China pauses new deals with Li Ka-shing family over Panama ports plan
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An aerial view of cargo vessels docked at Balboa Port, operated by Panama Ports Company.
PHOTO: REUTERS
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BEIJING – China has told state-owned firms to hold off on any new collaboration with businesses linked to Mr Li Ka-shing and his family, according to people familiar with the matter, after the Hong Kong billionaire irked Beijing with his plan to sell two Panama ports to a global consortium.
The directive was issued to state-owned enterprises last week at the behest of senior officials, the people said, asking not to be identified discussing private matters. Existing tie-ups are not affected, they added.
Under the directive, state enterprises would not immediately get approval for business activities linked to the tycoon. The regulators are also reviewing what investments the family has in China and abroad in a bid to better understand the breadth of its business dealings, the people said.
CK Hutchison Holdings, CK Asset Holdings, Horizons Ventures and Pacific Century Group did not respond to requests for comment. The state-owned Assets Supervision and Administration Commission, which oversees Chinese state companies, and the Ministry of Commerce also did not respond.
The order to pause new dealings does not necessarily mean Beijing will bar state firms from working with businesses linked to Mr Li. But it does ratchet up pressure on the 96-year-old tycoon after CK Hutchison’s deal with a BlackRock-led consortium to sell ports in Panama and elsewhere put his conglomerate’s flagship entity in the crosshairs of US-China tensions.
The sale, which is expected to net the company more than US$19 billion (S$25 billion) in proceeds, triggered scrutiny in Beijing after US President Donald Trump hailed it as the US reclaiming the strategic waterway from Chinese influence, though the Panama ports are just two out of 43 facilities being divested globally.
China is also looking into the sale for potential national security and antitrust violations, Bloomberg reported earlier in March. It is uncertain how much leverage Beijing has, as Chinese and Hong Kong ports are not included in the transaction. The impact on CK Hutchison from a halt on new business with state-owned companies may be limited.
The Cayman Islands-registered conglomerate makes 12 per cent of its revenue from Hong Kong and mainland China. The bulk of its operations spans Europe, North America and Australia, in sectors covering retail, telecommunications, ports and utilities, with little exposure to Chinese state-owned firms.
Horizons Ventures, Mr Li’s private investment arm, has focused its projects overseas, with over 80 per cent of the firms it has invested in located in Europe, the US, Canada, Australia and New Zealand, according to its website.
CK Asset – the conglomerate’s property arm now headed by Mr Li’s older son Victor – has one-fifth of its long-term rental investment property portfolio by area on the mainland, with China home to most of its land bank for property projects developed for sale.
Second son Richard’s company, Pacific Century Group, is also exposed to China. Its insurance arm, FWD Group Holdings, has stated its ambition to expand into mainland China, in previous financial documents, which would likely require partnerships with Chinese companies.
Still, China’s order to pause new talks with Li Ka-shing-related companies came before Mr Richard Li was invited to a high-profile summit in Beijing at the weekend, which suggested that the scion is not blacklisted by Beijing.
As for the Panama ports deal, work is continuing on finalising due diligence, tax, accounting and other transaction teams and the parties involved are aiming to sign an agreement as planned by April 2, said people familiar with the matter. BLOOMBERG
