Li Ka-shing Sells Fixed-Line Subsidiary to U.S. Firm for $1.86 Billion

Hong Kong tycoon Li Ka-shing has agreed to sell his Hutchison Telecommunications fixed-line phone subsidiary for HK$14.5 billion ($1.86 billion) to a US-based communications infrastructure investment firm.

The sale of Hutchison Global Communications (HGC) to I Squared Capital is the latest in a string of Hong Kong and Chinese mainland divestitures by Li in recent years, which has prompted onlookers to wonder if he is strategically slimming down his investments in the region.

HGC, currently wholly owned by Hutchison Telecommunications Hong Kong Holdings Ltd., operates fixed-line broadband phone services in Hong Kong, and is one of the city’s largest Wi-Fi providers. I Squared Capital, a private equity firm focused on energy, utilities and transportation infrastructure investment, is headquartered in New York.

Since 2013, Li’s companies have sold a number of properties in Hong Kong and on the Chinese mainland. In October, Li’s Cheung Kong Property Holdings and the Li Ka Shing (Overseas) Foundation sold its Century Link office complex in central Shanghai to China Life Insurance for 20 billion yuan.

In March 2014, Li sold nearly 25% of health and beauty chain A.S. Watson for $5.7 billion to Singapore state investment company Temasek Holdings. A year later, Li completed a restructuring of Cheung Kong Holdings under a new holding company, CK Hutchison Holdings, domiciled in the Cayman Islands rather than in Hong Kong.

But Travis Ng, a professor of economics at the Chinese University of Hong Kong, told Caixin that the stock market reaction to the deal contradicts the theory that Li sold HGC as part of a strategy to offload regional assets.

As of 2.55 p.m., Hutchison Telecommunications’ Hong Kong-listed shares were up 6.76%. This rise is consistent with market perceptions that I Squared could be “more capable of running its fixed-line business than the management of Hutchison Telecom,” Ng told Caixin.

Hutchison Telecommunications said in a statement that “the transaction will create value for its shareholders by unlocking the value of HGC, which has not been fully reflected in HTHKH’s share price in recent years.”

Hutchison Holdings Ltd, which has an approximately 66.09% stake in Hutchison Telecommunications, intends to vote in favor of and approve the HGC sale at an extraordinary general meeting, the statement also said. Hutchison Telecommunications and I Squared expect the deal to be completed in October.

Contact reporter Teng Jing Xuan (jingxuanteng@caixin.com)