CKI (Cheung Kong Infrastructure) and Hong Kong Electric are partnering to buy EDF Energy Networks in what is believed to be the biggest in what is believed to be the biggest investment in a European company by Hong Kong on record. The price (5.8 billion pounds) is above expectations also.
The French state controlled electricity group was having a dismal year, reporting 47 per cent a year on year drop in net profit.
The deal is the first for EDF chairman and chief executive Henri Proglio. The sale will help cut the group’s record set debt of 44 billion pounds.
Edmond Ip, deputy chairman of CKI, said: “We have a few other investments (in the UK). We are familiar with the regulatory framework there. It is an environment we feel happy operating in.”
CKI also firmly believes it can improve the performance of EDF, based on the inflated approximations of budgeted operating costs between 2005-2008.
For Mi Li, owner of CKI and Asia’s wealthiest man, the UK has been a favorite place to invest for a long time. He also owns Port of Felixstowe, 3, the UK telecoms group and Superdrug.
EDF will live on as the largest electricity generator in the UK, but also plans for signigicant new investments in the UK. This includes four new reactors.
Mr. Proglio did not elaborate on whether EDF would raise its stake in Areva, the French nuclear reactor maker. Officials suggest a partnership between the two would enable them to win overseas contracts. This could lead EDF to raise its 2.4 per cent stake in Areva.
The deal between EDF and CKE represents a win-win situation and an example of regulated assets with stable returns.