Li Ka-shing, Hong Kong’s richest man, will soon be in charge of keeping the lights on at Buckingham Palace.
The royal residence is a client of the electricity franchise surrounding London that Li, thanks to some deft deal makers on his side, acquired last month for a hefty £5.8 billion ($8.9 billion).
A mergers and acquisitions advisory team from Royal Bank of Scotland Group, led by Simon Wilde, helped Li outmaneuver Australian rival bidder Macquarie Group and its partners, the Abu Dhabi Investment Authority and the Canada Pension Plan, to buy EDF Energy Networks’ power grids from Électricité de France (also known as EDF Group). EDF Networks distributes electricity to 8 million customers in Britain’s eastern and southern regions, including Buckingham Palace, the Channel Tunnel Rail Link and the University of Cambridge.
The acquisition bolsters Li’s U.K. infrastructure portfolio. His Cheung Kong Infrastructure Holdings already controls the utility company Cambridge Water, while Hutchison Whampoa, another Li company, has assets including mobile phone provider 3 Group and some port facilities in Britain. The missing piece? Power.
“London needs good power and lots of power, so if you need to invest in a high-profile, prestigious asset, this is a great project,” says Wilde, who heads the team that advised Li’s consortium, which consisted of Cheung Kong Infrastructure, Hongkong Electric Holdings and the Li Ka Shing Foundation. “If you make a mistake, it will be very high-profile, but Cheung Kong Infrastructure and Hongkong Electric have good experience operating power plants in Hong Kong and are well qualified.”
The deal was monumental in more ways than one: It was Cheung Kong’s biggest overseas investment, and it was RBS’s biggest deal as a sole adviser. It was also a personal victory for Wilde, 40, a managing director and co-head of RBS’s energy and resources team for Europe, the Middle East and Africa. The Cambridge graduate with a master’s in economics and law first alerted Cheung Kong executives to EDF’s desire to sell its U.K. subsidiary in early 2009. He had worked on the sale of another EDF subsidiary in 2002 and was familiar with long-term power contracts, having worked at RBS when it participated in the sale of Gatwick Airport, which involved renegotiation of an electricity contract. As a result, Wilde was well positioned to help Li’s team value EDF’s long-term contracts, present an offer and restructure the company’s debt load once the deal was accepted in July. (EDF’s board approved the sale on September 7.)
Wilde gained solid experience doing energy deals — as well as a strong reputation — when he advised Spanish energy producer Iberdrola on its 2007 purchase of U.S. power company Energy East Corp. Before joining RBS he spent nine years with the M&A team at ABN Amro Group.
“Simon has extensive knowledge of the energy industry and has very good knowledge of how to address clients’ needs for any specific transaction,” says Pedro Azagra, Iberdrola’s head of corporate development. “He was always available when we needed him. That made a key difference in our successful bids.”
Hong Kong’s Superman — Li’s nickname in Asian business circles — almost didn’t get the U.K. power company, says Wilde, who, along with his team of 25 bankers and lawyers from RBS’s London and Hong Kong offices, worked around the clock for days before submitting a final winning bid on July 26.
“One of the key elements was a new business plan for this new company,” says Wilde. “We needed to come up with a plan that was best in class. We needed to explain many details, including capital expansion, the organizational structure of the business and how it will be run day to day.”
