Hutchison Whampoa is controlled by the Cheung Kong Group, and headed by Li Ka-shing, Asia’s wealthiest man, who has been nicknamed “Superman” because of his investment prowess. Its operations include ports, with property and hotels, retailing telecommunications (Hutchison Telecommunications International) and infrastructure (Cheung Kong Infrastructure).
Li Ka-shing's Hutchison may sell Watson, raise up to HK$98 billion
Possible offering by Li Ka-shing company could be biggest in Asia in three years, say analysts
Billionaire Li Ka-shing's Hutchison Whampoa is considering selling shares in its AS Watson retailing unit in what may become Asia's biggest initial public offering in three years.
Hutchison would review all options for the unit, including a public offering, that would allow it to retain control, it said on Friday. It could raise as much as HK$98 billion by spinning off part of AS Watson, according to Credit Suisse, making it the biggest IPO listing in Asia since AIA's HK$159 billion offering in 2010.
Hong Kong-listed Hutchison is considering the spin-off after scrapping plans to sell its ParknShop supermarket chain and a review by its financial advisers. AS Watson has more than 11,000 stores operating in 33 markets worldwide, according to its website, and its brands include health retailer Superdrug in Britain, Rossmann in Germany and namesake stores in Asia.
"Hutchison Whampoa's share price will be under pressure in the short term to reflect the disappointment the investors have over its failed attempt to sell ParknShop," Steven Leung, a director at UOB Kay Hian, said yesterday.
"The spin-off of AS Watson would be a better option for Hutch in the long run as it could unlock a more attractive valuation given the assets are more appealing."
Hutchison has not specified the timing, valuation or listing location of any potential offering. If the company decides to list a Watson spin-off in Europe, it could become the largest regional IPO since the US$17.3 billion sale of Enel, Italy's largest utility, in 1999.
The AS Watson business could have a market value of as much as HK$201 billion if Hutchison spins off 49 per cent, according to Credit Suisse. Earnings growth in the retail business had remained strong across different regions, especially Germany and the Netherlands, Credit Suisse analysts said.
Hutchison shares fell 1.1 per cent to HK$95.75 in Hong Kong trading yesterday, as the benchmark Hang Seng Index rose 0.4 per cent.
Hutchison also operates ports, hotels and provides telecommunications services. Li has stepped up investments in Europe, buying telecoms and utilities businesses, betting growth will outpace some of his Hong Kong assets. The billionaire is also planning to list his Hong Kong electricity business.