Chow Tai Fook adds Australia power firm to property, jewelry

Chow Tai Fook Enterprises Ltd., the Hong Kong conglomerate known for its chain of jewelry shops across China, agreed to acquire Alinta Energy Holdings Ltd. in a multi-billion dollar deal that marks the family-
owned group’s foray into Australian utilities.

The companies announced the transaction in separate statements yesterday, without disclosing financial details. Chow Tai Fook agreed to pay investors including buyout firm TPG Capital more than AUD4 billion (USD3.1 billion), people with knowledge of the matter said, asking not to be identified because the details are private. Alinta’s assets span nationwide energy retailing through power generation for industrial customers.

The transaction is Chow Tai Fook’s most ambitious overseas expansion in recent years and comes at a pivotal moment for the conglomerate as it undergoes a leadership transition. The Cheng family heads a group that includes four listed units with a combined market of more than $25 billion. Among those are New World Development Co., one of Hong Kong’s largest property developers, and Chow Tai Fook Jewellery Group Ltd., whose chain of luxury stores generates more revenue than Tiffany & Co.

Chow Tai Fook follows in the footsteps of another Hong Kong group, property tycoon Li Ka-shing’s Cheung Kong Property Holdings Ltd., in scouring Australia for assets. This week, Hong Kong’s richest man won shareholder approval to pursue the AUD7.4 billion takeover of power provider Duet Group to add an energy network that covers an area three times the size of the Chinese city.

Australian utilities the likes of Alinta and Duet have attracted foreign interest because of their steady cash flows from gas and electricity assets – the country’s power companies are overseen by national and state regulators, which decide how much network operators can charge. The utilities offer relatively high yields for Asian investors often crimped by price caps elsewhere.

Last year, Chow Tai Fook acquired a luxury Bahamas resort that’s slated to open this year with a casino, hotel and golf course. “Alinta Energy would be Chow Tai Fook Enterprises’ first significant investment in Australia outside of real estate and integrated resorts,” the Hong Kong company said in its statement.

The takeover would test the Cheng family’s ability to manage large-scale utilities assets. While the family has made a number of obscure energy investments in the last decade, including ones for coking coal in Mongolia and oil and gas projects in Argentina, most of those deals have been small. Bloomberg