Calling itself a pit stop, the port operator backed by Asia's richest man, Li Ka-Shing, derives 70 percent of its revenues from transhipments where super-sized ships move containers carrying finished goods to smaller vessels for transport to nearby markets. Its aim is to shift 35 containers an hour instead of the industry-standard 25, a feat it compares to F1 pit crews turning around a race car in seconds.

But it cannot outrun an industry slump.

The shipping industry is in its fifth year of a downturn, despite recent signs of a rise in bookings from China, as overcapacity weighs and big container firms scramble to form vessel-sharing alliances to cut costs.

"The dust needs to settle among the shippers. We call it a shipping downturn but there is container volume growth," said Westports Chief Executive Officer Ruben Gnanalingam, whose family will own a 46.8 percent stake after an initial public offering later on Friday.

"Ships can come and go but the port business always survives so long as economies thrive," he said in an interview with Reuters on Thursday.

When Westports debuts on the Kuala Lumpur stock exchange <.KLSE>, it is expected to boast a market value of $2.7 billion (1.6 billion pounds) to become the largest listed port operator along the Malacca Straits, which carries 40 percent of global shipping trade.

Unusual for an IPO, the $680 million raised from selling a 23.8 percent of the company will be distributed to existing shareholders - from billionaire Li to port workers - rather than used to fund expansion or repay debt. Gnanalingam said the stock market listing was more about branding and returning cash to shareholders than raising capital.

To attract big-name customers, Westports, operating from central Malaysia's Port Klang, speeds it up with cranes that operate 1.4 times faster than the industry standard, which means ships can get in and out faster. Last year, it kept vessels waiting just two to three hours for berths compared with an average of four hours seen in other ports along the straits.

That is a key distinction for Westports and Port Klang, which face intense regional competition, including two ports belonging to the country's eighth richest man, Syed Mokhtar Al Bukhary, as well as Singapore, home to the world's second busiest port.

The connection with Li, who owns more than a fifth of Westports through a unit of Hutchison Whampoa Ltd (>> Hutchison Whampoa Limited), is a competitive advantage, Gnanalingam said.

"Li opens doors. His companies are involved in 50 over ports and they organise these meetings that give you access to the latest out there from engineering, IT and the business," he said. "You share, learn and compete with one another."

Last year, Westports handled 69 percent of the 10 million twenty equivalent unit (TEU) containers passing through Port Klang - the 12th busiest port in the world.

"Unlike many Malaysian companies, Westports doesn't see the need to venture overseas and in this case, its a good thing," said Hwang-DBS analyst Aizuddin Pengiran. "Their hands are full in the next five years to grow what is already a solid business in Malaysia."

CLASH OF THE TITANS?

But the industry is changing.

The world's three biggest shipping firms - A.P. Moller-Maersk's (>> AP Moeller - Maersk A/S) Maersk Line unit, Switzerland-based MSC Mediterranean Shipping Company S.A., and France's CMA CGM - announced plans in June to share 255 ships and cut costs.

Once European Union anti-competition officials give the green light, expected by next year, the trio will have to choose which hubs across the world will be their main ports of call.

Their focus is the Asia-Europe line, which has been lacklustre due to the uneven pace of the global economic recovery and where overcapacity has driven spot freight rates to loss-making levels.

On Malacca Straits, Westports may lose out to the other ports as no shipper has invested in it, even though CMA accounts for 10 percent of revenues, bankers and industry analysts said.

Maersk, on the other hand, has a 30 percent stake in Syed Mokhtar's Port of Tanjung Pelepas (PTP) on the southern tip of Malaysia and MSC jointly controls a terminal further down in Singapore with the island-state's sole port operator.

"People forget these three shippers are not about to channel all the vessels in the alliance into one hub on the straits if the green light is given from the EU," Gnanalingam said. "There is the question of capacity constraints, which every port along the stretch is trying to deal with."

BUILDING UP VOLUMES

Westports will expand capacity by 68 percent to 16 million TEUs, in part to comply with requirements from the Malaysian government before it extends the company's concession by 30 years to 2054. Since the IPO money is going to existing shareholders, Gnanalingam said Westports will tap debt markets to fund growth.

Westports faces keen competition in the battle to ramp up capacity from politically connected Syed Mokhtar, whose infrastructure group MMC Corp (>> MMC Corporation Berhad) controls PTP and Johor Port in southern Malaysia.

PTP has spent $450 million to lift its annual handling capacity by 25 percent to 10.5 million TEUs by next year.

"Competition is not a scary prospect in the Malacca Straits. Everyone grows," said Gnanalingam. "When we first started out in 1990s, 15 million TEUs a year came through the straits. Now its 50 million this year. You can't get that anywhere else."

(Additional reporting by Yantoultra Ngui; Editing by Emily Kaiser)

By Niluksi Koswanage