Henderson stake buy shows Lee Shau-kee's confidence in Hong Kong
Flagship firm of city's second-richest man raises stakes in subsidiaries even as Li Ka-shing moves to cash out in HK so he can invest in Europe
Lee Shau-kee's decision to raise his flagship Henderson Land Development's stake in its subsidiaries is being widely seen as a reaffirmation of his faith in the Hong Kong market that fellow tycoon Li Ka-shing appears to be deserting.
Henderson Land has agreed to buy HK$2.96 billion worth of shares owned by Lee and other shareholders in Hong Kong & China Gas (Towngas), Hong Kong Ferry, Miramar and Henderson Investment.
Analysts said that while the move could be a restructuring exercise to streamline the investment portfolio of Hong Kong's second-richest man, it is also a vote of confidence in the city.
"If Lee wanted to sell off his assets, he would have sold to outsiders, not to his flagship company in which he has a 60 per cent stake," said Nichole Wong, regional head of property research at CLSA.
Wong said the short-term prospects for utilities stocks such as Towngas might not be promising given the possibility of interest rates rising. "But Lee may be taking a longer-term view. He is probably confident about the company in the long run."
Lee is tipped to use the money from selling the shares to buy farmland from Henderson Land for donation as a way of supporting the Hong Kong government's housing policy, or for buying more Henderson Land shares.
Lee has spent an estimated HK$12 billion buying back 240 million Henderson Land shares this year. In August, Lee said he was confident of reaching a deal within three months with the Housing Society to donate farmland in Yuen Long to provide more than 1,000 small homes for about HK$1 million each.
Lee's decision to use Henderson Land to buy stocks in the subsidiary companies comes amid Li's ongoing efforts to cash out of Hong Kong. Asia's richest man, chairman of Cheung Kong (Holdings) and Hutchison Whampoa, is expected to raise more than HK$100 billion by spinning off Hongkong Electric and Watsons to fund buying telecoms companies in Europe.
Eddie Hui Chi-man, a professor at Polytechnic University's building and real estate department, said Li's move reflected his view that the business environment overseas was more attractive than Hong Kong's.
Li's network abroad also allowed him to invest in a way that may not suit Lee, he said.