CK Hutchison, owned by Hong Kong’s wealthiest individual Li Ka-shing, has announced the expiration of its exclusive negotiations period with a consortium for the sale of two ports located at the Panama Canal. The terminal operator recently announced agreements to divest its interests in Hutchison Port Holdings and Hutchison Port Group Holdings. The terms of the deal require nearly $23 billion in total, including $5 billion in new debt.
The agreement itself gives the consortium operational command of 43 ports in twenty-three different nations. In this group are Global Infrastructure Partners, a BlackRock subsidiary, and Terminal Investment Limited, owned by the Mediterranean Shipping Company. The deal has come under intense scrutiny from Chinese anti-monopoly authorities and ignited a firestorm in the local media. A Beijing-backed newspaper in Hong Kong criticized the deal, calling it a betrayal of Chinese interests, while government offices overseeing Hong Kong affairs shared these commentaries.
Given these obstacles, CK Hutchison might now look to a Chinese partner to come into the consortium. Yet Hutchison’s co-managing director, Dominic Lai, admitted that Terminal Investment was the leading investor for the deal.
“Our Group remains in discussions with members of the consortium with a view to inviting a major strategic investor from the People’s Republic of China to join as a significant member of the consortium,” said Hutchison in a statement.
The Panamanian government has asserted its control over the canal, emphasizing that CK Hutchison’s operation of the ports does not equate to Chinese control. The federal government claims sole jurisdiction over the waterway. At the same time, many of the above stakeholders have become alarmed at foreign influence that’s quite pernicious.
As negotiations wrap up, CK Hutchison’s parent company is headed by Diego Aponte. Such is the key role of the shipping industry in this port development story. If this deal were to close it would more than double the consortium’s portfolio. It would provide access to major international shipping gateways.
Guo Jiakun, speaking on behalf of the Chinese government, stated, “The Chinese government will conduct supervision in accordance with the law, firmly safeguard national sovereignty, security and development interests, and maintain market fairness and justice.” This important comment reinforces the government’s willingness to actively monitor foreign investments and ensure they are beneficial for the country.
CK Hutchison’s possible move to win over a Chinese investor shows the company’s desire and necessity to play in these murky geopolitical waters. Looking ahead, stakeholders are watching the further discussions that are taking place. They are guardedly optimistic about what this means in terms of reshaping international shipping dynamics and foreign investment interest to improve the region’s prospects.
