07 April 2017

Hong Kong tycoon Li Ka Shing steps up investment in Canada

Cheung Kong Property Holdings (CKPH), a company controlled by the family trust of tycoon Li Ka Shing, is acquiring Reliance Comfort at an equity price of CAD 2,820 million (USD 2,100 million). Private equity investor Alinda Capital Partners, which is making a full exit through the all-cash deal, has been the owner of the target since 2007 when it took over UE Water Income Fund for around CAD 1,134 million.

According to Zephyr, the M&A database published by Bureau van Dijk, this is the ninth largest deal targeting a Canadian company to have been announced or completed so far this year. CKPH, which is also snapping up all of Reliance Comfort’s existing debts, plans to offload 25.0 per cent of the target to its affiliate Cheung Kong Infrastructure following the transaction.

CKPH has appointed Barclays as a financial advisor, while Canadian Imperial Bank of Commerce and Goldman Sachs are assisting Alinda Capital Partners.

Headquartered in Ontario, Reliance Comfort is a wholesaler of air-conditioners, heating equipment and ventilators. Its products are used in homes and commercial buildings.

CKPH’s managing director Victor Li said: “We have had very positive experiences nurturing Canadian businesses like Husky Energy and Park’N Fly.” He added: “We hope that Reliance will also grow and succeed just like our other Canadian companies, creating value to Canadians and contributing to the growth and development of the country’s economy.”

In 2015, Li’s business empire underwent a major reorganisation worth a combined HKD 832,430 million (USD 107,129 million), according to Zephyr, to simplify its corporate structure. As a result, the group’s businesses are currently held under Cayman Islands-incorporated CKPH and CK Hutchison. Having been accused of trying to flee the local market via the reshuffle, Li explained in a press conference that the new structure was instead meant to allow his successors to operate more easily, the Economist reported.

Li and his conglomerate became majority shareholders of Husky Energy back in 1991. With their continued investments in subsequent years, CK Hutchison Holdings and the Li Family Trust now control almost 70.0 per cent of the oil and gas explorer, according to Morgan Stanley, as cited in a report by the Economist.

Bullish about the prospects of Canada’s air traffic sector, Li acquired off-airport car park operator Park’N Fly for CAD 348 million in 2014 through his entities. The deal allowed the acquiror group to own car parks at major airports in cities, including Vancouver, Toronto and Montreal.

Other Canadian companies within Li’s business empire include neuro-bioscience research firm WEX Pharmaceuticals, which was taken over by CK Life Sciences International, a member of the Cheung Kong Group, in 2011.

© Zephyr