Superman in firm tilt to West
Apart from a sweeping corporate revamp of his empire in early 2015, tycoon Li Ka-shing expanded his business empire through offloading assets in Hong Kong and the mainland since 2011 and utilizing the “ammunition” — or proceeds from those sales —to acquire business assets in Europe regarded as undervalued after the European sovereign debt crises of 2011.
True to his Hong Kong moniker of “Superman”, in deference to his investment acumen, Li’s sales of these Hong Kong and mainland business assets indicate their valuation had reached the highest level. (see table below).
Analysts say Li’s asset sales aim to guard against any credit crunch risk on the mainland. “After years of unprecedented monetary expansion, the central government has been desperately trying to rein in credit growth. Historically, excessive credit growth has nearly always been followed by severe financial crises,” said Simon Black, founder of Sovereign Man, an independent website on international economics.
“The spillover effect of a credit crunch on the mainland could become pandemic. This is not important just for property tycoons like Li. There are implications for the entire world,” Black warned.
Meanwhile, Li has been aggressively purchasing assets in Europe the last few years, a sign of his confidence that these undervalued assets would bring economic benefits for his companies when the European economy gradually recovers. According to Forbes, Li’s firms spent $28 billion to buy European assets between 2010 and 2014.
His recent big acquisition in Europe was a $15 billion deal to buy Spanish mobile operator Telefonica’s UK mobile unit O2, which can help the consolidation of O2 and the existing Three Mobile network in the British telecom market.
Hutchison Whampoa had already brought Telefonica’s Irish business in 2013. That move saw Li’s companies operate telecom businesses in Italy, UK, Sweden, Denmark, Austria and Ireland. Analysts expect Li will consolidate the Italian telecom operations next.
Li has been snapping up European infrastructure assets as well, including UK’s Northumbrian Water, bought in 2011 for 2.4 billion pounds ($3.5 billion). He also brought the UK electricity distribution business of French power group EDF for 5.8 billion pounds. Retail assets are also on Li’s radar. Now a part of Li’s AS Watson retail empire, cosmetics retailer Superdrug was snapped up from Dutch retailer Kruidvat Beheer in 2002.
The UK is one of Li’s favorite destinations to make business acquisitions. According to Dealogic, an international information provider on investment deals, Li has spent around $50 billion to snap up UK business assets since 1995.
Li has also been scouting for technology startup investments in Israel. According to start-up market trackers IVC Research Center ,Li’s venture capital arm Horizons Ventures has invested in at least 28 Israelite start-ups since 2011, and is the biggest source of foreign cash for a growing number of startups in Israel.