Power Assets Holdings Ltd has downsized the initial public offering of HK Electric Investments, Bloomberg reported. The State Grid Corp of China will purchase nearly one-fifth of the electricity supplier, the report said. Li Ka-shing, Asia's richest man, controls Power Assets Holdings Ltd.
In a statement, Power Assets said it will be seeking up to $3.6 billion or HK$27.9 billion when it sells units of HK Electric. The price range for the units will be from HK$5.45 to HK$6.30 each. A 50.1% stake in the second biggest power supplier in Hong Kong will be offered by Power Assets after announcing a previous plan to offer up to 70% of HK Electric.
The report said that Power Assets is slated to close the largest trust IPO in the world in nearly three years amid a slowdown in growth in Hong Kong. Power Assets also said that the marketing range implies that HK Electric would have a dividend yield ranging from 6.26% to 7.24% this year.
Sanford C. Bernstein & Co Analyst Michael Parker told Bloomberg, "You can make the argument that there's very little growth opportunity in Hong Kong. The relationship between the regulators and utilities has not been positive for the last few years."
The statement also revealed that China's largest power distributor State Grid would be investing up to HK$10 billion to buy an 18% stake in the HK Electric. Oman Investment Fund will also be acquiring a stake for a price tag of HK$387.5 million. After the share sale, Power Assets will retain a 49.9% stake in the unit. The holding firm said the market value of HK Electric will fall anywhere from HK48.2 million to HK$55.7 billion.
In March 2011, Bloomberg data showed that Hutchison Port Holdings Trust, another company controlled by Li Ka-shing, was able to gather $5.5 billion when it debuted in Singapore.
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