Li Ka-shing gestures during a news conference in Hong Kong. Photographer: Dan Groshong/Bloomberg News. Source: Supplied
FEW South Australians would know his name, but his company owns half of our power network, many of our vineyards, and now has its sights set on buying the state’s gas network for $2.37 billion.
Li Ka-Shing, 86, is business royalty in Asia. He’s the richest man in the region, with a self-made fortune estimated by the respected business magazine Forbes at $36.2 billion.
He also commands the sort of respect and celebrity status afforded to the likes of transport baron Richard Branson or Facebook CEO Mark Zuckerberg in the West.
Unlike the former, Hong Kong-based Mr Ka-Shing is known for his lack of ostentation, sporting conservative suits and famously wearing an inexpensive Seiko watch.
“I am very prudent financially because of those hard times I went through,’’ he is quoted as saying.
“I spent nothing. I had a haircut every three months. I shaved my head like a monk.’’
It’s not all penury and self-restraint, however, with Mr Ka-Shing said to own a Gulfstream 550 private jet, a Sunseeker yacht and a sprawling white marble mansion in Hong Kong.
His company, the Cheung Kong Group, has long had an interest in Australian assets, owning 5800ha of vineyards across Australia, as well as Dry Creek-based Cheetham Salt Company, and it is expected to join the bidding for the Port of Melbourne, at an estimated price of $5 billion.
Mr Ka-Shing last week also joined the battle for Adelaide-based gas distribution company Envestra, pitching a counteroffer of $2.37 billion – or $1.32 a share – over rivals APA.
At stake is Envestra’s 23,000km of pipelines that supply gas to customers, mostly in SA and Victoria. Buying essential utilities is a strategy the Cheung Kong Group has deployed all over the globe, previously buying gas distribution assets, which typically are long-lived, steady investments, in the UK, and power- generation assets in Hong Kong, Australia, Canada and New Zealand.
Mr Ka-Shing was born in Guangdong province, on China’s south coast, in 1928, before fleeing to Hong Kong with his family to escape the Sino-Japanese War.
Following his father’s death, he was forced to leave school at age 12, finding menial work as an apprentice in a watchstrap factory. According to Forbes, by 14 he was working full-time in a plastics factory.
He was soon promoted through the ranks.
“On New Year’s Day, the boss announced that the bonus that year would be based on sales,’’ he has said.
“At the end of the year, my sales figure was seven times higher than the second best. If they paid my bonus based on my sales, my bonus would have been higher than the general manager’s.
“The other salesmen were already jealous. So I said to my boss, ‘Just pay me the same as the second best salesman; it would make everyone happy.’ As a result, I became a manager when I was 17 going on 18.’’
Li Ka-Shing, Hong Kong multimillionaire Source:Supplied
Hong Kong tycoon Li Ka-Shing in 2012. Picture: AFP PHOTO /FILES/ Philippe Lopez Source: AFP
Mr Ka-Shing started his own business making plastic toys and other items in 1950, aged 22, naming it Cheung Kong, after the Yangtze River, whose power comes from a confluence of countless smaller streams.
Mr Ka-Shing prided himself on working extremely hard to ensure his success.
“The first year, as I didn’t have much capital, I did everything by myself, including the first set of account books,’’ he has said. “I did so many things by myself, which kept my overhead low. I have made a profit every year since 1950. I have never lost a penny in any year.’’
Mr Ka-Shing started investing in real estate in 1958, and took advantage of the outflow of people from Hong Kong following the 1967 unrest, which included large-scale demonstrations against British rule.
The company has since diversified into myriad areas, even investing in technology companies such as Facebook, Spotify and Skype in recent years.
“Based in Hong Kong, the Cheung Kong Group’s businesses encompass such diverse areas as property development and investment, real estate agencies and estate management, hotels, tele-communications and e-commerce, finance and investments, retail, ports and related services, energy, infrastructure projects and materials, media, and biotechnology,’’ the company’s website boasts.
Cheung Kong Group is understood to be the world’s largest operator of container terminals and the world’s largest health and beauty retailer. At the end of March, the company said its value was more than a trillion Hong Kong dollars (about $A142 billion).
Cheung Kong Group made its first major foray into SA in 1999, signing a 200-year lease over what was then ETSA utilities, now SA Power Networks, for $3.5 billion.
The controversial privatisation allowed the then Liberal Government to retire debt, and boosted the state’s credit rating from AA to AA+, according to the author of Power Politics, Adelaide University associate professor John Spoehr.
In 2000, Cheung Kong acquired Victorian electricity distributor Powercor Australia for $2.315 billion, and later also bought another of the state’s power companies, Citipower.
It has since sold down these investments to the point where it owns 51 per cent of all three electricity distributors.
Recently, Cheung Kong has been increasing its SA footprint, buying Challenger Wine Trust for $45.8 million in 2010, helping it become, as it claims, the second-largest vineyard owner in Australasia.
The purchase of Cheetham Salt Company also made it Australia’s largest producer of salt.
The bid for Envestra, which would be subject to review by the Foreign Investment Review Board if successful, continues Cheung Kong Group’s practice of buying relatively conservative, but long-lived Australian assets.
Envestra is the kind of business you barely notice as long as it does its job well. A bit dull, but a good long-term earner with a steady income stream.
It remains to be seen whether rival bidder APA Group will launch another bid to top Cheung Kong. If not, another Australian tributary will soon be feeding into the massive river that Cheung Kong group has become.
Cheung Kong Group said via a spokesman that its executives were “too busy” to talk to the Sunday Mail.
CHEUNG KONG GROUP’S SA ASSETS
INFRASTRUCTURE
SA Power Networks: 51 per cent stake.
Envestra: Aiming to take over full control for $2.37 billion.
INDUSTRIAL
Cheetham Salt: Cheetham, at Dry Creek, is Australasia’s largest producer of salt for the domestic market. It can produce about 600,000 tonnes of crude salt and 700,000 tonnes of refined salt per year.
VINEYARDS
Qualco West: 415ha in the Riverland planted mainly to chardonnay, shiraz and muscat gordo blanc.
Qualco East: 174ha of vines planted mainly to chardonnay and semillon.
Miamba Vineyard: 130ha in the Barossa are planted mainly to shiraz, cabernet sauvignon and chardonnay.
Schuberts Vineyard: 74 ha at Lobethal planted mainly to sauvignon blanc and chardonnay.
Bussorah Vineyard: 68ha in the Padthaway region planted mainly to cabernet sauvignon, chardonnay, merlot and shiraz.
Dalmeney Vineyard: 316ha in the Padthaway region planted to cabernet sauvignon, chardonnay, merlot and shiraz.
INTERSTATE
Vodafone: Has a 50 per cent interest in Vodafone Hutchison Australia
Citipower and Powercor: Owns 51 per cent of these two Victorian power distributors.
Amgrow: A company servicing the Australian agriculture and horticulture markets.
Accensi: The largest independent toll manufacturer of crop protection products in
Australia.
Aquatower: AquaTower has the exclusive rights until 2027 to provide potable water to four towns in Victoria. CK group owns a 49 per cent stake.
Vineyards: In total owns 5800 ha (4600 planted) across Australia and 1500 ha (1100 planted) in the North and South Islands of New Zealand.
POTENTIAL
May bid for the Port of Melbourne and the Port of Newcastle.
Is bidding for ANZ Terminals, which provides liquids storage at eight ports here and in New Zealand.