Li Ka-shing steps back from ports business
March 18, 2014 Leave a comment
March 14, 2014 6:46 am
Li Ka-shing steps back from ports business
By Paul J Davies in Hong Kong
Two of Hong Kong’s biggest tycoons have taken diverging approaches in adjusting their portfolios, as Cheng Yu Tung’s sprawling New World Development group said it would reacquire its Chinese arm while Li Ka-shing took a step away from his ports business.
Deals by Mr Li, Asia’s richest man, are watched closely by investors and politicians trying to gauge his attitude towards Hong Kong. The latest sale comes on top of the disposal of his Hong Kong electricity distribution unit and the upcoming listing of the Watsons pharmacy chain.
Hutchison Ports Holdings Trust, controlled by Mr Li, on Friday announced a joint venture with Cosco Ports, the port arm of the Chinese shipping group. Under the deal, HPH Trust will sell a 60 per cent holding in one of its Hong Kong terminals for HK$2.5bn ($322m).
Some may see the move as another sign that Mr Li is disposing of Hong Kong-linked interests – particularly following the vilification he received during a strike by Hong Kong port workers in 2013 over poor pay.
Hutchison’s sale in January of Hong Kong Electric in a $3bn stock market listing ran counter to a deal by Kowloon rival China Light and Power. CLP – controlled by another old Hong Kong tycoon family, the Kadoories – bought back the shares in its distribution business that it did not own fromExxon, which had decided to quit Hong Kong.
New World Development also announced a consolidation on Friday, with a HK$18.6bn deal to buy out the 31 per cent of shares it does not own in New World China Land.
The Chinese company, which develops residential property in the mainland, has been trading at a steep discount to its net asset value per share for much of the time since its listing. In the past six months it has traded at 23-45 per cent below its end-2013 net asset value of HK$6.68, the company said.
New World Development is offering to pay a small premium to that value with a HK$6.80-per-share offer that it says will allow it greater strategic control over its Chinese business, with which the parent had a non-compete clause, according to a banker familiar with the matter.
It will also give the Chinese arm access to the financial support and cheaper funding of NWD’s much larger balance sheet, according to another banker familiar with the trade.
NWD will fund the purchase with cash it has to hand along with the proceeds of a HK$14bn rights issue that is to be launched later in March.
Shares in NWD were down almost 15 per cent at HK$8.20 on the back of the rights issue news, while New World China shares were up almost 30 per cent at HK$6.62.
In Singapore, shares in HPH Trust were flat at S$0.64.
New World Development was advised by HSBC.
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