KKR to invest $1 billion in UK water company owned by Li Ka-Shing’s CK Group

New York-listed investment giant KKR has agreed to invest £867m ($1bn) for a minority stake in Northumbrian Water Group, which is jointly owned by several listed companies within the CK Group , the business empire of Hong Kong billionaire Li Ka-Fishing.

Once completed, KKR will own 25% of the UK water utility and the remaining 75% will be jointly owned by CK Hutchison, CK Infrastructure and CK Asset.

Northumbrian Water, which provides water and sewerage services to people in the North East and South East of England, was acquired by Li’s companies for £2.4 billion in 2011.

A joint company filing released on Thursday said CK Hutchison is expected to earn HK$1 billion ($127 million) from the transaction, while CK Infrastructure and CK Asset will earn HK$900 million and CK Asset 500 million, respectively. The transaction, which is subject to regulatory approval, is expected to close later this year.

KKR and CK Group have partnered in the past. Last year, a KKR-led consortium invested $3.7 billion to acquire Spark Infrastructure, an Australian energy company that partnered with CK Group’s Australian power distribution business.

A major deal between the two giants reportedly fell through less than two weeks ago. The FinancialTimes said talks had broken down over the £15bn acquisition of UK Power Networks, Britain’s biggest electricity distributor. The KKR and Macquarie-led consortium pulled out of the deal after CK Infrastructure sought to raise the price amid soaring inflation and currency movements.

Founded some 45 years ago, KKR will forever be known as the “Barbarians,” after the bestselling book chronicling their takeover of RJR Nabisco for $25 billion in 1988. The private equity firm had popularized the practice of leveraged buyouts in the 1970s and 1980s and became the face of Wall Street’s conquest of corporate America, but in recent years the firm has taken a buy-and-build approach to its investments.

Li, who turned 94 last month, earned the nickname “Superman” by building a global business empire that now has interests in everything from ports, utilities and telecommunications to real estate and trading. retail in more than 50 countries. A longtime figure at the top of Hong Kong’s wealth rankings, his current net worth is estimated at $35.2 billion.

Li continues to serve as senior adviser to his two flagship companies, CK Hutchison and CK Asset, after his eldest son, Victor Li, replaced him as chairman in May 2018.

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