Billionaire Li’s HK Electric Investments Falls on Trading Debut

HK Electric Investments Ltd., a Hong Kong electric utility, fell as much as 4 percent on its trading debut following its HK$24.1 billion ($3.1 billion) initial public offering.

The shares were down 3.9 percent to HK$5.24 as of 10:23 a.m. in Hong Kong, compared with a 1 percent gain in the benchmark Hang Seng Index. The company sold 4.43 billion shares at HK$5.45 apiece in the IPO, the low end of a HK$5.45 to HK$6.30 range. It cut the amount it planned to sell to a stake of 50.1 percent from as much as 70 percent.

HK Electric, the utility arm of billionaire Li Ka-shing’s Power Assets Holdings Ltd., provides electricity to about 568,000 customers in the city. The IPO of the unit, which started operations in 1890, will give Power Assets “the financial strength to seek acquisitions in the global power sector,” it said in December. Li, Asia’s richest man, has a net worth of $28.3 billion, according to the Bloomberg Billionaires Index.

Outside Hong Kong, Power Assets has interests in gas distribution and wind farms in the U.K., Australia, China, New Zealand, Thailand, Canada and the Netherlands, the company said in a statement on Sept. 27. Earnings from businesses outside Hong Kong surged to HK$5.1 billion in 2012 from HK$700 million in 2007 and accounted for more than half of the company’s profit that year, Power Assets said.

State Grid Corp. of China, the nation’s biggest power distributor, agreed to pay as much as HK$10 billion for an 18 percent stake in HK Electric in a pre-IPO placement of shares. Power Assets will hold 49.9 percent of the unit after the offering.

Shaanxi Coal Industry Co., China’s third-largest producer of the fuel, followed HK Electric in reducing the size of its IPO. Shaanxi cut the size of its sale by 59 percent to 4 billion yuan ($661 million) before listing in Shanghai yesterday.

Before it's here, it's on the Bloomberg Terminal.