Li Ka-shing, right, and Victor Li.
AP Photo/Vincent Yu
New York-listed investment giant KKR has reached a deal to invest £867 million ($1 billion) for a minority stake in Northumbrian Water Group, which is jointly owned by several listed companies within CK Group, the business empire of Hong Kong billionaire Li Ka-shing.
After the deal is completed, KKR will hold 25% of the British water utility and the other 75% will be jointly owned by CK Hutchison, CK Infrastructure and CK Asset.
Northumbrian Water, which supplies water and sewage services to people in northeast and southeast England, had been acquired by Li’s companies for £2.4 billion in 2011.
A joint filing from the companies issued on Thursday said that CK Hutchison stands to gain HK$1 billion ($127 million) from the transaction, while CK Infrastructure and CK Asset will gain HK$900 million and HK$500 million, respectively. The transaction, which is subject to regulatory approval, is expected to close later this year.
KKR and CK Group have teamed up in the past. Last year, a KKR-led consortium invested $3.7 billion to acquire Spark Infrastructure, an Australian energy company that’s partnered with CK Group’s Australian power distribution businesses.
A major deal between the two giants reportedly collapsed less than two weeks ago. The Financial Times said talks broke down over the £15 billion acquisition UK Power Networks, Britain’s largest electricity distributor. The consortium led by KKR and Macquarie walked away from the deal after CK Infrastructure sought to raise the price amid sharply rising inflation and currency movements.
Founded roughly 45 years ago, KKR will forever be known as “barbarians,” after the bestselling book that chronicled their $25 billion takeover of RJR Nabisco in 1988. The private equity firm had popularized the practice of leveraged buyouts in the 1970s and 1980s and became the face of Wall Street’s conquest of corporate America, but in recent years the firm has adopted a buy and build approach toward its investments.
Li, who turned 94 last month, earned the nickname “Superman” as he built a global business empire that now has interests in everything from ports, utilities and telecom to real estate and retail in more than 50 countries. A longtime fixture at the top of Hong Kong’s wealth rankings, his current net worth is estimated at $35.2 billion.
Li continues to serve as senior advisor to his two flagship companies, CK Hutchison and CK Asset, after his eldest son, Victor Li, replaced him as chairman in May 2018.