By Costas Paris and Joanne Chiu 

Global investors including EQT Partners and KKR & Co. are looking at bidding for the Long Beach Container Terminal in Southern California, as are seasoned ship operators Seaspan Corp. and Hyundai Merchant Marine, according to people directly involved in the sale.

The sale of the major gateway for U.S. seaborne trade with China is expected to fetch as much as $2 billion and comes as its owner -- China's Cosco Shipping Holdings Co. -- looks to dispose of the terminal by the first half of next year.

Other potential buyers interested in the Long Beach terminal include Australian real-estate investor Macquarie Group and private-equity firm Blackstone Group LP, according to people involved in the process.

Another person involved in the deal said South Korean container-shipping company Hyundai Merchant Marine, which moves the majority of Korean exports across the Pacific and is heavily backed by the government in Seoul, also is looking at the terminal sale. Hong Kong-based and New York-listed based Seaspan is the world's largest container ship lessor.

The Long Beach terminal sale is part of an agreement with U.S. regulators that gave Cosco the green light to buy Hong Kong-based container shipping line Orient Overseas International Ltd. for $6.3 billion in July.

OOIL operates the Long Beach Container Terminal under a long-term concession. Cosco agreed earlier this year with the Committee on Foreign Investment in the U.S. to place it into a U.S.-run trust and sell it within a year to allay national security concerns over a Chinese state entity running a major U.S. gateway.

Cosco has minority investments in other U.S. ports, including another pier at Long Beach as well as at the ports of Los Angeles and Seattle.

Cfius has scuttled several international transactions in the past couple of years, including Broadcom Ltd.'s $117 billion takeover of chip rival Qualcomm Inc. and the sale of MoneyGram International Inc. to Chinese billionaire Jack Ma's Ant Financial Services Group.

Many big shipping and port operators are expected to stay out of this deal as they already have facilities in California and increasingly are opting to invest in inland logistics.

A possible sale to Blackstone's infrastructure fund may run into regulatory hurdles in the U.S. as its biggest investor is Saudi Arabia's Public Investment Fund. DP World, one of the largest container terminal operators in the world, could offer a bid, but the Dubai-based entity hasn't sought to own any U.S. properties since an effort to buy several American terminals in 2006 collapsed under political pressure and security concerns.

The Long Beach terminal is one of the few in the U.S. with extensive automation and can handle some of the world's largest container vessels. The terminal is expanding to handle ships carrying more than 20,000 boxes each.

The Port of Long Beach is one of the biggest in the U.S., with more than 7.5 million containers moving in and out of the site last year, or about one-fifth of U.S. trade volume. Apart from OOIL, a number of foreign-shipping operators have stakes in the port's terminals, including Mediterranean Shipping Co. and Japan's Kawasaki Kisen Kaisha Ltd., commonly known as "K" Line.

Imports to U.S. seaports on the West Coast have been surging in recent months, in an apparent push by retailers and manufacturers to pull orders forward ahead of a possible new round of tariffs set to hit U.S.-China trade in January.

Long Beach and the neighboring Port of Los Angeles, together the nation's top hub for container trade and the main destination for imports from China, handled a combined 849,908 containers in October, up 17.7% from the same month last year and 10.2% from September.

Write to Costas Paris at costas.paris@wsj.com and Joanne Chiu at joanne.chiu@wsj.com

 

(END) Dow Jones Newswires

December 18, 2018 12:52 ET (17:52 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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