By Li Hongmei
Power Assets Holdings controlled by Li Ka-shing, Asia's richest person according to the Bloomberg Billionaires Index, said in a securities filing Dec. 15 that it will spin off the business into HK Electric Investments, a single-investment trust, by way of listing the shares on the Hong Kong Stock Exchange, according to the media reports.
Cheung Kong Infrastructure Holdings, the largest publicly listed infrastructure company in Hong Kong which owns a 39% stake of Power Assets, will focus on overseas state-governed infrastructure investments.
According to the proposal, following the completion of the planned spinoff, Power Assets expects to own 30%-49.9% of the trust, with the remainder sold in the market, thus providing Power Assets with a steady dividend stream.
HK Electric Investments, which is expected to go listed as soon as Jan. 29 next year, will become a high-dividend utility trust after the spinoff, which could pay an annualized distribution yield of 5.5% to 7.26%, Power Assets said.
After the spinoff, Li's public utility kingdom will separate into three key units: Cheung Kong Infrastructure, Power Assets, and HK Electric Investments.
Several international institutional investors expect the spinoff to improve Power Assets' estimated value, and anticipate that Power Assets will transform itself into an energy investment company seeking high growth that will have an annualized yield of more than 10%.
Li is using stapled security - a security that is contractually bound to one or more other securities to form a single salable unit - to maintain 100% ownership of the new listing of HK Electric Investments.
Cheung Kong Infrastructure will target overseas state-controlled airports and waste management projects, said June Ng, an power analyst at DBS Vickers.
After the spinoff, experts expect that Power Assets and Cheung Kong Infrastructure will immediately sign a non-competition clause. If the investment project exceeds HK$4 billion (US$516 million), Power Assets might invite Cheung Kong Infrastructure to invest, while HK Electric will focus on generating and supplying electricity for the Hong Kong region.
