Hong Kong's Li Ka-Shing to Buy UK Gas Assets for $1 Billion

Published: Tuesday, 24 Jul 2012 | 9:57 PM ET

A group of companies controlled by Hong Kong billionaire Li Ka-shing has agreed to buy UK gas company Wales and West Utilities for 645 million pounds ($1 billion), the latest acquisition by the tycoon that will boost his gas portfolio in Britain.

Ira Chaplain | AFP | Getty Images

Hong Kong tycoon Li Ka-Shing.

Octogenarian Li has been expanding his business empire by buying into regulated infrastructure and utilities assets in developed countries, especially Britain — which is open to foreign ownership of its infrastructure assets.

Blue-chip property developer Cheung Kong (Holdings) said it had formed a joint venture with Cheung Kong Infrastructure Holdings, Power Assets Holdings and the Li Ka Shing Foundation Ltd to buy the company, which is involved in the management of gas transportation assets and gas distribution in Wales and the southwest of England.

"For Cheung Kong Holdings, the acquisition is considered to be a quality investment which would provide long-term steady recurring income contribution to the CKH Group and reflects CKH's strategy to embrace new growth opportunities through diversification and globalisation," the company said in a statement.

Cheung Kong Infrastructure and Power Assets are controlled by Li's conglomerate, Hutchison Whampoa.

Wales and West Utilities' distribution network area supplies 7.4 million customers in an area of 42,000 square kilometres, or almost one-sixth the area of the UK, while the total length of the main gas pipeline is about 35,000 kilometres.

The deal, which is subject to approval by the European Commission, would add to Li's assets in Britain, where he agreed to buy utility Northumbrian Water Group last August for 2.41 billion pounds.

In 2010, Cheung Kong Infrastructure and Li's other investment arm, Power Asset Holdings, agreed to buy the British electricity distribution networks of France's EDF, which provide power to London and southeast Britain, for 5.8 billion pounds.

Shares of Cheung Kong Infrastructure, which were suspended on Wednesday morning, have risen more than 8 percent so far this year, beating a 2.5 percent gain in the benchmark Hang Seng Index [.HSI 20629.78 582.15 (+2.9%) ] .