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
Life and Style
love + sex A new study has revealed the average size - but does that leave men outside the 'normal' range being thought of as 'abnormal'?
Voices
The Palace of Westminster is falling down, according to John Bercow
voices..says Matthew Norman
Sport
Steve Bruce and Gus Poyet clash
football
Arts and Entertainment
Jake and Dinos Chapman were motivated by revenge to make 'Bring me the Head of Franco Toselli! '
arts + ents Shapero Modern Gallery to show explicit Chapman Brothers film
Arts and Entertainment
Kurt Cobain performing for 'MTV Unplugged' in New York, shortly before his death
music Brett Morgen's 'Cobain: Montage of Heck' debunks many of the myths surrounding the enigmatic singer
Sport
Brendan Rodgers
football The Liverpool manager will be the first option after Pep Guardiola
Life and Style
life
ebooks
ebooksA special investigation by Andy McSmith
Sport
Christian Benteke of Aston Villa celebrates scoring the winner for Aston Villa
football
Arts and Entertainment
Myanna Buring, Julian Rhind-Tutt and Russell Tovey in 'Banished'
TV Jimmy McGovern tackles 18th-century crime and punishment
Arts and Entertainment
Paul Whitehouse as Herbert
arts + ents
News
Bill O'Reilly attends The Hollywood Reporter 35 Most Powerful People In Media Celebration at The Four Seasons Restaurant on April 16, 2014 in New York City
media It is the second time he and the channel have clarified statements
News
people
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

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn