Li Ka-shing business empire shifts base from Hong Kong to Cayman Islands
Sweeping restructure by city's richest man sees all non-property assets of Cheung Kong group injected into newly formed company
Li Ka-shing yesterday added fresh grist to rumours about his waning interest in Hong Kong as he unveiled a sweeping restructuring of his business empire, switching its base of incorporation to the Cayman Islands from Hong Kong.
Li - the chairman of Cheung Kong (Holdings) and its subsidiary Hutchison Whampoa, which together have a total market capitalisation of HK$661.68 billion - said all of his two flagship companies' non-property assets, including ports, telecommunications, retail, infrastructure and energy, would be injected into a newly formed company, CK Hutchison Holdings (CKH Holdings), incorporated in the Cayman Islands.
As part of the reorganisation, all property businesses including those overseas in the two companies will be injected into another new entity, Cheung Kong Property Holdings, which will seek a separate listing on the Hong Kong stock exchange by introduction.
CK Property will be one of the largest property companies listed in Hong Kong.
Speaking at a press conference yesterday, Li, the richest man in Hong Kong, said the restructuring would be good for all shareholders.
According to a 70-page announcement filed with the Hong Kong stock exchange, the move is aimed at creating shareholder value as it will enable all the group's assets to be fully reflected and remove the "layered holding structure" between Cheung Kong and Hutchison.
That would allow shareholders to directly invest in the two separate listed vehicles.
Li, however, rejected suggestions that the proposed reorganisation is a sign of his withdrawal from the city.
"More than 75 per cent of companies that have listed in Hong Kong in the past 10 years or so are incorporated in Cayman Islands, including state-owned enterprises. Have they also lost confidence in Hong Kong?" said Li, adding that the company was just "following the trend".
Asked if the restructuring will help his elder son, Victor Li Tzar-kuoi, to take over the empire, he said: "As a person reaching a certain age, you want the company's successor and all the executives here to operate more easily and to do well."
Asked about Li's hint that the reorganisation would facilitate succession, Whampoa group managing director Canning Fok Kin-ning said: "We don't interpret what the chairman says. If he says it is easier, then it is easier."
Company laws in Cayman Islands were more flexible, which would allow the reorganisation to proceed smoothly, the company said as justification for the new incorporation.
Under the restructuring plan, Cheung Kong shareholders will receive one CKH Holdings share for every Cheung Kong share, while CKH will offer Hutchison shareholders 0.684 CKH share for every Hutchison share. All eligible CKH shareholders will receive one CK Property share for every CKH share.
Li, who will be the chairman of both CKH and CK Property, said: "We hope to distribute more dividends this year."
The reorganisation is expected to be completed by June.