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Peggy Sito

The Children's Investment Fund Management (TCI), the British hedge fund that has been snapping up stakes in Hong Kong companies, is buying almost 10 per cent of medium-sized developer Chinese Estates Holdings for about $1.7 billion.

TCI had agreed to buy all 173.95 million shares, or an 8.27 per cent stake, owned by company chairman Thomas Lau Luen-hung at $8.33 each, for  $1.44 billion, sources said yesterday.

The price represents a 3.13 per cent discount  on Chinese Estates' closing price of $8.60 on Monday.

The stock, which was suspended from trading yesterday, has risen more than 13 per cent this year on expectations that interest rates would soon peak, boosting property prices later in the year.

It is understood that the hedge fund also bought shares in Chinese Estates from other shareholders, raising its holding in the company to about 9 to 10 per cent.

TCI, which was set up in 2003 by money manager Christopher Hohn, has been grabbing headlines in Hong Kong over the past four months as it bought up significant stakes in a number of local and mainland companies.

It now owns 18.35 per cent  of the Link Reit and an 11 per cent interest in Xiamen International Port. The company also has a stake in developer Sinolink Worldwide Holdings.

Late last year, the fund became a heavy buyer in New World Development but cashed out, selling its stake down below the 5 per cent disclosure level.

'The fund approached majority shareholders in Chinese Estates,' said the source, adding that TCI had expressed interest in holding the shares as a long-term investment.

Chinese Estates owns Windsor House in Causeway Bay and the Tung Ying Building in Tsim Sha Tsui.

Following the share placement, Mr Thomas Lau would not hold any shares in the company but would remain  on board as the company's chairman, according to the source said.

The placement came less than two weeks after executive director Joseph Lau Luen-hung and other key shareholders sold 209 million shares at $8.30 each to raise $1.73 billion.

The two placements came as the developer is said to be planning to raise up to $5 billion through an injection of between $8 billion and $15 billion worth of investment properties into a proposed real estate investment trust.

The company is looking to list the trust next month or in May.



TCI snaps up 10pc of Chinese Estates