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Ben Kwok

father pockets a packet after bailing out prince richard

Here's a heartwarming story about a father bailing out his son and making a big profit on the transaction.

The father is Li Ka-shing, the son is Richard Li Tzar-kai.

About nine years ago, Prince Richard took over a prime Tokyo commercial site for HK$5.82 billion.

The market had been sluggish for a long time and not even zero interest rates could revive it. So Li the younger's private arm Pacific Century Group ended up selling a 45 per cent stake to the father's Hutchison Whampoa at a steep discount of HK$1.45 billion.

An office and hotel project was launched on the site in November 2001 and again the response in the market was tepid.

But yesterday Pacific Century Group said it had sold the Japanese complex to K.K. daVinci Advisors for about HK$13.2 billion, more than double its acquisition price before construction costs. Pacific Century will hang on to the top floor of the building and the 57-room boutique hotel managed by Four Seasons.

Hutchison's spokeswoman declined to comment on the sale. But based on the above facts, we can deduce that Li Ka-shing's conglomerate cashed out some HK$6 billion from the sale and a net profit in excess of HK$4.5 billion - not bad for a 'bailout' exercise.

Meanwhile, all eyes will be on Prince Richard, who cashes out US$1 billion and another US$1 billion - if he manages to sell PCCW.

Not many excited by merchants debut

China Merchants Bank will make its trading debut today but not too many people are getting excited.

For one thing, not everyone who applied received a shares allotment, unlike other mainland mega-IPOs. Out of 541,220 applicants, 194,608 or 35 per cent did not get any shares. Lai See knows of a family of three where each member applied for the minimum number but wound up with nothing.

The allotment ratio was less than  1 per cent compared  with Bank of China's 2 per cent. Therefore, a person who put down HK$1 million of his own and borrowed another HK$9 million to subscribe ended up getting only 9,000 shares.

Including interest the average holding cost would be near HK$10 per share compared with the IPO price of HK$8.55.

There were 38 super-rich guys who subscribed for the maximum 55 million shares for HK$470 million. They ended up getting 521,000 shares for HK$4.45 million each.

The super-rich were much luckier in previous IPOs when one big client put up as much as HK$1.8 billion and got HK$36 million worth of Bank of China shares.

A wasted effort

Lai See is not a fan of the whole concept of sustainable development in Hong Kong. On the other hand, he is a friend of the environment.

So you can imagine his reaction upon learning that a dozen of his Quarry Bay colleagues had received the University of Hong Kong's 36-page 2005 Sustainability Report (complete with CD) - and seeing a number of the opulent glossy publications pitched unceremoniously into the recycling box.

This mass distribution effort clearly runs counter to the local universities' stated policy of minimising avoidable waste and pollution in all their forms. Green Group Consumer Power recently estimated that our eight institutions of higher learning had consumed 264 tonnes of paper - a heap that would be about 15 times the size of Hong Kong Stadium - to produce pamphlets for students.

On the last page of its latest publication, HKU invites suggestions on how to improve its sustainability reporting. How about this - send it out by e-mail in PDF format.



Lai See