Asia's richest man starts 2015 with about US$45b in deals

[HONG KONG] For Li Ka-shing, Asia's richest man, 2015 is turning out to be a busy year.

Mr Li's Hutchison Whampoa Ltd said on Friday it's in exclusive talks to buy UK wireless carrier O2 for as much as 10.25 billion pounds (US$15 billion), three days after Mr Li-controlled units agreed to purchase a British rail business for more than one billion pounds.

Two weeks ago, the octogenarian announced his biggest deal yet: the US$20 billion-plus merger of Cheung Kong Holdings Ltd and Hutchison Whampoa, his two main companies.

Mr Li, 86, isn't done.

One of his companies is among bidders for Fortum Oyj's Swedish electricity grid, a sale people familiar with the matter have estimated could fetch more than US$5 billion, and more deals may be on their way.

The flurry of activity comes as the tycoon, so revered by Hong Kong's media they call him "Superman," reorganizes his business empire before handing over the reins to his eldest son, Victor Li.

"The profile of the company is slowly changing to becoming one where the regulated utility type of cash flow is becoming more significant," said Kalai Pillay, head of Asia-Pacific Industrials research at Fitch Ratings in Singapore.

"They will be looking at things that are more long term cash."

It's been a lucrative year for Mr Li. His net worth now exceeds US$30 billion after it increased by more than US$1 billion this year, helping him reclaim the top spot in Asia in the Bloomberg Billionaires' Index from Alibaba Group Holding Ltd's Jack Ma. Mr Li now ranks 15th worldwide.

Mr Li, who opened a plastic flower factory after World War II, began investing in Hong Kong real estate in 1967 after riots spurred by China's Cultural Revolution depressed prices.

This year's jump in Mr Li's net worth was largely sparked by the Cheung Kong-Hutchison deal, which was secretly codenamed "Project Diamond" before the Jan 9 announcement. The plan, which aims to merge the two into a single company called CK Hutchison Holdings Ltd and spin off their real estate business, was cheered by investors who drove up shares of both companies by more than 10 per cent the following trading day.

The new structure would allow Mr Li more flexibility to invest in new businesses, Canning Fok, group managing director of Hutchison and Mr Li's long-time confidant, said at the time.

This year alone, Mr Li's companies have disclosed deals exceeding US$45 billion, according to data compiled by Bloomberg. It's not just January that's been busy as Mr Li's businesses have recently made acquisitions in areas ranging from an Australian gas distributor to airplanes. If completed, the O2 deal would add to the 10 acquisitions that Mr Li's companies have announced in the past year, data compiled by Bloomberg show.

The reorganization itself started taking shape last summer, when Cheung Kong was considering an acquisition to enter the aircraft leasing business, according to senior executives including Mr Fok. It eventually agreed in November to pay US$1.89 billion to buy 45 planes from companies including General Electric Co's aviation services unit.

Hutchison Whampoa, which owns UK carrier Three, said on Friday it's in exclusive discussions to buy O2 from Telefonica SA, a deal that would create Britain's largest mobile operator with more than 31 million subscribers. The purchase comes as competition intensifies in Europe amid a shrinking telecommunications market - Ovum estimates revenue from telecom services in the region will shrink 1.5 per cent this year after declining 2.2 per cent last year.

"We have been quite clear that our strategy is to be a consolidator in our own footprint of operations," Hutchison Group Finance Director Frank Sixt said during a conference call on Friday.

"If we can achieve consolidation on the right terms in relation to any of our properties, we will do so."

The O2 disclosure came days after Mr Li-controlled companies announced they will spend at least 1.03 billion pounds to buy the UK's Eversholt Rail Group.

Last year, a group of investors including Cheung Kong Infrastructure Holdings Ltd bought control of Australian gas distributor Envestra Ltd.

BLOOMBERG