Canning Fok, at the 'Hong Kong Heart' of Li Ka-shing's deal machine

HK Electric Investments

21/01/2015 21:00

* Fok, 36 years at Li's group, behind most big deals 
    * Fok planned the group overhaul announced on Jan. 9 
    * He is Hong Kong's top tax payer for 5 years -report 
    * Has a reputation as a fast, persuasive negotiator 
 
    By Denny Thomas 
    HONG KONG, Jan 22 (Reuters) - In late summer 2014, as mass 
protests rocked central Hong Kong, Canning Fok sat in his office 
quietly planning a business overhaul that would make his boss Li 
Ka-shing, Asia's richest man, richer still. 
    After Li revealed the fruits of Fok's labour on Jan. 9, 
describing it as a "watershed" moment in the history of his 
business group, shares in his principal companies, Cheung Kong 
Holdings  0001.HK  and Hutchison Whampoa  0013.HK , jumped more 
than 14 percent. 
    For three months, Fok worked with his core five-member team 
on "Project Diamond" to put the basic structure in place, then 
recruited HSBC  HSBA.L  to execute the plan, people familiar 
with the matter told Reuters. 
    The overhaul, aimed at tackling a valuation discount caused 
by the group's conglomerate structure, will split 86-year-old 
Li's empire into two camps, one focusing on property, and the 
other housing businesses including telecoms, infrastructure and 
ports.  ID:nL3N0UO3UK  
    "The Li family decided the timing, and then Canning took 
over," one person who has worked with the family said. Fok, who 
is currently on a road-show to win shareholder support for the 
deal, declined to comment through a Hutchison spokesman. 
    Fok, now 63, had been an auditor at Arthur Andersen when he 
wrote directly to Li asking for a job 36 years ago. Li gave Fok 
a personal hearing and hired him for Cheung Kong, according to a 
German newspaper. He impressed with his calm effectiveness and 
rose through the ranks to become Li's most trusted lieutenant 
and the family's Mr Fix It. 
    When Fok, backed by his "brains trust" team, is sold on a 
proposal, he takes it to Li and his son Victor for their 
approval and is rarely turned down, the sources said. 
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
 Graphic on the group restructuring http://link.reuters.com/met73w 
 Graphic on the group's decision makers http://link.reuters.com/duj83w 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
      
    THE FIELD MARSHAL 
    Fok has been behind most of the group's big deals of the 
past two decades, including the purchase of Orange Austria and 
Telefonica's  TEF.MC  Irish business, selling out of its Indian 
telecom venture and bringing in State Grid Corp of China 
 STGRD.UL  as a key investor in the initial public offering of 
group company HK Electric Investments  2638.HK .  
    In all these deals, Fok has personally led the negotiations, 
relying on his network of top-level contacts, the sources said. 
He has on occasion taken a private jet to close a deal - his 
own, since Hutchison, where he is group managing director, does 
not have a corporate jet. 
    "Canning is the field marshal, and he controls the Li  
empire," said a person familiar with Fok's negotiations. 
    In a region where M&A is often painfully slow, Fok is noted 
for his persuasiveness and an ability to deliver in a hurry. 
    Last year as the group's health and beauty retailer A.S. 
Watson was preparing to list on the market, Fok decided to 
gamble on an alternative fundraising avenue that would avoid the 
uncertainty of an IPO and bring in the kudos of a big global 
fund.  
    He called Singapore sovereign wealth fund Temasek Holdings 
 TEM.UL , which had been looking to buy a small stake in the 
IPO, and convinced its leaders over a brief series of meetings 
to sign their biggest ever deal, paying $5.7 billion for a 25 
percent stake. Failure could have wrecked the listing. 
     
    "HONG KONG HEART" 
    He also has a reputation for sticking to his guns on 
pricing. When he tested buyers' interest in Hong Kong 
supermarket operator ParkNShop in 2013, he set a $3 billion 
price tag. Though he got offers just 10 percent shy of that sum, 
he walked away, according to people who have worked with him. 
    Though Fok has been instrumental in building Li's empire to 
a behemoth spanning 50 countries, with listed companies worth 
more than $100 billion, he keeps his cards close to his chest. 
    "He comes across a little bit enigmatic. He's really quiet, 
listens a lot," said a person who has worked on several of Li's 
deals. 
    That makes him "a very good chess player" when it comes to 
negotiations, the person said.  
    He hasn't always had things his own way - his big push into 
European telecoms has yet to deliver - but he has been richly 
rewarded for his service, making him Hong Kong's biggest 
individual tax payer for the past five years, according to local 
media reports. 
    At home, as at work, the married father of four doesn't do 
things by halves. A keen musician, he has five pianos, one of 
them 200 years old, according to a local media report, and wrote 
the music and lyrics, including the title track, for eight songs 
on the "Hong Kong Heart" album by singer Irene A. 
 
 (Additional reporting by Alice Du, Elzio Barreto and Lawrence 
White; Editing by Will Waterman) 
 ((denny.thomas@thomsonreuters.com; +852 2843 6358; Reuters 
Messaging: denny.thomas.thomsonreuters.com@reuters.net)) 
 
Keywords: LIKASHING CANNINGFOK/