Margin Call: Expect plenty of twists and turns ahead of any APA takeover approval

 

He might be one of the world’s richest men, but Hong Kong billionaire Li Ka-Shing and his son Victor Li don’t like to create too much fanfare around their market-altering deal making.

But their $13 billion all-cash takeover bid this week for the Michael Fraser-chaired APA Group must have the Cheung Kong group’s advisers Richard Wagner in Sydney and Julian Peck in Melbourne for Morgan Stanley popping corks.

It’s the second deal the bank has done for its loaded Chinese client in a bit over a year, with Morgan Stanley also guiding CKI’s $7.4bn buy of energy utility DUET in the first half of 2017.

But that’s only if CKI, who also has law firm Allens Linklaters in its corner, gets the myriad regulatory approvals (plus APA board and shareholder sign-off) it needs to actually to bring the mega-deal to completion.

Former CK Hutchison chairman Li Ka-Shing with his son and current chair Victor Li.

CKI has been in Oz for almost two decades. Its DUET buy was the group’s biggest offshore deal ever, gaining the approval of the now David Irving-led Foreign Investment Review Board and ultimately Treasurer Scott Morrison.

But CKI, which has been granted inside the tent access to do due diligence on APA, knows defeat too, having been stymied the year before by ScoMo in its bid to buy Ausgrid from Gladys Berejiklian’s NSW Government.

At the time the Treasurer cited “national security concerns”.

Competition boss Rod Sims has already started his inquiry into the CKI bid for APA, which would see the Hong Kong-based conglomerate control much of Australia’s east coast gas assets.

They’ve started talking to FIRB too, at a time when there is much concern about preserving the national security of key infrastructure assets. Just ask China’s Huawei, which is expected to be officially banned from assisting with the rollout of Australia’s 5G mobile network.

We won’t be surprised to hear much made of Victor Li’s status as both a Chinese and Canadian citizen.

All that leaves a big strategic job for CKI’s key man on the ground in Australia Ben Wilson, who runs the group’s Australian Gas Infrastructure Group and which now includes DUET.

Wilson, if he wants to add APA to his portfolio, is going to have to do some heavy pedalling to see his rich boss’s deal flashed the green light.

Read the full Margin Call column tomorrow in print and online.