Hutchison Whampoa Ltd.’s sale of Chinese port assets may raise more than Singapore’s combined 31 initial public offerings last year, boosting the city’s efforts to compete as a financial center.

Hutchison, controlled by Hong Kong billionaire Li Ka-shing, said yesterday it will sell a stake in a trust holding container ports in Hong Kong, Macau and Guangdong province, along with associated businesses and some Chinese river ports. The sale may raise US$6 billion ($7.7 billion), the IFR news service reported yesterday.

 

An offering of that size would be a record for the city- state, eclipsing the US$4 billion raised by Singapore Telecommunications in 1993. IPO proceeds in Singapore totaled US$5.7 billion last year, trailing the US$49.5 billion raised in Hong Kong, according to data compiled by Bloomberg that exclude overallotment shares.

 

“Given there’s so many companies listing in Hong Kong, you can say the Singapore Exchange won this time,” said Nicholas Yeo, who helps oversee Chinese equities at Aberdeen Asset Management, which manages US$261 billion globally. “This is definitely a boost to the Singapore market.”

 

Singapore’s Straits Times Index gained 10% last year and 64% in 2009, outperforming Hong Kong’s Hang Seng Index, which rose 5.3% in 2010 and 52% the previous year, data compiled by Bloomberg show. Today, the Singapore benchmark gained 0.1% in the morning session.

 

Hutchison fell 1.2% to HK$92.40 at the midday break in Hong Kong, after sliding 2.4% yesterday.

 

Hutchison said it was listing the new port company in Singapore because Hong Kong Exchange regulations don’t allow such trusts. Hutchison may eventually offer units of the trust in its home city if regulations change, it said.

 

South Korea’s STX Group is considering listing its Chinese shipyard in Singapore or Hong Kong in the second half of this year. The group’s STX Pan Ocean Co. and STX OSV Holdings Ltd. are already traded in the city-state.

 

Singapore Exchange, the operator of the city’s securities market, offered in October to buy ASX Ltd., Australia’s main bourse, for A$8.4 billion ($8.4 billion) to help Singapore compete against regional rivals.

“Singapore Exchange’s planned takeover of ASX makes Singapore an attractive place for IPOs,” Lee Jong Chul, vice chairman of STX Group, said in an interview in October.

 

China Merchants Holdings (International) Co., the owner of stakes in ports that move a third of the country’s cargo containers, and Cosco Pacific Ltd., Asia’s third-largest container-terminal operator, both trade in Hong Kong.

 

Hong Kong Exchanges & Clearing, the operator of Hong Kong’s bourse, has a market capitalization of US$25.6 billion and trades at 42.2 times profit, according to data compiled by Bloomberg. Singapore Exchange has a market value of $7.1 billion and a price-earnings ratio of at 29.9, the data show.

 

“If you list in Hong Kong then you will be competing for capital with China Merchants and Cosco Pacific,” said Johnson Leung, an analyst at Tufton Oceanic Far East in Hong Kong. “If you list in Singapore there are no comparables.”

 

The ports in Hutchison’s trust posted an operating profit of HK$5.3 billion ($873.4 million) on sales of HK$10.3 billion in 2009, according to a statement. That’s an operating margin of 51%. The company had a 60% market share in Hong Kong’s Kwai Tsing port and a 47% share in Shenzhen in the same year, Hutchison said.