Li Ka-Shing to cash in US$19b in Panama port deal
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The news: Hong Kong tycoon Li Ka-Shing is set to rake in over USD19 billion ($30 billion) in cash for the sale of 43 ports across 23 countries, in a deal which has been fiercely opposed by China.
Italian billionaire Gianluigi Aponte’s family business, Terminal Investment Ltd (TiL), has emerged as the lead investor of the group buying the ports from Li Ka-Shing, and will be the sole owner of 41 ports. BlackRock will control the remaining two ports in Panama which have drawn significant political attention from both Beijing and the US.
The numbers: Sources cited by Bloomberg explain that BlackRock’s unit Global Infrastructure Partners, will own 51% of the Panama ports, while TiL will hold the remaining 49%. The two Panama Canal ports amount to around 4% of the transaction’s entire value.
The context: The deal is still pending due diligence, accounting checks and regulatory approvals from local authorities. Bloomberg sources say that the final structure and ownership of the consortium may evolve.
Last week, Panamanian authorities cast doubt on the deal after an auditor said Li Ka-Shing’s CK Hutchison Holdings owes USD300 million in unpaid fees linked to the two ports, and failed to get necessary clearances for the ports.
“There are breaches, nonpayments and countless things that were wrongly calculated,” Panamanian comptroller general Anel Flores told reporters in Panama City.
US President Trump had touted the deal in his inaugural speech in January, claiming it as a victory in his campaign to “take back” the Panama Canal from China. He said that the canal was vital to US national security and controversially did not rule out military action to “reclaim” the canal.
The response from Beijing about Li Ka-Shing’s decision to sell the Panama assets has been scathing. A Beijing-backed newspaper described the deal as a betrayal of all Chinese and said the company should think about which side to take. Another said great entrepreneurs are patriots, suggesting that businesspeople who “dance with” predatory American politicians would be doomed to infamy.
The WSJ reports that Beijing also plans to launch an antitrust review into the deal, and has been working to line up alternative buyers should the deal fall through.
