London/Hong Kong: Hong Kong billionaire Li Ka-shing is to buy UK power grids from France's EDF for £5.8 billion (Dh33.2 billion), the biggest full European acquisition by a North Asian group.
The tycoon's investment vehicles Cheung Kong Infrastructure (CKI) and Hongkong Electric (HKE) said they would buy three British electricity distribution networks and a private power networks business from EDF, the world's second-largest utility.
The grouping beat a rival consortium that included Macquarie Group, Canada Pension Plan (CPP) and the Abu Dhabi Investment Authority (Adia).
In Paris, EDF confirmed the offer and said the deal was at a multiple of 8.1 times the business's estimated 2010 earnings before interest, tax, depreciation and amortisation (EBITDA), as it reported first-half results.
Cutting debt
The sale to the octogenarian Li, ranked by Forbes as the world's 14th richest man, in one leap comfortably beats EDF's 5 billion euro (Dh24.2 billion) target for asset sales to cut debt.
Martin Young, an analyst at Nomura in London, said EDF had achieved "a very good price indeed, in this day and age", with the company touting a 27 per cent premium to the end-March "regulated asset base" (Rab) value ascribed to the networks. The purchase caps a process that has dragged on for more than a year, delayed by a change in EDF management, British regulatory rulings, and difficulties with pension trustees.
Analysts said the deal would double CKI's presence in the UK, helping to overcome its limited room for domestic growth.
Adia eyes acquiring high speed rail link
The Abu Dhabi Investment Authority (Adia) is engineering a £1.5 billion bid to acquire the Channel Tunnel high speed rail link. It has joined forces with infrastructure funds operated by private equity group 3i and investment bank Morgan Stanley, Sky News said on its website. The consortium will bid for High Speed 1 (the rail link's formal name), which is being auctioned by the UK Government, the website reported. Adia could not be reached for comment.
