Temasek, Paulson backing Hutchison's port assets spin-off

Singapore sovereign wealth fund Temasek Holdings and US hedge fund manager Paulson & Co are cornerstone investors in Hutchison Whampoa's port spin-off in Singapore, the largest listing in Southeast Asia.

Hong Kong tycoon Li Ka-shing's conglomerate could raise almost US$6 billion by floating its Hong Kong and Shenzhen port and related assets in a business trust, Hutchison Port Holdings Trust.

Apart from Temasek and Paulson, the other major cornerstone investor is Taiwan-listed Cathay Life Insurance. Between them, the eight cornerstone investors are putting in a total of US$1.62 billion.

Paulson will inject US$350 million in the IPO, and a Temasek unit and Cathay Life will each put in US$100 million.

According to its preliminary prospectus, Hutchison Port Holdings has been priced at an indicative range of 91 US cents to US$1.09 per unit, for a possible range of up to US$5.2 billion to US$5.8 billion.

The listing of one of Hutchison Whampoa's most profitable assets could reduce the group's net debt by as much as 30 per cent at the outset, according to a report by rating agency Moody's last month.

Hutchison Whampoa's net debt as of June 30 last year, was US$19 billion and its net debt to net capitalisation ratio was over 30 per cent, Moody's said. The group wants to trim the ratio to the low-to-mid-20 per cent range. The IPO would also allow Hutchison Whampoa's partner, Singapore terminal operator PSA International, which has stakes in the group's port assets, to cash in.