Commercial Due Diligence

Background

The consortium of Chinese companies:

• COSCO Pacific Ltd
• China Merchant Holding International
• China Shipping Terminal Development

At the time of the study, these three companies were the largest Chinese companies in the container port and shipping sectors.

Drewry Approach

• Drewry put together a team at very short notice and within four weeks had completed an initial site visit and conducted extensive secondary/desktop background research. At the request of the client, Drewry conducted its own site investigation to finalise the market projections related to the target asset;
• Drewry carried out a series of interviews with the KMCT management to determine the credibility of the management projections;
• Drewry met with the local users of the port and the competition to establish an independent view of KMCT’s prospects;
• As there was a single main user of KMCT, Drewry evaluated the risk to the buyers and possibility of attracting other customers through the analysis of the local shipping network.

Results Achieved

• Drewry met the client’s deadlines and the study was used for obtaining internal approval.
• The investment by COSCO Pacific Ltd, China Merchant Holding International and China Shipping Terminal Development represents the first acquisition by Chinese companies of Taiwanese national assets (toll roads, airports and seaports).
• In October 2012, Drewry worked together with the consortium made up of three Chinese companies (COSCO Pacific Ltd, China Merchant Holding International and China Shipping Terminal Development) to acquire a 30% stake in KMCT.
• The timeline for the study was tight as the client had an end of year deadline to meet and internal approvals to obtain.
• Working together with local legal advisors and PWC Taiwan, Drewry participated in due diligence meetings and conducted its own investigation to determine the intrinsic value of the terminal.