Asia’s richest man made a subtle but significant statement that he’s stepping back from his $120 billion empire and allowing his eldest son to emerge from his shadow

August 1, 2013, 6:48 a.m. ET

Li Ka-shing Signals Power Shift With Absence From News Conference

TE-PING CHEN

Asia’s richest man made a subtle but significant statement Thursday that he’s stepping back from his $120 billion empire and allowing his eldest son to emerge from his shadow.

In a sign of the power shift under way from father to son, Li Ka-shing, 85 years old, skipped his annual televised news conference timed to the earnings from his companies Cheung Kong Holdings0001.HK +2.39% and Hutchison Whampoa 0013.HK +0.17% . For the past 10 years, it has been one of the city’s most anticipated press events, in which the charismatic Mr. Li dazzles reporters with his star power, answering questions on subjects from education to Hong Kong’s politics.The past year has been tough on Mr. Li as his business empire, with far-reaching assets including ports and telecoms, has dealt with a series of public-image debacles in Hong Kong. In October, a boat carrying its employees to a fireworks display in Victoria Harbor sank after it collided with a ferry, killing 39. Mr. Li also bet wrong on the most recent election for chief executive, forcefully backing the losing candidate. Meanwhile, public resentment of how Mr. Li’s businesses—spanning property, the city’s leading mobile provider, its drugstores and groceries chains—dominate the city.

He is now turning to the older of his two sons, Victor Li, 49, who is known for his quiet demeanor, sober suits and his brief kidnapping in 1996.

“As long as Li Ka-shing is out there commenting, the focus will be on him,” said Kenny Tang of Redford Asset Management. “As Cheung Kong changes its management, the style will be changed, too.”

The company said it would cut back on the regular press events that elder Mr. Li traditionally dominated, a move investors and company analysts said is likely aimed at propelling Victor Li’s position as his father plans his eventual retirement.

Victor Li, who took over controlling shares of the family trust last year, began working for his father after graduating from Stanford University three decades ago. He became chairman of Cheung Kong Infrastructure1038.HK +0.65% which has been one of the biggest drivers of Hutchison Whampoa company profits, in 1996. He also acts as deputy chairman of Hutchison Whampoa Limited and Cheung Kong, both which his father oversees as chairman.

On Thursday, Hutchison Whampoa, Mr. Li’s conglomerate with business in ports, telecommunications and other assets, said its first-half net profit rose 23% over past year because of strength in its European mobile-phone business and growing contributions from its infrastructure unit. Property developer Cheung Kong said profit over the same period fell 13%, in part because of reduced property sales.

Mr. Li has endured heavy criticism recently, with dock workers at the shipping berths one of his units operates holding placards of his face decorated with devil’s horns outside Cheung Kong’s headquarters to protest working conditions. In July, Hutchison Whampoa said it is considering selling local shopping chain ParknShop, sparking cheers from those who said Mr. Li shouldn’t control so much of the city’s economy.

“Victor basically runs the day-to-day operations and he’ll defer to dad for major operations only,” said a person close to both the company and the family . In particular, Victor has driven the company’s recent spree of buying up cheaply priced assets in Europe, including a British gas distributor and U.K. water-and-sewage company, which have helped buoy the company’s revenue of late, the person said.

Few expect major changes in the family’s companies under Victor Li’s leadership. The Li empire has been investing outside Hong Kong for years. The city accounted for just 16% of Hutchison Whampoa revenue last year, down from 52% in 2000. The elder Mr. Li said earlier this year it has become difficult to invest in Hong Kong because of public resistance.

“Hong Kong hasn’t been its major revenue generator for some time,” said Nomura analyst Benjamin Lo.

People who know the Li family describe Victor as an avid reader and windsurfer with a conservative attitude. In his early days, he was known to have irked other property developers for his driving, competitive style, and those who know him say he lacks some of his father’s personal charm. At news conferences his responses are more restrained than his father’s. However, many praise his quick recall and strong head for numbers.

Both Li Ka-shing and Victor Li declined to be interviewed. Cheung Kong and Hutchison Whampoa didn’t respond to a request to comment.

Friends of the Li family say he has been fairly insular, living for years in the same mansion with his father, wife and children. Part of his reticence stems from an ordeal in 1996 when he was gagged and held overnight by a gangster nicknamed “Big Spender” before being released after his father paid $134 million. The gangster was executed in mainland China, and little of the ransom—which “Big Spender” said he gambled away—was recovered.

Victor is “strictly business,” says another person who has worked closely with the Li family over the years. By contrast, he says, his younger brother Richard Li who runs PCCW, one of the city’s main telecom providers, is “the more fun one.” Last year, when Mr. Li announced plans to divide his corporate empire, he said that while Victor would receive control of the companies, he would support Richard’s ventures with cash, adding that Richard’s assets would rise “several-fold” thanks to his support.

Hong Kong is one of the developed world’s most unequal cities, and Mr. Li told reporters earlier this year that he has faced plenty of local jealousy in his time. “But now [I’ve] gotten used to it and face it with a peace in my heart,” he said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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