Chow Tai Fook Enterprises (周大福企業), the Hong Kong conglomerate known for its chain of jewelry shops across China, agreed to acquire Alinta Energy Holdings in a multibillion dollar deal that marks the family-owned group’s foray into Australian utilities.
The companies announced the transaction in separate statements yesterday, without disclosing financial details.
Chow Tai Fook agreed to pay investors — including buyout firm TPG Capital — more than A$4 billion (US$3.1 billion), people with knowledge of the matter said, asking not to be identified because the details are private.
Photo: Bloomberg
The transaction is Chow Tai Fook’s most ambitious overseas expansion in recent years and comes at a pivotal moment for the conglomerate as it undergoes a leadership transition.
The Cheng (鄭) family heads a group that includes four listed units with a combined market of more than US$25 billion. Among those are New World Development Co (新世界發展), one of Hong Kong’s largest property developers, and Chow Tai Fook Jewellery Group (周大福珠寶), whose chain of luxury stores generates more revenue than Tiffany & Co.
Chow Tai Fook follows in the footsteps of another Hong Kong group, property tycoon Li Ka-shing’s (李嘉誠) Cheung Kong Property Holdings (長地集團), in scouring Australia for assets.
This week, Hong Kong’s richest man won shareholder approval to pursue the A$7.4 billion takeover of power provider Duet Group to add an energy network that covers an area three times the size of the Chinese territory.
Last year, Chow Tai Fook acquired a luxury Bahamas resort that is scheduled to open this year with a casino, hotel and golf course.
“Alinta Energy would be Chow Tai Fook Enterprises’ first significant investment in Australia outside of real estate and integrated resorts,” the Hong Kong company said in its statement.
With the sale, Alinta’s owners have abandoned a plan to hold initial public offering (IPO) for the company this year. The IPO was delayed last year due to market volatility following the US election.
TPG and more than 30 lenders, including Oaktree Capital Group LLC, had taken control of Alinta as part of a debt-for-equity swap.
The sale comes at a tense time in Australia as the government battles a rise in power failures and surge in wholesale gas prices that has put pressure on energy markets.
Australian Prime Minister Malcolm Turnbull has directed utilities to increase the amount of gas available for domestic supply and said the government could restrict oil and gas exports if companies fail to comply.
Foreign investment also remains a sensitive issue after Australian Treasurer Scott Morrison barred separate bids for state-owned power network Ausgrid last year from Li and China’s State Grid Corp (國家電網). The Alinta and Duet takeovers are subject to approval by the Australian Foreign Investment Review Board.
Jeff Dimery is to continue as Alinta’s chief executive and the existing senior management team will also be retained, the company said.
Chow Tai Fook’s 69-year-old patriarch Henry Cheng (鄭家純) has been on leave from an unspecified illness since early this year. His 36-year-old son, Adrian Cheng (鄭志剛), is the heir apparent.
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