Li clan amps up quest for a simple sprawl discount
26/02/2026 04:57
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. By Una Galani HONG KONG, Feb 26 (Reuters Breakingviews) - Victor Li is trying to wheel and deal his way back to a plain old conglomerate discount. The son of billionaire Li Ka-shing, one of Asia's original tycoons, agreed to offload electricity distributor UK Power Networks to French utility Engie ENGIE.PA for $14.3 billion. It frees up capital for new investment, but finding better options than returning it to shareholders will be tough. Li's flagship entities have suffered as conglomerates increasingly go out of fashion and Sino-American tensions rise. The younger Li has made it a priority to address valuation slumps at $30 billion CK Hutchison 0001.HK, which includes ports, telecom, retail and energy businesses, and $21 billion CK Asset 1113.HK, home to the China-focused property portfolio. Despite some recent improvement, both trade at just 40% of their book values, down from around par after the elder Li cleaved his empire in 2015. The latest disposal, from CK Infrastructure 1038.HK, helps a bit. It values the UK Power enterprise at roughly 1.5 times its regulated asset value, in line with what Iberdrola IBE.MC and National Grid NG.L have paid for acquisitions in recent years. Owned by CK Asset, CK Hutchison subsidiary CK Infrastructure and its minority-owned Power Assets 0006.HK unit, the group will report a gain of at least $2.9 billion. The stock prices of Li's two main holding companies gained 2% and 3% on Wednesday after the deal was announced. Such gains are capped at the flagship outfits because the sellers intend to use the proceeds for new investment and acquisition opportunities, rather than simply handing cash back to investors. CK Infrastructure said in August that it sees itself well-positioned to take advantage of a "buyer's market". With its $23 billion ports deal stalled, the Li family is gearing up for an active 2026. Victor Li's agenda includes taking CK Hutchison's telecom and retail assets public in London and Hong Kong. What he does with the money will dictate just how committed he is to compensating for CK's undesirable sprawl. Follow Una Galani on Linkedin and X. CONTEXT NEWS Hong Kong's CK group said on February 25 that its CK Infrastructure Holdings had agreed to sell UK Power Networks to French utility Engie for 10.5 billion pounds ($14.3 billion) in cash and intends to use the proceeds to find new investment or acquisition opportunities. Electricity distributor UK Power Networks is 40%-owned by CK Infrastructure, 40% by Power Assets and 20% by CK Asset. Engie said it expects the deal to be completed in mid-2026, after securing approval from independent shareholders of the selling Hong Kong-listed parent companies. CK Infrastructure, a CK Hutchison subsidiary, holds 36% of Power Assets. The Li family's CK empire trades at a deep discount https://www.reuters.com/graphics/BRV-BRV/zjvqmqxmmvx/chart.png (Editing by Jeffrey Goldfarb; Production by Ujjaini Dutta) ((For previous columns by the author, Reuters customers can click on GALANI/ una.galani@thomsonreuters.com))