Week in Review

July 27, 2012 6:32 pm

Li Ka-shing leads deal for UK gas group

Hong Kong billionaire Li Ka-shing extended his exposure to the steady earnings of British utilities after a consortium led by his flagship Cheung Kong Holdings agreed to buy Wales and West Utilities, the UK gas company, for £645m.

The acquisition is the latest in Mr Li’s long-term strategy of buying utilities in the UK, Canada and Australia because they offer low-risk regulated environments, common law jurisdictions and predictable returns.

Wales and West Utilities manages gas transportation and distribution as well as meter services throughout Wales and the south west of England. The company’s distribution network supplies 7.4m customers over an area covering about one-sixth of the UK.

The sellers of the company are a group that included vehicles for Macquarie’s European and Global infrastructure funds, a subsidiary of the Canada Pension Plan Investment Board and Australia’s AMP Capital.

The deal is the latest in a series led by Macquarie vehicles which has resulted in equity stakes in UK utility assets being sold to Chinese and other overseas investors.

Cheung Kong, Cheung Kong Infrastructure and Power Assets will each hold 30 per cent, with Mr Li’s private charitable foundation holding the remaining 10 per cent stake.

Last year, the billionaire’s Cheung Kong Infrastructure acquired Northumbrian Water Group in the UK for £2.41bn.

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