Henderson Land Ripe for Restructuring After Lee Buying, BNP Says

  • BNP says deep discount to net asset value could be catalyst
  • The billionaire raised his stake to about 72% in January

Henderson Land Development Co. Chairman Lee Shau-Kee’s streak of share purchases in the developer has fueled expectations that the second-richest man in Hong Kong may take the company private or restructure it.

Privatization of the builder is a possible scenario, as the firm is trading at about a 50 percent discount to BNP Paribas SA’s net asset value estimate, Hong Kong-based analysts Ricky Ng and Wee Liat Lee wrote in a note Thursday. Lee boosted his stake to 72.28 percent from 72.1 percent Jan. 28. The shares rose 1.2 percent to HK$41.05 at the midday break in Hong Kong.

Hong Kong billionaires have been reorganizing their sprawling corporate empires that since the beginning of last year. Li Ka-shing’s Cheung Kong Holdings Ltd. bought out unit Hutchison Whampoa Ltd. and spun off its property assets into a different company in January 2015 in the biggest reshuffling of his empire. New World Development Co., controlled by the family of Hong Kong billionaire Cheng Yu-tung, last month announced the privatizationof its China land unit with a more attractive offer than one that failed to win over minority shareholders’ objections in 2014.

The BNP analysts referred to both those examples in the report as reasons why a restructuring of Henderson Land would make sense.

Another option would be for Henderson Land to distribute shares of Hong Kong & China Gas Co. to shareholders, BNP said. Henderson Land holds 41.5 percent of the gas company, according to data compiled by Bloomberg.

Lee’s stake increase paves the way for a restructuring as the billionaire now holds more than 30 percent of Hong Kong & China Gas, enabling him to make a general offer to remaining shareholders, Bank of America Merrill Lynch property analysts led by Raymond Ngai wrote in Jan. 28 note.

— With assistance by Emma Dong

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