Li Ka-shing (李嘉誠), Asia’s richest man, is to spin off his electricity assets in Hong Kong through an initial public offering worth up to HK$27.9 billion (US$3.6 billion), and will sell a large chunk of it to a Chinese state-owned power company.
HK Electric Investments (港燈電力投資) — carved out from Li’s Hong Kong-listed utilities firm Power Assets (電能實業) — will float in Hong Kong on Jan. 29 in what could be one of the biggest listings in the city since 2010.
The firm filed a statement with the Hong Kong Stock Exchange late on Sunday saying it plans to sell 4.43 billion shares at an indicative price range of HK$5.45 to HK$6.30 a piece. It added the shares will provide a dividend yield of 6.26 percent to 7.24 percent.
Li’s utility assets have suffered weak profit growth after the Hong Kong government five years ago capped the rate of return on electricity firms at 9.99 percent from 15 percent.
The rate of return pegs the maximum profit the city’s electricity companies can make to the value of their fixed assets.
State Grid Corporation of China (國家電網) has agreed to buy 18 percent of the new trust, which will have a market capitalization of between HK$48.2 billion and HK$55.7 billion, the statement said.
Sovereign wealth fund the Oman Investment Fund has also agreed to subscribe to 0.7 percent to 0.8 percent of HK Electric Investments’ available shares.
Power Assets said in a statement filed with the city’s bourse last month that the trust could be valued from HK$48 billion to about HK$63.4 billion.
The listing of HK Electric Investments could be the biggest since insurance giant AIA’s US$20.5 billion listing in 2010.
Power Assets shares fell 1.17 percent in morning trade in Hong Kong yesterday, closing at HK$59.3 in the bourse.