ICGE in the catbird's seat...........ICG's new partner is a top Hong Kong power broker
Li Ka-shing's Hutchison Whampoa gains a U.S. foothold. The Wayne firm gets help in
navigating the Asian market.
By Miriam Hill
INQUIRER STAFF WRITER
Internet Capital Group Inc. has paired up with Hong Kong's leading power broker to help it
navigate an Asian market even more hyped up on dreams of Internet wealth than the American one.
Internet Capital, of Wayne, announced late Wednesday that it had joined forces with Hutchison
Whampoa Ltd. to buy a Hong Kong toy maker as an investment vehicle, and use it to help Asian
companies conduct business online.
The Hutchison name may not ring many bells here, but in Hong Kong, the company and its
chairman, Li Ka-shing, are household names. Li's holdings are so vast that there is a saying that, for
every dollar spent in Hong Kong, 5 cents goes into his pocket.
"The only place he hasn't conquered is the United States, and so he's positioning himself to do that,"
said Anthony Chan, author of Li Ka-shing: Hong Kong's Elusive Billionaire.
And Raj Aggarwal, Mellen professor of finance at John Carroll University in Cleveland, said Li is
"one of the most powerful guys there, and he's got great connections in China."
Li's holdings include ports and shipping, grocery stores, manufacturing and telecommunications. He
and his family are worth more than $12.7 billion, Forbes magazine said in its July 5, 1999, issue,
making him among the richest people in the world. His ties to China's leadership began in the 1970s
when he advised Communist leader Deng Xiaoping.
Li, 71, began his business career in Hong Kong selling plastic flowers, and parlayed those profits
into real estate and other industries. His latest focus has been the Internet. His Internet company,
tom.com, a Web site about China, increased in value more than five times when it went public
March 1. In an example of Hong Kong's overwhelming interest in Internet ventures, thousands of
people lined up outside banks to purchase shares.
His son, Richard Li, made headlines last week when his company, Pacific Century Cyberworks,
won a bidding war for Hong Kong Telecom, the dominant phone company there. Cyberworks has
no profits, but its stake in other Internet companies, along with the Li name, boosted its stock price
high enough that it raised $40 billion for the telecom company.
Internet Capital, whose own stock has increased from $6 at its August public offering to $139.44 at
yesterday's close, hired Goldman Sachs to help it find a partner in Asia. At the same time, Hutchison
Whampoa's managing director, Canning Fok, began looking for an Internet partner in the United
States.
Together, Internet Capital and Hutchison plan to build electronic commerce networks where
businesses can buy and sell goods and services to each other online in Hong Kong and throughout
Asia.
"This allows us to very aggressively enter the market, and accelerate the development of
business-to-business commerce in Asia," said Ken Fox, who founded Internet Capital with Walter
Buckley 3d, now the chief executive officer. "We'll acquire Asia-based companies. We'll bring U.S.
companies over, and we'll also create incubators in China and Hong Kong."
Their investment vehicle will be Harbour Ring International Ltd., best known for making Teenage
Mutant Ninja Turtles. Internet Capital contributed $116.8 million for a 55 percent stake in Harbour
Ring. Hutchison's stake was diluted by the increase in shares, and it paid $17.6 million to end up
with a 15 percent interest, down from 21 percent before the deal. A foundation owned by Li paid
$10.6 million for 10 percent.
In Hong Kong, companies are required to be in business for two years before they can sell stock.
Buying Harbour Ring gets Internet Capital and Hutchison around that rule, giving them a publicly
traded company with which they can make investments immediately.
The newly renamed company, ICG Asiaworks, expects to buy stakes in 10 to 20 companies in the
next year. Fox said Internet Capital expects to expand into Japan and Korea in the next few months.
This article contains information from Bloomberg News. |
