As billionaire Li Ka-shing finalizes a $16 billion deal to create Britain’s biggest wireless carrier, he’s turned again to his friends at Singapore Inc. to make it happen.
Li, whose Hutchison Whampoa Ltd. is merging its U.K. mobile operator with O2 UK, will sell a 1.1 billion-pound ($1.7 billion) stake in the combined operations to Singapore wealth fund GIC Pte, according to a statement Friday. The Hong Kong tycoon has now raised $12 billion selling interests in his retail, ports and telecommunications businesses to arms of the Singapore government, data compiled by Bloomberg show.
The deals help Li keep down debt as he pursues a $31 billion reshuffle of his empire and makes overseas purchases as varied as an Australian gas distributor, a jet fleet and a U.K. rail-car portfolio. State-backed investment companies in Singapore, the only AAA-rated economy in Southeast Asia, have bought stakes in overseas firms including Citigroup Inc. and UBS Group AG as they seek growth outside the nation of 5.6 million.
“There’s obviously a great relationship,” Nicholas Teo, a Singapore-based analyst at CMC Markets, said by phone Friday. “That relationship may have led to the funds being the first port of call.”
Abu Dhabi Investment Authority, two Canadian pension managers and arms of Brazilian investment firm Grupo BTG Pactual are also buying stakes in Hutchison’s combined U.K. wireless business, for a total of as much as 3.1 billion pounds, an exchange filing shows.
Li, 86, was among the first to visit and pay his respects following the death of Singapore’s first prime minister Lee Kuan Yew in March. His corporate dealmaking history with the island nation dates back to at least 2006, when he sold a $4.4 billion holding in his ports business to rival PSA International Pte, controlled by Singapore state investment company Temasek Holdings Pte.
“They tend to do this quite a lot, where they retain control of the operations -- something that they’re good at -- and get others to part fund the equity,” said Kalai Pillay, head of Asia Pacific industrial ratings, at Fitch Ratings in Singapore. “It allows more flexibility if there are other opportunities in the future.”
Hutchison Whampoa last year postponed an initial public offering of A.S. Watson & Co., which runs groceries and beauty stores, and instead sold a $5.7 billion stake to Temasek. Spokesmen for Hutchison Whampoa, GIC and Temasek declined to comment.
“Both GIC and Temasek are aggressive investors,” Steven Leung, Hong Kong-based director of institutional sales at UOB Kay Hian Ltd., said by phone. “They have built up a good relationship with Hutch, and it will definitely continue.”