The Qatar Investment Authority will acquire a 19.9 percent stake in billionaire Li Ka-shing’s electric utility for HK$9.25 billion, the Hong Kong Economic Journal reported on Wednesday.
The investment will make the Gulf state’s sovereign wealth fund the third-largest shareholder of HK Electric Investments Ltd. (02638.HK), the newspaper said.
Power Assets Holdings Ltd. (00006.HK) will sell a 16.53 percent stake in the Hong Kong unit. The fund will also buy another 3.37 percent holding from Cheung Kong Infrastructure Holdings Ltd. (01038.HK), Power Assets’ parent company.
After the deal, Power Assets will still hold 33.37 percent stake in HK Electric.
Power Assets chairman Canning Fok Kin-ning expects the company will benefit from the new partnership with the Qatar Investment Authority.
Analysts said the transaction will generate capital that Power Assets could use for investment abroad. However, the deal will result in an accounting loss of HK$455 million for the company.
Power Assets will hold HK$62.8 billion of cash after the deal.
Meanwhile, HK Electric said the transactions were merely commercial decisions.
It denied speculation that the deal had anything to do with the Hong Kong government’s review of the return rate for the electric utility under the scheme of control agreement.
The current agreement allowing a 9.99 percent return will expire in 2018, and the government is soliciting public views on its plan to lower the rate to 6 to 8 percent.
Translation by Vey Wong
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