Victor Li’s CK Infrastructure Holdings (1038), which owns energy and water utilities globally, is considering listing some UK assets through a London initial public offering.
CK Infrastructure is speaking with investment banks about the listing of certain UK holdings through a potential multibillion-dollar fund, according to market sources. The company is still discussing the entity’s structure and which assets to include, and it may decide not to pursue the transaction, they said.
Li built a stable of British infrastructure assets ranging from sewage to gas to rail over the last decade. The potential listing could help CK Infrastructure replenish capital after the acquisition spree, giving it more firepower to go after bigger deals in the future.
An IPO could also facilitate any move by CKI to reduce its exposure in the UK – amid uncertainties tied to the country’s looming exit from the European Union and the so-called “return reset” for some of its assets. For instance, the regulatory reset for Northumbrian Water is due to commence in April 2020.
“Brexit has introduced some political uncertainties; especially the Labour Party has proposed nationalization of the water utilities in the UK. We think this scenario is quite extreme but the reset will be uncertain,” said Dennis Ip, an analyst at Daiwa Securities Group.
A group led by CK Infrastructure in 2010 acquired the UK power networks from Electricite de France for 5.8 billion pounds (HK$59.3 billion) and a year later bought utility Northumbrian Water for 2.4 billion pounds. In 2015, CK Infrastructure acquired Eversholt Rail for 2.5 billion pounds.