Li Ka-shing’s Power Assets and CKI to invest in his troubled Canada-based oil firm Husky

Power Assets and Cheung Kong Infrastructure (CKI), two firms controlled by Hong Kong tycoon Li Ka-shing, have agreed to fork out C$1.15 billion (HK$7 billion) to buy a 65 per cent stake in some oil logistics assets of Li-controlled Canada-based oil firm Husky Energy.

The move would answer expectations of shareholders of international power utility Power Assets from its management to find suitable investment targets for putting its HK$68 billion cash pile to good use. It would also shore up the finances of Alberta province-based Husky, which is enduring rising debt service costs and falling cash flows amid the worst oil slump in decades.

Power Assets chairman Canning Fok Kin-ning said last month that if no “sizeable investment” materialises by the time of its annual shareholders meeting on May 12, a board meeting would be convened to decide on the payment of a special dividend.

The Hong Kong-listed firm has been largely sitting on the war chest since it was amassed since the early 2014 stake sell-down and separate listing of its Hong Kong utility unit. It only spent €144 million of that on a wind power generator in Portugal in October.

“This transaction represents the largest investment that [Power Assets] has made since the spinning off of HK Electric Investments two years ago,” said Power Assets chief executive Charles Tsai in a statement. “In line with our acquisition requirements, this deal provides us with an excellent opportunity to invest in a secure and profitable project that offers immediate cash flow.”