Cheung Kong Infrastructure (CKI), controlled by tycoon Li Ka-shing, plans to raise up to HK$2.38 billion in a share placement.
The move has triggered speculation that the Hong Kong-listed company aims to buy overseas assets that possibly include British airports.
CKI is planning a share placement of 50 million shares priced between HK$46.15 and HK$47.62 per share, a discount of 3.3 to 6.3 per cent to its closing price of HK$49.25 yesterday, Reuters reported.
'We believe CKI is eyeing some meaningful acquisitions,' Standard Chartered analyst Evan Li said. 'It's consistent with the company's strategy to look at utilities and infrastructure in developed markets.
'They are building ammunition for a meaningful deal. We know they are looking at potential deals. Europe, the UK and North America are places that will be considered.'
CKI is reportedly nearing a bid for a British airports group, a JPMorgan report said, citing the Manchester Evening News.
'CKI has reportedly become one of the two shortlisted bidders for a stake in a joint venture with Manchester Airport Group, the owner of four UK airports in Manchester, East Midlands, Bournemouth and Humberside,' it said.
The other shortlisted bidder was Australian infrastructure fund Industry Funds Management, JPMorgan said. It would be the first acquisition of overseas airports by Hong Kong's richest man, and JPMorgan expects the acquisition would increase CKI's earnings per share by up to 5 per cent.
'We believe CKI and Power Assets Holdings are studying potential acquisitions in European Union utilities. We estimate CKI has room to fund up to HK$12 billion of acquisitions,' the JPMorgan report said.
Power Assets is a Hong Kong-listed power company in which Li Ka-shing and his eldest son, Victor Li Tzar-kuoi, jointly own a controlling 38.87 per cent stake.
This is CKI's third equity-raising exercise this year. The company raised HK$2.3 billion by issuing callable perpetual securities in February and another HK$2.3 billion through a share placement in March.
If CKI goes ahead with the latest exercise, it will have more than HK$10.3 billion in cash. The company's gearing ratio was 7 per cent at June 30, according to its 2012 interim report.
'We are in a very strong position for further acquisitions,' CKI chairman Victor Li said in the interim report.
'Backed by our strong financial platform, we will seek acquisitions that enhance our asset base and income stream.'
CKI did not return calls for confirmation.
Amount, in HK dollars, that Li Ka-shing's cash-rich Cheung Kong Infrastructure will have for acquisitions with the share placementTopics: Hong Kong Economy of Hong Kong Cheung Kong Holdings Hong Kong Cheung Kong Holdings Li Ka-shing Business