be held in Hong Kong this year include a series of commercial real estate spinoffs from Hong Kong property and investment companies, including an I.P.O. by NW Hotel Investments, which is part of New World Development, that could reach $1 billion.

Great Eagle Holdings also plans to spin off its Langham hotel chain through an $800 million I.P.O., while the property and infrastructure group Hopewell Holdings is looking to raise as much as $800 million from a spinning off of its property and hospitality business, Hopewell HK Properties.

Sinopec Engineering was formed last September, consolidating eight engineering and construction units of Sinopec Group, as the state-owned giant looked to expand its business overseas.

It is controlled by Sinopec Group and Sinopec Corp., which hold stakes of 2 percent and 98 percent, respectively.

Citic Securities, JPMorgan and UBS were hired as sponsors of the Sinopec Engineering offering.

China Galaxy International, Goldman Sachs and J.P. Morgan are acting as sponsors of the China Galaxy deal, with a group of 13 other banks also helping arrange it. The number of banks on the I.P.O. puts it near the record 17 hired by PICC for its listing last year.

Article source: http://www.nytimes.com/2013/05/06/business/global/06iht-sinopec06.html?partner=rss&emc=rss

DealBook: A.I.G. to Sell $2 Billion Stake in Asia Unit for Share Buyback

The headquarters of A.I.A. Group, American International Group's Asian insurance unit, in Hong Kong.Jerome Favre/Bloomberg NewsThe headquarters of A.I.A. Group, American International Group’s Asian insurance unit, in Hong Kong.

The insurance giant American International Group said on Thursday that it planned to sell a $2 billion stake in its Asian insurance unit as part of a plan to repurchase $5 billion worth of its own stock from the United States government.

The move is the latest effort by A.I.G. to shed assets and repay the government after the firm received a $182 billion bailout in 2008.

A.I.G. has been progressively selling its stake in its Asian insurance business, the A.I.A. Group, since listing the company on the Hong Kong Stock Exchange in an initial public offering that raised $17.8 billion.

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Under the terms of the deal announced, A.I.G. will offer investors 600 million shares in A.I.A. at 25.75 Hong Kong dollars to 26.75 Hong Kong dollars, according to the term sheet obtained by DealBook.

On the low end, the price represents a 2.1 percent discount to A.I.A.’s closing price in Hong Kong on Thursday; on the high end, it represents a 1.7 percent premium. The deal will leave A.I.G. with a stake of about 13 percent stake in A.I.A.

Robert H. Benmosche, chief of the American International Group, at a House panel in 2010 on the government's $182 billion bailout.Yuri Gripas/ReutersRobert H. Benmosche, chief of the American International Group, at a House panel in 2010 on the government’s $182 billion bailout.

Earlier this year, A.I.G. sold a $6 billion stake in A.I.A., which is the region’s third-largest insurer.

A.I.G. said on Thursday that it planned to buy as much as $5 billion of its own stock, the third repurchase of its shares this year. A.I.G. added that it would use the proceeds of the A.I.A. share sale, in part, to repurchase its shares.

The Treasury Department has been selling off its stake in A.I.G. Last month, officials said they would sell about $5 billion worth of A.I.G. stock to reduce the government’s holding to around 53 percent, from 92 percent when the firm was first bailed out.

The government’s links with A.I.G. now lie primarily with the Treasury Department’s shares in the insurer. The holdings could prove profitable. The stock is currently trading at almost $35, ahead of the government’s break-even price of $29.

Since receiving a government bailout, A.I.G. has recovered by reinventing itself as a smaller company that largely shies away from the types of complex investments that nearly led to its downfall.

Goldman Sachs and Deutsche Bank are managing the $2 billion share sale for A.I.G.

Article source: http://dealbook.nytimes.com/2012/09/06/a-i-g-to-raise-2-billion-for-share-buyback/?partner=rss&emc=rss