Li Ka Shing's firms slump as falling pound hurts profit outlook

HONG KONG • A hung Parliament in the United Kingdom is translating into losses for one of Asia's richest men.

Li Ka Shing's CK Hutchison Holdings and Cheung Kong Infrastructure Holdings were among the biggest losers in Hong Kong trading, as the slumping pound cut the value of the companies' UK earnings.

Sterling slid 2 per cent after Britain's ruling party lost its majority in a snap election.

Mr Li has much riding on Britain as the country is the biggest profit generator in the billionaire's business empire.

He operates Superdrug and Savers stores, ports, the Three phone service, as well as gas and electricity distribution.

CK Hutchison generated 36 per cent of its total earnings before interest and taxes from the country last year.

Mr Li's companies are falling "because of the currency issue - there would be a direct impact on their assets and earnings when translated into Hong Kong dollars", said strategist at CMB International Securities in Hong Kong Daniel So.

The billionaire last year warned that the fallout from the nation's decision to leave the European Union would last for years.

CK Hutchison dropped as much as 2.3 per cent before closing 1.3 per cent lower in Hong Kong. Cheung Kong Infrastructure slid 2.1 per cent. The city's benchmark stock index slipped 0.1 per cent.

In a separate development, a consortium of private equity firms TPG Capital Management and MBK Partners, as well as telecoms firm HKBN, are preparing separate bids for the fixed-line phone unit of Mr Li, sources with direct knowledge of the matter said.

Hong Kong Global Communications, a unit of Hutchison Telecommunications Hong Kong Holdings, is expected to be valued at about US$1.5 billion (S$2 billion), five sources told Reuters, requesting anonymity because the details had not been released publicly.

Two of the sources, however, said the deal could be valued at as much as US$1.9 billion.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on June 10, 2017, with the headline 'Li Ka Shing's firms slump as falling pound hurts profit outlook'. Print Edition | Subscribe