Magic Circle Firms on Reorganization of Li Ka-shing's $97B Empire
Asia's richest person is spinning off his real estate assets into a new company in a deal led by Freshfields, Linklaters and Woo Kwan Lee & Lo.
January 12, 2015 at 10:32 PM
3 minute read
Li Ka-shing, Asia's richest man, has turned to longtime Hong Kong counsel Woo Kwan Lee & Lo and Freshfields Bruckhaus Deringer for a reorganization of his $97 billion business empire.
The 86-year-old Li controls his business empire through Cheung Kong (Holdings) Ltd., which operates significant property, ports, infrastructure, retail, telecommunications and energy businesses in 50 countries. Under Li's proposed reorganization, a newly created company called CKH Holdings will become the group's holding company. If shareholders vote in favor, CKH will then merge with two other significant companies in the group: Hutchison Whampoa Ltd. and Husky Energy Inc. Finally, the group's real-estate assets will be transferred to a new company called CK Property. Both of the new companies will be listed on the Hong Kong stock exchange by way of introduction.
In a filing to the exchange, Cheung Kong said the reorganization would unlock greater value for shareholders while also allowing them to invest directly in the two new companies. Markets tend to undervalue the assets of a holding company like Cheung Kong, which controls 49.97 percent of Hutchison Whampoa, and therefore shareholders were not realizing the true value of their investment because of that “holding company discount,” the company said. The filing noted that, on Jan. 7, Cheung Kong shares were trading at a 23 percent discount to the parent company's book-to-equity value as of June 30 last year.
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