Whampoa raises HKD1.3 billion from Vanda sale to bolster 3G

3 Feb 2004

Hong Kong port-to-retail conglomerate Hutchison Whampoa says it will use the proceeds from the swift placement of shares in Vanda, a information technology group it controls, to bolster its USD22 billion investment in 3G operations across Europe and Asia. However, the move, which will net Whampoa around HKD1.3 billion (USD167 million), has drawn some criticism from analysts who believe it could tarnish the reputation of Li Ka-shing with the region’s retail investor community. Hutchison Whampoa acquired a 30% stake in Vanda last Thursday, following a deal that saw the latter paying HKD7.1 billion for shares and convertible notes in Whampoa’s fixed line unit Hutchison Global Communications (HGC). In the immediate wake of the transaction Vanda’s sale price rose by 61% to HKD1.52 – buoyed by investors keen to cash in on the so-called ‘Li factor’ and the prospect of further rises – but later slumped to HKD1.05 at the close on Monday after Whampoa announced it was listing the holding. Hutchison Whampoa still holds 52% of Vanda and has pledged not to sell any more shares for at least three months, but the back-door listing has left some retail investors feeling bitter. Under accountancy rules the Hong Kong conglomerate is set to gain a total profit of HKD3.9 billion, the difference between the book value of HGC and the price paid by Vanda, although its can only book a third of that to correspond to the number of shares placed.

Hong Kong, CK Hutchison