Richard Li

Richard Li Tzar Kai is the younger son of Li Ka-shing, a rags-to-riches tycoon known as “Superman” in Hong Kong, his adoptive home. Li Ka-shing in 2012 anointed his elder son, Victor Li, to follow him at the helm of flagship property developer Cheung Kong (Holdings) Ltd, and Hutchison Whampoa Ltd, a conglomerate whose activities span ports, telecoms retailing, energy and infrastructure. But he also vowed to support the business ventures of Richard Li, who is the chairman of phone, pay-television and Internet company PCCW Ltd, formerly Hongkong Telecom.

PCCW spin-off raises HK$9.3b in global I.P.O.

PUBLISHED : Thursday, 24 November, 2011, 12:00am
UPDATED : Thursday, 24 November, 2011, 12:00am

PCCW is taking in HK$9.3 billion in proceeds from its telecommunications assets spin-off - Hong Kong's first business trust initial public offering - after units were sold at the low end of its price range in a volatile market.

In a filing with the Hong Kong stock exchange yesterday, PCCW said the final price for the global offering of so-called share stapled units jointly issued by HKT Trust and operating firm HKT was pegged at HK$4.53 per unit.

Although at the bottom end of the previously announced range of HK$4.53 to HK$5.38, the offer price still allowed the business trust to achieve an estimated market capitalisation of HK$29.1 billion.

PCCW group managing director Alex Arena said that amount 'exceeds the minimum market capitalisation of HK$28.6 billion approved by PCCW shareholders'.

A higher market capitalisation of HK$30.46 billion could be reached if the over-allotment option, which would be granted by HKT Trust and HKT to the IPO's international underwriters, was exercised in full.

'Despite the very challenging macro-economic environment and financial markets during the roadshow, HKT has attracted a broad list of globally renowned institutional investors who appreciate the high quality, defensive nature of HKT,' Arena said.

About HK$7.8 billion of the IPO's net proceeds will be used to pare down the outstanding US$2.5 billion in debt securities of PCCW's telecommunications business.

VC Brokerage director Louis Tse Ming-kwong said the spin-off was a triumph for PCCW chairman Richard Li Tzar-kai (pictured), who had long wanted to unlock more value in the company's telecommunications operations, while repaying debt and pursuing opportunities in the media business.

'PCCW's fixed-line business may provide a steady flow of cash, but it is a low-growth industry,' Tse said, noting that small investors had shied away from the business trust IPO.

But Li made a hefty commitment via his holdings in Pacific Century Regional Developments, Pacific Century Diversified, Pacific Century Group, and Eisner Investments.

Macquarie Securities' Lisa Soh said the business trust valuation continued to look expensive based on an estimated price/earnings ratio of 21.3 times its 2012 earnings and yield of 7.7 per cent to 8.9 per cent.


Eisner Investments, which Richard Li wholly owns, applied for this number of additional reserved share stapled units in the IPO


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