HK Inc no longer appealing to Li Ka-shing?

23 July 2013

ParknShop chain review prompts speculation about tycoon's plans

By Li Xueying Hong Kong Correspondent

ASIA'S richest man, Mr Li Ka-shing, could be putting his mega-supermarket chain ParknShop on the block, a move that has sparked talk here that the tycoon no longer finds Hong Kong an attractive place to do business.

Indications are that Mr Li's Hutchison Whampoa conglomerate was looking to exit the mature grocery industry with its limited future growth even as it eyes richer pickings in Europe.

But swirling speculation that Mr Li - nicknamed Superman for his investing savvy - is prompted by other considerations, including politics, has prompted the city's No. 2 leader, Ms Carrie Lam, to reassure the public that Hong Kong is "doing very well".

"In terms of Hong Kong's economic competitiveness and in terms of our economic fundamentals, we are doing very well," said the Chief Secretary on Sunday when asked whether the potential pullout would affect the confidence of overseas investors here.

"So I am not at all concerned about the individual business decisions of enterprises about their own investments. I suggest that we don't read too much into this individual enterprise's decision."
Hutchison Whampoa said over the weekend it is conducting a strategic review of the supermarket chain to "optimise value for shareholders".

No timetable has been set for the review and there is no certainty of a transaction being completed, it said in a statement. This came after a report by the Wall Street Journal saying Hutchison Whampoa had hired investment banks to sell ParknShop for up to US$2 billion (S$2.5 billion).

ParknShop is half of Hong Kong's supermarket duopoly, commanding 33 per cent of the market share with 345 stores. The other is Wellcome, operated by Dairy Farm International Holdings, which hogs 40 per cent of market share, according to market research firm Euromonitor.

Mr Li has stressed that whether his supermarket chain would be sold is an individual business decision and would not affect other areas of his empire, which has a finger in almost every lucrative pie in Hong Kong, from property to telecommunications.

Speaking to reporters outside his home, he called the review "a normal business activity", said the South China Morning Post.

Still, the move has set tongues wagging on whether it was prompted by other reasons.

Hong Kongers have been increasingly vocal about their unhappiness over the income gap. In April, Mr Li found himself vilified when striking dock workers linked to his port company and complaining of being underpaid found a measure of public sympathy for their cause.

"There is a strong anti-market and anti-rich sentiment in Hong Kong," says Professor Francis Lui, associate business dean at the Hong Kong University of Science and Technology. "Many people do worry whether investors would feel comfortable in such an environment which is no longer pro-business."

There has also been talk that Mr Li - a supporter of Mr Leung Chun-ying's rival, Mr Henry Tang, during the Chief Executive race last year - does not agree with Mr Leung's policies.

But, asked by reporters, Mr Li denied the possible move to sell ParknShop was related to the political situation or public opinion of Mr Leung. "Please do not speculate," he said.

xueying@sph.com.sg