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money will flow out of gamestop and go into badly bruised C& C
When was this news? Year 2000??
chartistkao1 ( Date: 10-Aug-2021 16:00) Posted:
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THE SUPERMAN OF HONG KONG
Li Ka-shing just bought stakes in British-controlled Jardines. What is the consummate China insider up to?
By Alejandro Reyes / Hong KongGo to charts of Li' s holding and stock perfomanceGo to an organizational chart of Jardine Matheson, with recent stock performance
Go to a story about Jardines
Go to a story about elder son Victor Li Tzar-kuoi
LI KA-SHING is affectionately known in Cantonese as chiu yan Li or " Superman Li." When cutting a deal, the Hong Kong tycoon who parlayed a plastic-flowers business into a multi-billion dollar property-based empire can move faster than a speeding bullet. In 1985, it took him just 17 hours to buy a controlling stake in Hongkong Electric for HK$2.9 billion ($375 million) -- and that included eight hours of sleep. And he needed only minutes to come to terms with Hongkong Bank on a $24.8-million loan to help finance the deal.
As for leaping tall buildings, last week, Li, 69, disclosed that his Cheung Kong group had recently picked up a 3% stake each in British trading house Jardine Matheson and Jardines-controlled Hongkong Land, the biggest landlord in the territory' s Central business district. The bold move came less than two months after China resumed sovereignty over former British colony Hong Kong. Jardines has been out of favor in Beijing because of its opium-trading past and perceived anti-Chinese sentiments -- and Li is known to be close to the Chinese. Very close.
Was Beijing priming a favorite businessman to take control of the giant British hong? " It' s stretching the imagination a bit to see 3% as a takeover bid," says Kent Rossiter, deputy general manager of Nikko Securities (Asia). He suggests that Li simply saw an opportunity since Jardines and Hongkong Land were trading at a steep discount to their net asset value. But businessman William Fung Kwok-lun disagrees. " I don' t for a moment think he was investing just because he recognized value," says the immediate past chairman of the Hong Kong General Chamber of Commerce. " What he wants may be a bigger chunk or, in this new era, to be invited on the board."
The market is eagerly waiting for Superman' s next maneuver. Whatever that is, Li (estimated net worth: $11 billion) is already a winner. On the Singapore stock market, where they are listed, Jardine Matheson at one point gained 17% while Hongkong Land jumped 33% after Cheung Kong made its Aug. 5 announcement. On Aug. 12, Jardines was up 13.5% and Hongkong Land 26%. In a week, Li' s combined $435 million purchase had appreciated considerably. " It' s a no-lose situation for the Li group of companies," says Rossiter. The share prices of Cheung Kong Holdings and subsidiary Hutchison Whampoa, both listed in Hong Kong, also zoomed.
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*Includes $1.4 billion in profits from associated firms. All results for 1996. Sources: Cheung Kong and Datastream
What is Li up to? He isn' t talking, so speculation is filling the gap. When Jardine Matheson and Hongkong Land weakened Aug. 11, for example, there were rumors that Li was taking profits. That is possible. In 1986, the tycoon bought a 4.99% stake in British media-based conglomerate Pearson. When the Pearson board did not offer him a seat, Li sold out. A year later, Cheung Kong and other Li companies purchased 4.9% of British telecommunications group Cable & Wireless. " Cable & Wireless never bothered to extend Li' s investment into anything long-term, such as a joint venture," notes Anthony Chan, whose biography of Li was published last year. Li opted out at a profit in 1990.
The betting is that a full takeover of Jardines is not likely, even with China' s backing. The hong is simply too big -- and amply protected. Fung says Li must contend with Jardines' weblike cross-shareholding structure, designed to place control in the hands of Britain' s Keswick family despite their less than 10% holdings in the group. Jardines also moved its legal domicile from Hong Kong to the British colony of Bermuda in 1984, adding fuel to Beijing' s anger but ensuring that takeover attempts are detected early. Under the island' s securities regulations, anyone accumulating 3% of a Bermuda-based company must make a disclosure. The trigger point in Hong Kong is 10%.
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*Includes $262 million from the sale of a stake in British firm Trafalgar House. All results for 1996. Sources: Jardines, Datastream, World Equities
Some analysts say Li is really interested in Hongkong Land. " The Keswick family would sell at the right price," says Hong Kong investment adviser Marc Faber. " They are international investors and they know that the price of real estate in Hong Kong is higher than ever." Hongkong Land owns some 40% of the Central district' s prime properties, including the prestigious office complex Exchange Square, which is home to the Hong Kong bourse, Alexandra House, Swire House and, of course, Jardine House. Li has torn down his Central hotel, the Hilton, and is redeveloping the site into a new corporate headquarters for Cheung Kong.
He had tried to wrest control of Hongkong Land in 1987 when he joined a group that launched a takeover bid. Jardines eventually ended the run when it bought back at a premium the shares the consortium had purchased. It wrung out a pledge from the raiders not to try another attack on any Jardines firm for seven years. That agreement expired in 1995. If a full takeover of Hongkong Land does not happen, Li could end up with a board seat -- or at the least, a joint venture. " I wouldn' t be surprised to see Hongkong Land and Cheung Kong team up in the future," says Geoffrey Palmer, a property analyst at Credit Suisse First Boston. " Cheung Kong has a good record as a developer and Hongkong Land has good properties."
A seat on Jardine Matheson' s board is also a possibility. " Jardines needs a China connection," says Rossiter -- and Li is the consummate China insider. The conglomerate has already been working hard to build bridges with China. Group chairman Henry Keswick and managing director Alasdair Morrison recently met Vice-Premier Zhu Rongji. There have been rumors that Jardine companies, which include hotel group Mandarin Oriental and food producer and supermarket operator Dairy Farm, will re-list in Hong Kong. (They moved to Singapore in 1994 in yet another Jardines decision that upset China.) Some see a team-up as a win-win-win situation for Li, Jardines and Beijing. The Chinese could deal with the British hong through a trusted intermediary, assuring foreign investors they can put aside personal animosity.
If Li pulls off a deal with the Keswicks, it would cement his reputation as a key player in the new Hong Kong. He has been seen as slipping in recent years. Cheung Kong has yielded its position as the territory' s top developer to the Kwok family' s Sun Hung Kai, whose new projects now typically fetch about HK$500 ($65) more per square foot than those of its rivals. Li' s fellow property tycoon, Lee Shau-kee of the Henderson group, is said to be wealthier. New World boss Cheng Yu-tung has bigger investments in the mainland. Li has the ear of Chinese President Jiang Zemin and a direct line to Hong Kong Chief Executive Tung Chee-hwa -- but so do tycoons Henry Fok Ying-tung and Ann Tse-kai.
Not that Li is obsessed by rankings. " The mark of respect is more important to him than millions and billions of dollars," says his elder son Victor Li Tzar-kuoi, who is being groomed to take over the empire as early as next year. Still, the signs are that Li Ka-shing may become the first among equals in Chinese Hong Kong. When Jiang came to Hong Kong for the June 30 handover ceremonies, he chose to stay, for free, at the $3,800-a-night presidential suite at Li' s Harbour Plaza, a five-star hotel in an out-of-the-way location. " We have made an internal decision not to say anything about the presidential visit," says Harbour Plaza manager Sean Murray. " But I can tell you it turned out well for everyone."
Li has endeared himself to China in other ways. He has served as an adviser to CITIC, Beijing' s investment arm, for years. The tycoon waived Cheung Kong' s usual hefty fee for overseeing the construction of the new headquarters of the Chinese Foreign Ministry in Hong Kong. Li is said to have spent close to $85 million since 1980 to set up and maintain a university for 5,000 students in Shantou, near his hometown of Chaozhou in Guangdong province. He is putting nearly $360 million into building homes in Beijing. The Cheung Kong group is the biggest manager of container terminals in China with major operations in Yantian and Shanghai, and has become a big player in power plants.
In Hong Kong, Li has close ties with Tung. The chief executive' s family-owned company, Orient Overseas (International) Limited, joined Li' s Hong Kong International Terminals as a junior partner in the $19.6-million purchase of a 75% stake in the Felixstowe Dock and Railway Company, which operates Britain' s largest container port. During the race for the post of chief executive last year, Li' s strong support was a key factor in securing Tung' s victory. " Mr. Li is my good friend," Tung said recently. " In Hong Kong, I have many good friends from the fields of commerce, academe, politics. To be chief executive, the most important thing is impartiality and selflessness."
Though early in the special administrative region' s history, there are already worries about Li' s clout. " But it' s not as if one guy like Mr. Li is now totally paramount," says businessman Fung. " You' ve got the Kwoks and the Lee Shau-kees of this world. You' ve got other people, including the old British interests who are not small." While Fung concedes that " big business people like Mr. Li would be able to influence the Hong Kong government," he does not think they can do so to the extent that British businesses did in colonial times. There is no major business figure like Li on Tung' s Executive Council, for example. British administrations had always reserved seats for British firms such as Jardines and Hongkong Bank.
Besides, Li is more interested in business -- and in charities. He has said he would retire next year to concentrate on social work. His companies demand a lot of attention. The Li empire stretches from Britain and Europe to America and around Asia. Hutchison Telecom in Hong Kong has ventures in India, Indonesia, Thailand and Australia. Hutchison International Port Holdings recently signed a deal to build and operate a container terminal at the Indonesian port of Bojonegara. In March, Li restructured his empire to improve operational efficiency and refocus the infrastructure businesses.
" He' s a shrewd businessman who can follow opportunities," says Nikko' s Rossiter. " He knows a good deal when he sees it." Last week, Henderson Land executives revealed that they too had looked at Jardines, but decided against a buy-in. Henderson was a member of the consortium that tried to take over Hongkong Land with Li in 1988. Henderson Land vice-chairman Colin Lam Ko-yin told reporters his company has no plans to join a bid for Jardines -- " at the moment." With Superman Li leading the charge, any potential partner would need to make up its mind fast.
--With reporting by Alexandra A. Seno / Hong Kong
What' s up with Jardine Matheson' s recent stake raise in Jardine Strategic?
One advisory firm suggests that the ultimate goal of recent share buys could be a potential privatisation of Mandarin Oriental
Sat, Aug 10, 2019 - 5:50 AM
UPDATED Sat, Aug 10, 2019 - 5:50 AM
Singapore
JARDINE Matheson' s recent scooping up of shares in related company Jardine Strategic up to the free float limit has sparked speculation that there is a privatisation in the making - not of Jardine Strategic, but in a roundabout way, of Mandarin Oriental International.
Jardine Matheson has been incrementally buying shares in Jardine Strategic since the start of this year. Its latest stake as at late June is about 84.9 per cent, fast breaching the 15 per cent free float threshold allowed by the London Stock Exchange (LSE) where it is also listed.
The unexpected conclusion about the privatisation target was arrived at by United First Partners, a special situations investment and advisory firm focusing on event-driven analysis, in its report published last month.
Its train of thought is as follows: Jardine Strategic currently owns about 77.28 per cent of Mandarin Oriental, a global group that invests in and manages luxury hotels, resorts and residences in Asia, Europe and America.
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JARDINE Matheson' s recent scooping up of shares in related company Jardine Strategic up to the free float limit has sparked speculation that there is a privatisation in the making - not of Jardine Strategic, but in a roundabout way, of Mandarin Oriental International.
Jardine Matheson has been incrementally buying shares in Jardine Strategic since the start of this year. Its latest stake as at late June is about 84.9 per cent, fast breaching the 15 per cent free float threshold allowed by the London Stock Exchange (LSE) where it is also listed.
The unexpected conclusion about the privatisation target was arrived at by United First Partners, a special situations investment and advisory firm focusing on event-driven analysis, in its report published last month.
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This follows a review of strategic options for the site in 2017, which allegedly saw potential purchasers such as Sun Hung Kai Properties, Hysan Development and a joint venture between China Estates Holdings and China Evergrande Group.
However, no deal was cut, as none of the proposals supposedly fully met its expectations or transaction requirements.
Mandarin Oriental has been open about the fact that it believes the redeveloped building will generate higher yields, given strong commercial property values in Hong Kong. The redevelopment is expected to take up to six years to complete, and will cost some US$650 million.
Upon closure, Mandarin Oriental will be required to recognise a one-time accounting valuation gain associated with reclassifying the asset as a commercial investment property on its balance sheet - currently estimated to be about US$2.9 billion. This will be reflected in the group' s 2019 results.
It is this accounting gain that analysts Justin Tang and Oh Jin Rui consider to be the " hard near-term catalyst" , the rationale for a potential privatisation.
They argue that Jardine Strategic could make a 40 per cent premium scrip privatisation offer, say US$2.50 per share for Mandarin Oriental, and pay it in company shares.
This would require about 18.74 million shares to be issued to Mandarin' s minority shareholders, and it would solve Jardine Strategic' s problem of maintaining its free float, as it would raise the total shares outstanding and dilute Jardine Matheson' s stake from nearly 85 per cent to about 83.5 per cent, effectively eliminating the possibility of a free float breach.
" Even with a 40 per cent premium, Jardine Strategic would still reap upside upon completion of the Excelsior' s redevelopment without having to share it with minorities of Mandarin," they said.
They also surmise that Jardine Matheson' s bulking up on Jardine Strategic' s stakes is probably not a prelude to the privatisation of the latter, and consequently the unwinding of a cross-holding structure between the two entities.
Jardine Strategic holds most of the Jardine group' s major listed interests it also holds more than 50 per cent of Jardine Matheson. This makes Jardine Matheson and Jardine Strategic both major shareholders and subsidiaries of each other. Such a cross-holding structure makes a takeover virtually impossible, they say.
Chances are also slim that the cross-holding structure fiercely protected by the controlling Keswick family would be allowed to unravel, as this would put them in a position vulnerable to corporate raiders.
The analysts also explored the possibility of Jardine Matheson being attracted by Jardine Strategic' s net asset value (NAV) of US$68.46 per share as at end-2018.
However, they noted that the purchases had continued even at a historically tight discount to NAV.
Therefore, a more plausible reason is that Jardine Matheson has intentions to use Jardine Strategic shares to buy out the 22.72 per cent Mandarin Oriental interest the Jardines do not own.
Nicolas Van Broekhoven, who publishes on markets insights platform Smartkarma and has been following the Jardine companies for over a decade, said that given that the share price of Mandarin Oriental is back to multi-year lows, and also that its financial results have been poor, privatisation is a possibility.
Jardine Matheson, through its public relations agency, declined to comment.
According to a Singapore Exchange spokeswoman, the new delisting rules, including the " fair and reasonable" opinion required from independent financial advisers for the exit offer, do not apply to companies secondary-listed on the local bourse.
Jardine Matheson, Jardine Strategic and Mandarin Oriental each have a primary listing on the LSE, with secondary listings in Singapore and Bermuda.
Jardine Matheson, founded in China in 1832, is the listed holding company of the Jardine empire, overseeing a portfolio of diverse businesses, including Jardine Strategic.
The latter holds most of the Jardine group' s major listed interests, including property player Hongkong Land, Pan-Asian multi-brand retailer Dairy Farm, Mandarin Oriental, Indonesia-based diverse business Astra International and Jardine Cycle & Carriage.
Both Jardine Matheson and Jardine Strategic reported lower earnings for the six months ended June 30, weighed down by Indonesian conglomerate Astra and the weaker car market in Indonesia, although both Hongkong Land and Dairy Farm chalked up increases in profit.
Jardine Matheson, Jardine Strategic and Mandarin Oriental shares closed US$55.08, US$32.95 and US$1.43, respectively on Thursday.