Hong Kong group buys Australia's CitiPower


CitiPower owns the electricity network in Melbourne's Central Business District and densely-populated inner suburbs

By Jane Searle

MELBOURNE, Australia (CNN) -- Hong Kong companies controlled by Asia's wealthiest man have successfully bid Aust. $1.555 billion ($863 million) for Australian electricity retailer, CitiPower.

The deal was announced in the Australian city of Melbourne on Friday.

Cheung Kong Infrastructure Holdings (CKI) and Hongkong Electric Holdings (HKE), companies ultimately controlled by Hong Kong tycoon Li Ka-shing, submitted the bid to American Electric Power for the distribution and retail businesses of Melbourne-based CitiPower.

CitiPower has about 260,000 customers in Melbourne's central business district and the city's inner suburbs.

CKI is the largest publicly listed infrastructure company in Hong Kong. It has operations in China, Australia, Canada and the Philippines.

HKE is the holding company of the Hongkong Electric Company, one of the world's oldest power groups.

The Hong Kong group's bid beat three other offers lodged by the TXU-led group Singapore Power, Australia's Origin Energy, and Melbourne-based power distributor United Energy in partnership with insurer and funds manager AMP.

When the purchase is completed, CitiPower's retail business will be on-sold to Australia's Origin Energy for A$137 million.

Completion of the sale is expected by September 1 this year.

American Electric Power bought CitiPower from another U.S. power utility, Entergy, for A$1.7 billion in December 1998.

Net consideration for the distribution business paid by the consortium is A$1.418 billion.

'A natural extension'

"CitiPower is a well-managed business with a strong customer base in Central Melbourne and surrounding suburbs," said CKI group managing director and HKE executive director H.L. Kam.

"This acquisition is a natural extension of our existing distribution investments in Victoria and South Australia," said Kam.

Kam said he was confident the investment would allow greater operating efficiencies and better customer service.

CKI and HKE also own two major Australian electricity distributors, Powercor Australia and ETSA Utilities.