CKH (1 HK): Intervention Seeds Participation

• Inviting a PRC investor to join the bidding consortium as a significant member, as opposed to a majority player, appears the panacea to get this port deal over the line.

• Although CK Hutchison Holdings (1 HK) stopped short of naming the investor, China’s state-owned shipping conglomerate Cosco is widely expected/rumoured to join BlackRock and Swiss-Italian shipping company MSC.

• Participation through effective intervention? Cosco's involvement should all-but seal Chinese regulatory approvals. The green light from the US administration, the EU, and other jurisdictions, will pivot off how much involvement.

What's New? The Invite

The Group remains in discussions with members of the consortium with a view to inviting major strategic investor from the PRC to join as a significant member of the consortium.

Changes to the membership of the consortium and the structure of the transaction (the “New Arrangements”) will be needed for the transaction to be capable of being approved by all relevant authorities.

The Group intends to allow such time as is required for such discussions to achieve the New Arrangement.

Source: HKEx announcement

• Around a week ago, the WSJ reported that China would approve the port deal provided COSCO, a Chinese state-owned shipping conglomerate, joins the buyer consortium.

  • Early June, the FT reported that representatives of the MSC BlackRock held in-person discussions with China's State Administration for Market Regulation (SAMR).

• In my prior reports, such as CK Hutch (1 HK): Back To Square One, I speculated CKH had sounded out Beijing ahead of the proposed port sale. That conclusion appears misguided.