Power Assets Holdings Ltd., controlled by Asia’s richest man, Li Ka-shing, gained the most in two years in Hong Kong trading after announcing a plan to sell units in its electricity arm.
The stock jumped as much as 3.4 percent, the most since Sept. 15, 2011, to HK$69.95. The shares were at HK$69.65 as of the noon trading break.
Power Assets plans to sell as much as 70 percent stake in the Hong Kong electricity division through a business trust structure, the company said in a statement on Sept. 27. The spinoff may raise $5 billion, said two people with knowledge of the plan. That will make it the biggest initial public offering in Hong Kong since October 2010, when AIA Group Ltd. raised $20.4 billion, according to data compiled by Bloomberg.
“Some investors like utility companies because they are able to provide relatively stable returns, even during economic downturns,” said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai. “Power Assets shares have witnessed some adjustments early this year and are not expensive compared with competitors.”
CLP Holdings Ltd., Hong Kong’s biggest electricity supplier, has a price to earnings ratio of 17.9 times, while Power Assets trades at 14.6 times, according to data compiled by Bloomberg.
Proceeds from the spinoff will enable Power Assets to pursue acquisitions in the global power industry, according to the company’s statement. The spinoff is a commercial decision and shouldn’t be seen as a withdrawal of capital from Hong Kong, Power Assets said in a separate statement on Sept. 27. Li’s Hutchison Whampoa Ltd. is considering exiting its ParknShop supermarket chain in Hong Kong, while buying Telefonica SA’s Irish mobile-phone unit.