Hutchison aims for top of the list
Hutchison's Hong Kong terminals form part of the Singapore listing
New year, new take on port listings. Or that’s what Hutchison Whampoa is banking on with its US$6bn initial public offering for its port assets in Hong Kong and southern China.
In what is being touted as one of the biggest stock market listings in Asia this year, Hutchison Whampoa is spinning off its ports operations, better known as Hutchison Port Holdings, or HPH, to you and I.
Hutchison Whampoa is one of the flagship companies of the Hong Kong billionaire Li Ka-Shing, and one of the world’s biggest port operators, with stakes in 51 ports in 25 countries. Hutchison says the initial business portfolio will comprise the group’s interests in deep-water container ports in Hong Kong and China's Guangdong province, as well as related businesses in the same area. It will keep its ports in other countries and proposes a non-competition agreement for the two businesses. The group plans to retain a 25% stake in Hutchison Port Holdings Trust, as the listing will be known.
However raising $6bn is far from a certainty; speculation is that $6bn is ambitious, given Hutchison’s mature port business that leaves little room for growth potential. Although Hutchison is less modest on this point, describing “significant potential” for economic and trade growth in the Pearl River Delta generally, adding that the port industry is “well-positioned to capitalise on such opportunities”. Whatever cash is raised will be used to fund port expansion.
Li Ka-Shing’s Hutchison Whampoa has also taken the contentious decision to list in Singapore rather than Hong Kong. If successful, the IPO would be Singapore's biggest ever public offering, topping a listing by Singapore Telecommunications that raised over $3bn in 1993.
"The board believes the proposed transaction offers clear commercial benefits to the group and the company's shareholders taken as a whole," said the group in a statement. "It will establish HPH Trust as a new publicly traded entity to hold, operate and develop all of the group’s existing and future deep-water container port business in the HPH Trust territory."
Hong Kong-listed Hutchison Whampoa has appointed DBS Bank, Deutsche Bank AG and Goldman Sachs (Singapore) Pte as joint bookrunners and joint issue managers for the global offering and while the IPO could be ready as early as February, industry speculators expect April to be more realistic.
It will be fascinating to see if Hutchison can draw in the punters as it clearly expects to, and whether those buyers will provide the group with the $6bn it is eyeing. If it can and does, will it be time to sound the all clear for port investment after the black years of disinterest?
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