Hong Kong Billionaire Beats ADIA, Macquarie Capital, and CPPIB to Buy UK Power Grids

(July 30, 2010) — After tough competition with a consortium comprising sovereign-wealth fund Abu Dhabi Investment Authority, Macquarie and the Canada Pension Plan, tycoon Li Ka-shing emerged as one of the UK’s biggest infrastructure owners after buying Electricite de France SA’s (EDF) British electricity network business for $9.1 billion.

The process — which has dragged on for more than a year due to delays by a change in EDF management, British regulatory rulings, and difficulties with pension trustees — ended as being one of the largest deals in Europe by a north Asian company, ranking behind the $14.3 billion Chinalco paid for a 12% stake in Rio Tinto two years ago.

Hong Kong 82-year-old billionaire Li Ka-shing $9.1 billion deal for three UK power grids owned by EDF makes him one of the largest owners of Britain’s infrastructure. His assets range from the Port of Felixstowe to Cambridge Water.

According to the Wall Street Journal, the acquisition of assets of EDF, the world’s second-largest utility, will be spread across a consortium of buyers controlled by Li — Cheung Kong Infrastructure Holdings Ltd. will take 40%, Hongkong Electric Holdings Ltd. another 40% and the Li Ka-Shing Foundation 20%.

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Li, one of the richest men in Asia, now controls about a quarter of the UK’s power distribution — around 10% of gas supply and less than 5% of water supply.

The deal represents Li’s fifth investment in the UK and follows his efforts to increase ownership of overseas utilities as a result of facing difficulties expanding in Hong Kong.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(July 30, 2010) — According to a midyear release by State Street Global Advisors (SSgA), exchange-traded fund (ETF) industry assets in the US fell 0.4% to $772 billion in the first half of 2010, yet net flows into all US ETFs during the first six months of the year exceeded the pace seen for the same period last year.

“Despite the market’s performance during the first half of 2010, ETF net inflows are ahead of last year’s pace,” said Tom Anderson, director of strategy and research for the Intermediary Business Group at SSgA, the investment management business of State Street Corporation. “This growth has been driven by financial professionals, individual investors and institutions, and underscores the way investors build and maintain portfolios in every market cycle using these innovative investment products.”

SSgA noted that three key trends have shaped the industry in the first half of 2010.

1. The growing number of fixed-income ETF offerings helped attract net inflows of $21.2 billion for the fixed-income ETF segment, a 21% hike from the end of 2009, illustrating the “rapid evolution” of the ETF industry to meet investor needs.

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2. Gold ETF assets have reached new peaks, jumping 30.2% from the end of 2009, as SPDR Gold Shares ETF earned $7.6 billion, which brought total assets past the $50 billion mark. Investors are no longer simply looking for broad-based commodities, and are instead looking for a specific gold niche, SSgA told ai5000. The SPIDER Gold Trust (GLD), the second-largest ETF in the world, has assets of over $50 billion as of the end of June.

“Gold is a huge opportunity right now as institutions become more heavily invested in the asset,” Will Rhind of ETF Securities told ai5000. “ETFs are a breakthrough solution to get that exposure,” he said, noting that they’ve been increasingly used to position against rising interest rates and fears of inflation.

3. With ETFs accounting for more than 60% of all canceled trades during the market disruption on May 6 known as the “flash crash,” preliminary findings showed the flash crash was caused by market structural issues and were not caused or exacerbated by ETFs or ETF trading. Confidence in these investment vehicles remained strong, said SSgA.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742