* Li Ka-shing's Power Assets to spin off utility into trust
* HK Electric Investments to offer 4.43 bln units in
* Investment trust to pay yield of 6.26 pct-7.24 pct in 2014
By Elzio Barreto
HONG KONG, Jan 12 Li Ka-shing's Power Assets
Holdings Ltd slashed the size of a Hong Kong initial
public offering of its electricity business by nearly one-third
to $3.6 billion because of a lower expected valuation and its
decision to keep a large stake in the business.
Power Assets will spin off the business into HK Electric
Investments, a single-investment trust, offering 4.43 billion
units in an indicative range of HK$5.45-HK$6.30 each, the
company added in a filing to the Hong Kong stock exchange on
Sunday. That would put the deal at up to HK$27.91 billion ($3.6
The company cut the expected maximum market capitalization
of the trust to HK$55.7 billion from HK$63.4 billion announced
Power Assets also said it will hold about 49.9 percent of
the trust, compared with as little as 30 percent in the December
filing. Based on the top market valuation of the trust and Power
Assets initial plan to float up to 70 percent of the business,
the IPO was expected to reach up to $5.7 billion.
The trust is expected to pay a distribution yield of 6.26
percent to 7.24 percent in 2014, the company said in the filing.
The IPO will be only the third in the city by a
single-investment trust, following HKT Trust, spun off
from telecoms group PCCW Ltd, and hotel owner Langham
Hospitality Investments Ltd.
Power Assets said it received initial commitments worth
nearly $1.34 billion from two investors for the IPO.
Government-owned State Grid Corp of China agreed to make the
largest commitment as a cornerstone investor, pledging up to
HK$10 billion, while Oman Investment Fund agreed to buy HK$387.5
million, the filing said.
Cornerstone investors receive a guaranteed allocation in
exchange for agreeing to retain their stakes for a set period.
Goldman Sachs and HSBC were hired as
sponsors of the IPO.