Asia’s richest man sells China to buy Europe—but maybe he should pay his Aussie tax bill first

October 3, 2013
October 3, 2013

Li Ka-Shing, the octogenarian billionaire known as “Superman” for his business savvy, is offloading assets in China to buy more in Europe in a characteristically super-sized fashion. He’s planning to sell or take public various companies and investments in Hong Kong and mainland China that could raise about $20 billion, giving him the financial firepower to buy telecommunications and real estate assets in Europe.

These include taking Hong Kong-based drug and beauty products conglomerate A.S. Watsons Group public to raise about $10 billion, the South China Morning Post reported today. Li is also planning to list up to 70% of Hong Kong Electric, part of Power Assets Group, which could raise as much as $5 billion, Bloomberg reported last week.

Li, the 8th richest man in the world according to Forbes, put Hong Kong supermarket ParknShop up for sale this summer in a deal expected to fetch up to $4 billion. In September, two of Li’s biggest companies, Hutchison Whampoa and Cheung Kong Holdings, sold their stakes in a large shopping mall in Guangzhou for $390 million. Other commercial buildings in Shanghai and Shenzen worth more than $1 billion are also for sale, according to reports in mainland Chinese press.

Li has decided to “make a slew of asset disposals in Hong Kong and on the mainland,” to give him the financial ammunition to do deals in Europe, according to the South China Morning Post. Analysts say that he is transferring funds out of maturing businesses in China, where economic growth is slowing and the Hong Kong real estate business is under pressure, in order to scoop up undervalued European assets.

In August, Li said Hutchison Whampoa planned to increase market share in European telecommunications and acquire other businesses. The company owns the mobile and broadband telecom operator 3 Group Europe, and has agreed to buy Telefónica’s O2 Ireland unit for €850 million (US$1.1 billion)—one of five major acqusitions it already has made in Europe this year, including  943.7 million euros ($1.25 billion) for waste processing company AVR Afvalverwerking BV. Hutchison is also reportedly seeking a major stake in Telecom Italia.

Before he makes any further moves, though, there’s that pesky matter of the $711 million the Australian government believes companies controlled by Li owe in unpaid taxes, a situation that has put him in a “tax office stoush,” (meaning “fight”) in the words of Australia’s The Age newspaper. That sum includes income taxes and late fees owed by Cheung Kong Infrastructure Holdings and Power Asset Holdings from 2000 to 2009, according to an Australian Federal Court ruling this week, related to their electricity businesses there. Power Assets is fighting the case, but with all the money Li is raising, maybe he should just pay the bill.

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