Abney Associates advising investors in what may become Hong Kong’s largest IPO since 2010, Power Assets Holdings Ltd, is reportedly in the process of spinning of its profitable Hong Kong Electric Company.
Speculation is high that Asia’s richest man Li Ka-Shing’s flag ship company Power Asset Holdings Ltd. is seeking to divest itself of its Hong Kong Electric operation. The power producer has been since 1890, one of the two largest electricity providers servicing Hong Kong and has a customer base of 568’000 users. The deal could potentially raise $5 billion from the sale of 70% holding stake of the company.
Power Asset Holdings, which is expected to retain a 30% stake in its electricity provider spinoff, has already sought approval from the Hong Kong stock exchange and now only has to seek permission from its shareholders and listing committee before it can proceed further. Two joint sponsors for the deal are already on board represented by HSBC Holdings Plc. and Goldman Sachs Group Inc.
“This could be one of the most stable IPO offerings to emerge in a very long time, the company has a 123 year history of solid business performance generating profits per year at 10% generated by what is being sought in the flotation, the company’s assets alone contribute another 10%. Hong Kong is dependent on the supply and service this company provides and with a continual consumption this leads to an easy investment conclusion,” explained James Carter, Senior Vice President of Mergers and Acquisitions at Abney Associates.
Hong Kong Electric reported profits for last year of HK$4.5 billion and is currently holding assets of HK$5.6 billion making its initial public offering valuation of HK38.75 billion, a remarkably low figure in comparison with recent IPO listings of similar sized companies. Proceeds from the sale of Hong Kong Electric are believed to be earmarked for use by its current parent company in further expansion through acquisitions primarily within Europe.
“This is definitely an IPO that is generating great interest, mostly because it is of far more substance than style, a lot of investors are pleased to see such an offering come to market. The company’s track record speaks volumes with current earnings and projected future earnings stable and performing well, and when viewed in comparison with its estimated flotation value this leads to great potential on return of investment. Hong Kong Electric Company will continue to be of interest to potential investors and we will also be closely monitoring the progress of Power Asset Holdings,” concluded James Carter, Senior Vice President of Mergers and Acquisitions at Abney Associates.
Abney Associates are a Hong Kong based company that provides a range of financial services to individual clients, portfolio companies, corporate investors and entrepreneurs who wish to take unbiased financial advice.
Abney Associates are primarily a team of financial specialists who pride themselves on having a high level of expertise and vast experience for diligently monitoring any positive or negative developments to companies currently listed on exchanges globally, especially those that may affect client investment interests. This is done in order to ensure the financial advice given is factually correct and delivered in an effective way.