Consortium of 3 Li Ka-shing firms acquires Phoenix Energy, Northern Ireland’s largest natural gas distribution network, for US$941 million

CK Infrastructure, CK Asset Holdings and Power Assets Holdings acquire Lionrai Investments No. 1, which owns 100 per cent of Phoenix Energy, from NatWest Group Pension Fund and Utilities Trust of Australia
Very happy to acquire quality asset characterised by stable returns: Victor Li Tzar-kuoi

Energy

Yujie Xue

Published: 9:50pm, 24 Apr 2024

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A consortium formed by Hong Kong tycoon Li Ka-shing’s infrastructure and energy flagship, CK Infrastructure, property arm, CK Asset Holdings, and international energy utility investment unit, Power Assets Holdings, is acquiring the largest natural gas network company in Northern Ireland, the CK Group said on Wednesday.

The consortium has reached an agreement to acquire Lionrai Investments No. 1, which owns 100 per cent of natural gas network company Phoenix Energy, from NatWest Group Pension Fund and Utilities Trust of Australia in a deal worth £757 million (US$941 million). The transaction is expected to be completed by the end of this month, the group said.

CK Infrastructure and CK Asset each hold 40 per cent equity interest in the consortium, while Power Assets holds the rest.

“We are very happy to acquire another quality asset characterised by stable returns,” Victor Li Tzar-kuoi, Li’s elder son and chairman of CK Infrastructure and CK Asset, said in a statement.

Beginning operations in 1996, Phoenix Energy is one of three gas distribution network operators in Northern Ireland and is now the region’s largest natural gas network company. It operates a network that covers nearly half of the local population, including Greater Belfast, and covers 78 per cent of gas connections in Northern Ireland.

Lionrai reported an after-tax loss of £34.3 million in 2021 and £13.6 million in 2022, according to a CK Group stock exchange filing in Hong Kong. It did not provide data for last year.

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The deal marks CK Infrastructure’s first acquisition of an asset in Europe since 2017. The acquisition can provide stable cash flow, immediate yield and recurring profits to the group, CK Infrastructure said in the statement.

CK Infrastructure, also founded in 1996, owns a global infrastructure portfolio that comprises primarily projects operating in the United Kingdom, Australia and New Zealand. The company had HK$13 billion (US$1.65 billion) in cash on hand and a net debt to net total capital ratio of 7.7 per cent as of the end of last year.

Together with other CK Group units, including CK Asset and Power Assets, CK Infrastructure has been on an asset shopping spree since the outbreak of the Covid-19 pandemic, taking advantage of cheap valuations caused by the pandemic-led global economic slump to hunt for bargains with HK$18 billion in cash in hand at the time.

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Li has, however, taken a hit from a gloomy property sector and sluggish trade landscape. According to Forbes magazine in February, Hong Kong’s 50 richest persons saw their total wealth diminish by 9 per cent to US$296 billion last year, with Li, who tops the list, seeing his net worth shrink by 7 per cent to US$36.2 billion.

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