`Superman' shakes up Hutchison Whampoa

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The Independent Online
Li Ka-shing, the most important player in Hong Kong's stock market, yesterday took investors by surprise with a major restructuring of his four listed companies in the colony. He said the move would make his Hutchison Whampoa group "one of the leading companies in the world for diversified infrastructure business".

The restructuring will also increase Mr Li's formidable control over the companies and will make vast accounting profits for his parent company, Cheung Kong.

Although the Hong Kong stock market had little time to digest Mr Li's complex plans it responded positively. The key Hang Seng Index rose 221 points to close at 13,443, mainly on the back of optimism generated by the reorganisation plans. Trading in the shares of Mr Li's companies was suspended.

If the plans are approved by shareholders and regulatory authorities Hutchison Whampoa will make a general offer for the electricity utility Hongkong Electric, in which it already has a controlling interest.

Hutchison will then transfer its existing 35.01 per cent holding in Hongkong Electric to newly listed Cheung Kong Infrastructure, run by Mr Li's eldest son Victor. The move may result in the privatisation of HK Electric.

The parent company Cheung Kong will then transfer its entire shareholding in Cheung Kong Infrastructure to Hutchison for HK$20bn (pounds 1.54bn) worth of new shares in Hutchison, which will own 84.6 per cent of the infrastructure company. Cheung Kong will own 50 per cent of Hutchison.

Despite the increased shareholdings there is no suggestion of any real management change because companies already controlled by Mr Li are not famous for their autonomy.

The net result of this reshuffling will be to position Hutchison as a big league infrastructure business focusing on telecommunications, power generation and ports development. Although its main interests lay in Asia, Hutchison has significant interests in Britain - its control of the recently listed Orange mobile telecommunications company and its joint ownership of Britain's largest container port at Felixstowe, run with OCCL, the company previously headed by Tung Chee-hwa who will lead Hong Kong's first post-colonial government.

Cheung Kong, the parent company, will increase its holding in Hutchison but retain its focus on property development, the area of Mr Li's expertise.

Mr Li is known as Chiu yan ("Superman") to the Chinese language press and most moves he makes are greeted with near-reflex approval. However some analysts yesterday were expressing concerns about the possibility that high-growth Cheung Kong Infrastructure might be held back by low- growth Hongkong Electric.