Hong Kong tycoon buys up UK electricity networks

Hong Kong's business “Superman” Li Ka-Shing is paying £5.8bn for energy giant EDF’s 100,000 miles of the UK’s electricity network.

The octogenarian Asian billionaire first approached EDF in March, beating off a range of competitors including the National Grid, the Abu Dhabi Investment Authority and several Canadian pension funds for the UK network group, which includes cables and substations supplying around eight million households and employing nearly 5,000 people.

The "irrevocable offer" from Mr Li's consortium – which includes his Cheung Kong Infrastructure holding company (CKI), Hongkong Electric, of which CKI owns 40 per cent, the Li Ka-Shing Foundation and the Li Ka-Shing (Overseas) Foundation – remains open until 24 October.

According to EDF, the offer constitutes a 27 per cent premium to the regulated asset value for the regulated electricity networks, and a multiple of 8.1 times 2010 earnings estimates for the total business.

The French group aims to present the plans for commercial cooperation with the Cheung Kong consortium in the UK to its European Works Council in early September, before going to the board for a final decision.

If the deal goes ahead, the consortium will take control of three regional electricity networks covering London, the South-east and the East of England, providing nearly a quarter of all electrical power in the UK. Alongside the regulated assets, the deal also covers EDF's non-regulated business, which has commercial contracts to deliver electricity to private sites.

CKI and HK Electric already own electricity networks in Australia, Canada, New Zealand, China and Thailand. They also own £1.67bn-worth of assets in the UK, including stakes in Cambridge Water, Southern Water and distributor Northern Gas Networks.

H L Kam, CKI's managing director, yesterday said: "CKI has always been attracted to the regulated industries in the United Kingdom due to the regulatory regime, financial infrastructure and rule of law. We are delighted to further extend our presence in this market."

As part of wider plans to expand overseas, CKI and HK Electric spent £76m last November raising their holding in Northern Gas Networks from 75 to 88 per cent.

K S Tso, the managing director of HK Electric, said: "This proposed [EDF networks] transaction, upon completion, will significantly enrich our earnings from investments outside of Hong Kong. Through these attractive assets, we will continue to diversify our profit base outside of Hong Kong and achieve growth."

EDF's UK networks business was put up for sale last October, as part of plans to raise €5bn (£4.2bn) to cut the parent group's €44bn debt pile. But the process was delayed by the five-year price review by watchdog Ofgem, which did not conclude until November.

The deal with the Cheung Kong consortium was announced yesterday, alongside first-half financial results profits showing group net income down by nearly half from last year to €1.6bn, pulled down by a provision for risks in the US. In the UK, sales dropped by 3.6 per cent to €5.6bn while earnings before interest, tax, deductions and amortisation held steady at €1.6bn.

Who is Li Ka-Shing?

Octogenarian Li Ka-Shing is a fixture in lists of the wealthy and powerful both in his native Asia and worldwide. Ranked 14th in the Forbes global rich list, the business acumen with which Mr Li amassed an estimated fortune of $21bn (£13.4bn) has seen him dubbed "Superman" in his home town of Hong Kong.

*Born in 1928 in Southeastern China, Mr Li fled to Hong Kong with his family in 1940 to escape war on the mainland. He is now the chairman of two behemoth conglomerates – Hutchison Whampoa and Cheung Kong Holdings – with interests in everything from container terminals and retail to property and energy infrastructure.

*Mr Li's rags-to-riches business career began when he left school at the age of 15 to work 16-hour days in a plastics trading company. Just seven years later – using money borrowed from friends and family – he set up his own company, Cheung Kong Industries in competition with his old employer.

*Mr Li's first big breakthrough was plastic flowers: after spotting a gap in the market, he honed his production techniques and was soon the biggest supplier in Asia.

*The next step was into the Hong Kong real-estate market, fuelled by collapsing property prices after the 1967 riots

*In 1979, Mr Li bought Hutchison Whampoa from HSBC, thereby acquiring a vast array of international interests, including the world's biggest container ports operator, a retail empire counting Superdrug and Hong Kong's best-selling bottled water amongst its assets, and a string of telecoms networks such as 3 in the UK.

*He may be a regular on rich lists and own a house in Hong Kong's swanky Deep Water Bay district, but Mr Li nonetheless has a reputation for simple living, famously sporting a $50 watch.

*He is also one of the world's greatest philanthropists. In 1980 he set up the Li Ka-Shing Foundation, which focuses on education and healthcare. So far he is estimated to have given away $1bn and in 2006 pledged to donate more than a third of his entire fortune to charity. Major personal donations so far include $128m to the University of Hong Kong faculty of medicine and $11.5m to the Singapore Management University. He was also a founder donor of Shantou University, in Guangdong, China.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
video
Arts and Entertainment
tv

First full-length look is finally here

Arts and Entertainment
Stanley Tucci as DCI Eugene Morton, Sophie Grabol as Hildur Odegard and Christopher Eccleston as Professor Charlie Stoddart in 'Fortitude'
tvGrace Dent: Still, it's compelling and cinematically sublime
News
news

Rap music mogul accused of running two men over in his truck

Arts and Entertainment
EastEnders actor Danny Dyer has been rejected from Game of Thrones three times
tv
Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

ebooks
ebooksA special investigation by Andy McSmith
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
Tax now accounts for ‘nearly 80%’ of the price of a bottle of whisky
news

Arts and Entertainment
Peppa Pig wearing her golden boots
film

"Oink! Oink! Hee hee hee!" First interview with the big-screen star

Life and Style
tech

Biohacking group hopes technology will lead people to think about even more dystopian uses

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee