From toymaker to Asia’s richest man

Li’s empire includes the property firm Cheung Kong Holdings and conglomerate Hutchison Whampoa

Billionaire Li Ka-shing: keen to diversify out of Hong Kong.  Photograph: Lam Yik Fei/Bloomberg

Billionaire Li Ka-shing: keen to diversify out of Hong Kong. Photograph: Lam Yik Fei/Bloomberg

 

Last week it was reported that Asia’s richest man, Hong Kong tycoon Li Ka-shing, was looking to buy the Dublin-based Awas Aviation Capital. Li is a legend in Hong Kong, like a founding father in other cultures, and the Awas bid was a reminder of just how much money there is in Hong Kong – and how much of it is he conrols.

Li has made noises of late that opportunities in Hong Kong are becoming limited and he is keen to diversify out of the city state. His companies are cash-rich after he raised nearly €7 billion by selling stakes in various units. This is one Hong Kong entrepreneur about whom Irish people need to know.

Li’s empire includes the property firm Cheung Kong Holdings and conglomerate Hutchison Whampoa, with global assets also including telecoms, utilities, ports and retail.

Cheung Kong Holdings is the vehicle he is using to buy into Awas, one of the world’s biggest aircraft leasing companies, which focuses on buying used jets, mainly from other leasing companies. Its current portfolio comprises more than 300 aircraft, which it leases to more than 100 airlines in 50 countries.

Worth about €22 billion personally by some estimates, Li is the quintessential Hong Kong entrepreneur. Born in 1928, he fled to Hong Kong from Guangdong province during the second World War, and his father died of tuberculosis during the Japanese invasion when he was 14.

Made in Hong Kong

John James Cowperthwaite

Cowperthwaite famously refused to collect economic statistics, in order to avoid officials meddling in the economy.

“I still believe that, in the long run, the aggregate of the decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is likely to do less harm than the centralised decisions of a government; and certainly the harm is likely to be counteracted faster,” is one of Cowperthwaite’s celebrated quotes.

In July, Cheung Kong reported a profit for the first six months this year grew by 59 per cent to HK$21.35 billion (€2 billion).

He is a major philanthropist in Asia, having set up two universities, including the Cheong Kong Graduate School of Business and the University of Shantou.

Other areas at which Li is looking include the Australian property market.

Through his Singapore-listed unit ARA Asset Management he is trying to deploy capital into southeast Asia and Australia, through its summit development fund.

Last week Li won out in a takeover battle for the Australian gas-transmission company Envestra after a rival bidder agreed to support his 2.37 billion Australian dollar (€1.65 billion) offer. This gives Li access to a network of natural gas pipelines in supplying cities such as Melbourne and Adelaide.

Despite Hong Kong’s reputation as one of the world’s richest cities, one in five residents, or about 1.3 million people, live below the poverty line, according to a government report last September. The city’s Gini coefficient, a measure of income inequality, rose to 0.537 in 2011 from 0.525 a decade earlier, the highest since records were kept in 1971.

The 86-year-old Li is an old-school capitalist and his ability to make money is matched by a sense of social responsibilty. He said in June that he has trouble sleeping at night because of a widening wealth gap and waning trust in Hong Kong.

“Trust enables us to live in harmony, without which more and more people will lose faith in this system, breeding scepticism towards what is fair and just, doubting everything and believing all has turned sour and rancid,” said Li. “The howl of rage from polarisation and the crippling cost of welfare dependence is a toxic cocktail commingled to stall growth and foster discontent.”

At the same time, he has spoken out against Occupy Central with Love and Peace, an activist group threatening mass sit-ins at the financial district if it does not get progress on making Hong Kong more democratic.

China has said candidates for the 2017 election of Hong Kong’s new leader must be vetted by a committee.

The shrewdness for which Li is known was exemplified in an interview with Forbes in 2010, when he was 81, when he was asked what advice he would give to an entrepreneur.

“Managing a family on a tight budget is hard, but managing a company with a tight cash flow is even harder. I am always vigilant about cash flow. I have adhered to a steady cash flow, high reserve and a healthy debt-to-equity ratio.

“‘Seeking growth while maintaining stability’ has always been my motto, striking the right inter-relatedness of growth and stability is important. We should never allow ourselves to be burdened by opportunities that abound.”

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