I Squared Capital HK$14.5 billion acquisition of Hutchison Global Communications Investment Holding

Overview:

• I Squared Capital has agreed to acquire Hutchison Global Communications Investment Holding (HGC) from Hutchison Telecommunications Hong Kong Holdings (HTHKH) for approximately HK$14.5 billion.
• I Squared Capital’s ISQ Global Infrastructure Fund II will manage the acquisition through its wholly-owned subsidiary Asia Cube Global Communications.
• HGC provides fixed-line telecommunication services through a fibre network spanning over 1.4 million km and connecting over 14,200 buildings. It also has over 25,000 Wi-Fi hotspots in Hong Kong. With four land routes into mainland China and a number of submarine and terrestrial cable systems into other continents, it provides services to consumers, fixed and mobile carriers and OTT service providers. It generates a substantial proportion of revenue from long-term contracts.
• HGC will continue to supply fixed-line services to HTHKH with the companies planning a cooperative commercial relationship.
• I Squared Capital invests in energy, utilities and transport in the Americas, Europe and certain high growth economies through offices in New York, Houston, London, New Delhi, Hong Kong and Singapore.
• HTHKH is a mobile, fixed and Wi-Fi telecommunications operator using the name “3” in Hong Kong and Macau and “3Home Broadband” in Hong Kong. It is a group member of CK Hutchison Holdings, which owns and operates investments in ports and related services, retail, infrastructure, energy and telecommunications.
• HTHKH believed that HGC’s value had not been fully reflected in the share price and so the transaction would unlock value for shareholders. Reuters reported that Hutchison Telecom’s share price rose after it publicly acknowledged rumours of the deal in May 2016.
• Completion of the transaction is subject to shareholder approval on HTHKH’s side with CK Hutchison Holdings, interested in around 66.09% of HTHKH’s issues shares, already undertaking to HTHKH to vote in favour of the transaction.
• The deal is expected to complete by October 2017.
• HTHKH’s financial advisers were Deutsche Bank, Hong Kong Branch and Goldman Sachs Asia.

Jordan Hughes - Journalist