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2nd UPDATE: 'Superman' Li Ka-shing Retires, Handing Son Reins To Global Empire

By Amy Lam and Benny Kung
Nikkei Markets
Adds management comment from a press conference and more detail.
HONG KONG (Mar 16) -- Li Ka-shing, Hong Kong's billionaire tycoon who became a symbol for Asian success, announced his retirement from the family business on Friday, shifting the focus to his elder son and new leader, Victor Li.

The transition was not a surprise. The elder Li anointed Victor as his successor in 2012 after father and son had worked together for more than 25 years. In a bid to pre-empt family disputes, Li said then that he would continue to bankroll the ventures of his younger son, Richard Li.

There is general agreement that the handover won't have an immediate impact on the family's numerous companies that straddle more than 50 countries and are collectively valued at around $150 billion.

Veteran investor Marc Faber, who publishes the Gloom, Boom and Doom newsletter, said that while investors may have less confidence in the son than in the father, the companies are managed by competent individuals.

The more interesting question is whether Victor can emerge from his father's shadow and put his stamp on the empire.

Victor, 53, will manage the group's property, ports, retail, energy, some telecom and other businesses, including CK Hutchison Holdings, a multinational conglomerate, CK Asset Holdings, and CK Infrastructure Holdings, the three biggest companies in the fold.

His brother Richard will continue as chairman of telecom and media business PCCW.

Li Ka-shing will step down as chairman of the group after shareholder meetings on May 10. The business tycoon said he will continue to serve as a senior advisor at CK Hutchison and CK Asset, continuing to contribute to the group on "significant matters."

At a news conference on Friday, he brushed aside concerns about the future, saying the group's management did not comprise of just him or Victor, even as he exuded confidence in his son's ability to push the group forward.

"We have not just planned for today, but also for the next five years and 10 years," he said. "I think Victor is quite okay. He is quite competent."

Li, who will turn 90 in July, has been clearing the decks to ensure a smooth succession, said Victor Zheng, a research fellow at the Chinese University of Hong Kong's Institute of Asia-Pacific Studies who has researched Chinese business families in the territory. "He understands that the business is big and can have a much bigger impact on society, economy and business."

Still, the success of the plan rests on the man in charge, Zheng said.

The most vivid memory that many have of Victor is his kidnapping in 1996 by notorious gangster Cheung Tze-keung. Many years later, his father, in an interview with Chinese publication Southern Metropolis Daily, admitted he paid a HK$1-billion ransom to secure his release.

Not much is known about Victor's leadership style. Some find him a reticent, details guy lacking some of the people skills and business savvy that contributed so much to the elder Li's success.

Victor's utterances are so rare that he is an unknown quantity to investors, said David Webb, an activist investor and former investment banker based in Hong Kong.

However, "Genetics tells us that exceptional individual characteristics are mean-reverting in subsequent generations, so he is unlikely to be as good as his father. That said, in some areas of the group's business, they have dominant positions and it would take exceptional incompetence to lose that," Webb said.

Given the group's strong presence in Europe, Canada and Australia as well as deep roots in the Greater China region, Victor has a strong platform but also faces a daunting task. One of his challenges will be to steer the group against the backdrop of emerging protectionism in the West and a resurgent China.

In August, the senior Li, who is sought after by the media for his comments on everything from politics to property prices, warned that "geopolitical risks, uncertainty on the commodity prices outlook and market concerns on interest rates" posed challenges to his businesses.

Li moved to Hong Kong as a 12-year old refugee from war-torn China. Forced to quit school to support his family, he worked in a plastics trading firm and in 1950, opened a plastics manufacturing company. In the years that followed, Li's deal-making skills and his determination to succeed propelled him to the top ranks of the world's wealthiest.

Called Superman, his pervasive business presence in Hong Kong also turned him into one of the most influential figures in the Chinese territory.

Forbes put Li's net worth at $35.3 billion as of Friday, ranking him 23rd globally.

In November, his property arm company sealed the city's biggest real estate deal by selling a 73-storey office tower for a record $5.14 billion. Early last year, his infrastructure unit bought Australian power and gas utility Duet Group in a $5.6 billion deal.

Over the past year, speculation has been rife about his impending retirement.

Li is exiting on a high note.

On Friday, CK Hutchison reported a 6.3% increase in its 2017 net profit, driven by the performance of the group's European telecommunications operations, while a jump in the value of its investment properties boosted CK Asset's annual profit 55% from the 2016 level.

CK Infrastructure, in which CK Hutchison owns a majority stake, reported a 6% rise in its 2017 net profit to HK$10.26 billion as revenue jumped 15.7% to HK$31.64 billion. Another group company, Power Assets Holdings, reported a 30% increase in net profit to HK$8.32 billion.

As he stepped down, Li was optimistic in his outlook for the group's businesses.

"Building on our solid foundations of diversified businesses, prudent financial strategy and a stronger recurring income base, we are well placed to secure investments that generate long-term stable liquidity, provide income in the short to medium term, and strengthen further the Group's dividend distribution capability," he said in a statement.
- By Amy Lam and Benny Kung; hkeditorial@nikkeinewsrise.com; +852 3960 5150
- Edited by Sumathi Vaidyanathan and Dhanya Thoppil
- Send Feedback to feedback@NikkeiNewsRise.com
- Copyright (c) 2018 Nikkei NewsRise Asia Pte Ltd.

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