Hong Kong investor buys UK wind farms for £350mn | USAEMALL.com

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A vehicle controlled by the family of Li Ka-shing, Hong Kong’s richest man, has agreed to buy a portfolio of UK wind farms for £350mn in the latest expansion of its utility arm.

Under the agreement, a consortium led by CK Infrastructure will acquire 32 onshore wind farms from Aviva Investors.

CKI also said on Wednesday it had applied for a secondary listing on the London Stock Exchange, with admission expected on Monday.

The wind farm deal shows the ongoing attraction of established renewable power generation assets in the UK, despite a windfall tax imposed after Russia’s full-scale invasion of Ukraine, while CK’s secondary listing is a sign of confidence in London’s stock market.

The Financial Conduct Authority, the UK financial regulator, in July announced a significant overhaul of the country’s listing regime as part of efforts to attract companies to London.

The UK wind farm assets, with a nameplate capacity of 175 megawatts, include the 18MW Den Brook wind farm in Devon and the 25MW Minnygap project near Dumfries in Scotland.

The UK announced its so-called Electricity Generator Levy in the autumn of 2022, imposing a 45 per cent charge on electricity sold at an average price of more than £75 per megawatt hour.

Renewable generators such as wind farms were included in the levy because their revenues jumped after the Russian invasion but there was no increase in their input costs, unlike coal or gas generators.

CKI said the assets would provide “immediate returns, stable cash flows and recurring profit contributions”. The Hong Kong-listed company is one of the biggest gas, electricity and water distributors in the UK.

The transaction was expected to complete in late September, the company said.

Earlier this year, CKI bought Phoenix Energy, Northern Ireland’s main gas distribution network, for £757mn. It also spent £90.8mn to acquire UU Solar, which owns about 70 smaller renewable generation projects.

CKI had a long-established presence in the UK and preferred to “invest in markets that they are familiar with”, said Lorraine Tan, director of Asia equity research at Morningstar.

The Li family has ventured into the UK utility market with a series of acquisitions and investments over the past 20 years.

CKI bought UK Power Networks, the main electricity distributor in London and the south-east of England for £5.5bn in 2010, and also owns substantial stakes in Northumbrian Water and Northern Gas Networks.

The UK accounted for the largest share of CKI’s global profits at 40 per cent in the first six months of this year, up from 36 per cent in the first half of 2023, the company said.

Victor Li, chair of CKI and the elder son of Li Ka-shing, said the company was in an “advantageous position” to explore new acquisitions given its “solid” financials.

CKI also controls gas and electricity assets in Canada, Australia and New Zealand.