HUTCHISON Whampoa plans to spin off its holdings in two ports assets, a move expected to raise $6bn (£3.8bn) in what could be Southeast Asia’s largest ever stock offering.
The listing by Hutchison, a ports-to-telecom conglomerate owned by Hong Kong tycoon Li Ka-shing, will take place on the Singapore Stock Exchange, allowing the company to use the proceeds for investments in its ports and infrastructure business.
“Hutchison’s divestments will likely result in a meaningful reduction in the company’s net debt and increase the company’s financial flexibility,” said Kalai Pillay, senior director at Fitch’s Asia-Pacific corporates team, noting that the deal will also reduce cash flows to Hutchison from the ports business.
The key assets of Hutchison Port are deep-water container port operations in Hong Kong, China’s southern Guangdong province and Macau.
Hutchison proposes to spin off Hutchison Port Holdings Trust in a separate listing in Singapore, where regulations are favourable for trusts-like companies to list, it said in a filing with the Hong Kong stock exchange yesterday.
The statement helped explain why Hutchison would float the ports unit in Singapore rather than Hong Kong, where heavy demand from investment funds have made Hong Kong by far the top exchange for public listings in the last two years.
Shares of Hutchison fell 2.4 per cent yesterday to HK$93.65 per share in a broader market down 2.4 per cent. Traders attributed the dip to the run up the stock has enjoyed this year.
Hutchison’s shares have risen 17 per cent since the beginning of the year, making it the second-best performer among the main Hang Seng index.
City A.M. Reporter