Billionaire Li Seeks to List 25% of Retail Unit This Year

Hutchison Whampoa Ltd. (13), controlled by Asia’s richest man Li Ka-shing, plans an initial public offering this year for A.S. Watson & Co., selling about 25 percent of the division that has more than 10,000 retail stores worldwide.

Hutchison, which yesterday posted a 20 percent jump in 2013 profit, plans to list the unit in Hong Kong and another location, according to Li.

“If you look at all the analyst reports, Watson now represents 10 to 15 dollars in our share price, it’s way below its value which could be as high as 50 or 60 dollars,” Managing Director Canning Fok said at a media briefing in Hong Kong yesterday. “We should do an IPO to reflect the value of these operations.”

Hutchison, with interests in retail, ports and telecommunications, is expanding in Europe and North America while seeking to sell assets in Hong Kong and China, where long-term economic growth is slowing. Watson would be valued at more than $20 billion in an IPO, a person with knowledge of the matter told Bloomberg News in December.

Hutchison has picked Bank of America Corp., Goldman Sachs Group Inc. and HSBC Holdings Plc to work on an IPO of its retail arm, two people with knowledge of the matter said in December. This came after the company scrapped plans to sell its ParknShop chain in October.

“Watson can have two listing locations as it has a relatively big market cap,” Li said yesterday. “Hong Kong will definitely be one of them. I hope we can do it within this year.”

Marionnaud

Singapore is a definite possibility for a listing, Li said today, adding the company is considering a few other options. A London listing would require Watson to be registered there, he said at a press conference.

The share sale will exclude the Marionnaud business, which operates more than 1,000 stores in 12 European markets selling luxury perfume and cosmetics and has been hit by weak consumer spending and intense competition, the company said in the statement yesterday. Hutchison has no plans to divest this unit, Fok said.

The company will continue to invest and revamp the business while it has no plans to list it separately, Li said.

Hutchison Whampoa rose 1 percent to close at HK$104.6 in Hong Kong trading yesterday. The stock fell 0.8 this year, compared with a 2 percent drop in the benchmark Hang Seng Index.

Net income at Hutchison climbed to HK$31.1 billion ($4 billion) last year, matching analysts’ estimates, on its hotels and property unit and an expansion of its mobile-phone business in Europe.

Health and Beauty

The retail division, the biggest unit by sales with health and beauty stores and groceries such as Hong Kong’s ParknShop, said earnings before interest expenses and other finance costs, tax, depreciation and amortization rose 11 percent to HK$14.2 billion. The figure excluded the Marionnaud business.

It saw a 18 percent EBITDA increase from the health and beauty operations on mainland China, the highest profit growth within the retail unit, it said in the earnings statement yesterday.

Hutchison plans to add 400 outlets in China this year and to keep gearing ratio below 25 percent for the group, he said.

The 85-year-old Li ranks 22nd on the Bloomberg Billionaires Index with a net worth of $29.6 billion. He opened a plastic flower factory after World War II and began investing in Hong Kong real estate in 1967 after riots from China’s Cultural Revolution depressed prices.

Net Worth

Li said today calculations by media of his current net worth is correct. The billionaire told reporters yesterday that his fortune is at least 40 percent underestimated and foreign magazines hadn’t accounted for his shareholding in Canadian oil and gas producer Husky Energy Inc.

The comments about underestimated wealth referred to more than 10 years ago, Li said today. He declined to comment about the value of his private foundation.

Li, who is also chairman of developer Cheung Kong Holdings Ltd., also said today he sees “very, very slim” chances the U.S. will raise interest rates this year as growth remains slow. Any hikes in 2015 and 2016 would also be limited, he said.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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