Li Ka-shing Sheds Key UK Power Asset in Makeover for New Era

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(Bloomberg) — CK Group has agreed to sell the UK’s largest power-distribution network for £10.5 billion ($14.2 billion), as Hong Kong billionaire Li Ka-shing accelerates divestment efforts to insulate his empire from geopolitical risk.

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The sale of UK Power Networks to French utility Engie SA comes as the Li family’s flagship conglomerate CK Hutchison Holdings Ltd. reshapes its business by selling assets and spinning off units in sectors ranging from ports to drugstores. 

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Among Hong Kong’s billionaire clans, the Lis are moving the most quickly in exiting businesses that are being threatened by growing geopolitical rivalry between the US and China. The family also believes that carving up its businesses unlocks far greater value than the market currently assigns them under the existing structure, Bloomberg has reported.

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Unit CK Infrastructure Group said Thursday that it expects an effective gain of about HK$14.5 billion ($1.9 billion) from related transactions, with the proceeds generating cash for future investments or acquisitions. CK Hutchison shares rose as much as 3.9% in Hong Kong, the biggest intraday gain in three weeks.

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The UK sale is “in line with CKH’s ongoing corporate restructuring, aimed at reducing the disconnect between what investors pay and what the company’s holdings are worth,” said Pak To Wong, APAC special situations senior analyst at Market Securities Hong Kong Ltd. 

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“The interesting part will be to see where they recycle that capital to,” he added. “That said, I think they are unlikely to deviate away from investing in regulated industries.” 

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Major moves being pursued by the conglomerate include an initial public offering of retail arm A.S. Watson Group, Bloomberg has reported, a potential listing or partial sale of its global telecom operations and the controversial deal to sell its global port assets that could potentially generate $19 billion in cash if completed.

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Despite the strategy, CK Hutchison has already borne the brunt of geopolitical fallout, with its ports transaction now at risk as tensions between the US and China rise. The attempt to offload 43 port assets was dealt a fresh blow this week as Panama moved to occupy two flashpoint facilities near the Panama Canal. Talks have dragged on for months, with the deal’s future uncertain. 

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Business Mix

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Li Ka-shing built his fortune by investing in regulated infrastructure and telecom assets in developed Western markets. But his son Victor, who has chaired the group since 2018, now navigates a volatile landscape marred by increasing trade tensions and the disruptive rise of artificial intelligence.

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CK Hutchison and other local companies trying to do business abroad walk a tightrope. At home, Beijing has tightened its grip on the private sector, viewing Hong Kong tycoons like Li Ka-shing with growing skepticism. Overseas, perceived ties with China have raised suspicions and created political hurdles.