69novels Chapter 22: Stocks may let you have them, but I want HK Electric.
Chapter 22: Stocks may let you have them, but I want HK Electric.
Around 12 noon.
The terrace of the rooftop private room at the Peninsula Hotel.
Before the food was served, Li Jiagang, Shen Bi, and Bao Yugang sat on the terrace drinking coffee and enjoying the Victoria Harbour view.
"Young Master Li, look," Bao Yugang said, pointing to the location of Kowloon Wharf on Hong Kong Island, "Doesn't the shape of the Kowloon Wharf Building resemble a sword hanging from its sheath?"
Li Jiagang immediately understood what he meant.
These two old foxes arranged to meet him. It must have been about twenty minutes since he entered the private room, right?
But all they did was exchange pleasantries and try to get something out of him, or praise him as a talented young man or a heroic youth, without ever getting to the point.
Li Jiagang dislikes this kind of negotiation the most; he prefers straightforward and frank conversations.
However, he understood.
These old foxes value composure and patience. If they jump straight into the main point, they'll be seen as impatient, putting them in a passive position and putting them at a significant disadvantage in negotiations.
Negotiation is all about mindset.
But for Lijiagang, this approach is purely boring and a waste of time.
But he had no choice but to play along and wait until it was time to have a proper talk.
Anyway, he came with a purpose.
Before arriving, he had a long talk with Huo Jianning, which lasted until he arrived at the appointment.
At first, Huo Jianning suggested that he should talk about "Hutchison Whampoa".
But Li Jiagang knew that without pledging allegiance to HSBC, it would be virtually impossible to acquire Hutchison Whampoa. Therefore, he ruled out Hutchison Whampoa and began discussing which other properties HSBC was worth taking over.
Ultimately, they reached an agreement and settled on an industry that they both believed had a promising future.
But if they want to take over this industry, HSBC's Sir Michael Sandberg must step in.
"Yes! It really does look alike," Li Jiagang echoed, then picked up the newspaper on the table and smiled, "Congratulations, Sir Bao, you're probably the largest shareholder of Wharf Holdings now, aren't you?"
Upon hearing this, Bao Yugang and Shen Bi, who were standing nearby, exchanged glances and then smiled knowingly.
"Young Mr. Li, let's be frank." Bao Yugang had already understood what Li Jiagang meant by those words, so he didn't delay any longer: "I hope you can part with your shares in Wharf Holdings and give them to me. Of course, I will trade at the latest price."
Li Jiagang nodded repeatedly.
But he did not respond immediately.
Before he could figure out how to respond, Shen Bi suddenly interjected, "Young Li, I suggest you know when to stop. Otherwise, sometimes good things can turn into hot potatoes."
Li Jiagang was displeased upon hearing this.
Shen Bi has really become a threat to him.
Li Jiagang remained expressionless, picked up his coffee and stirred it gently: "So, you two invited me here today to 'rescue' me?" he said with a smile.
"Hahaha……."
"Young Master Li, you're exaggerating."
"We're just businessmen, and we've invited you here with the utmost sincerity." Bao Yugang clearly sensed the change in Li Jiagang's tone and immediately stepped in to smooth things over: "Or, Mr. Li, do you have any thoughts you'd like to discuss?"
Although Li Jiagang said these words with a smile, how could Bao Yugang, who had experienced ups and downs in the business world, not even notice this slight change?
His purpose in meeting with Li Jiagang was to obtain the "Wharf Holdings" shares in his possession, not to create enmity.
"Yes, if Mr. Li is willing to give up his Wharf Holdings shares, can you share your thoughts?" Sir Michael Sandberg spoke up again from the side.
Seeing that Bao Yugang had backed down and did not intend to use his power to pressure him, Li Jiagang felt more at ease.
He then stated frankly, "I have no conditions." He then looked at Sim Bi, "However, I do have something I need Sim Bi's help with."
"If Sir Michael Sandberg can help with this, everything else is negotiable. I also want Sir Michael Sandberg to successfully take over Kowloon Wharf and enhance China's prestige."
"Young Master Li, what do you say?"
Shen Bi, standing to the side, asked without any change in expression.
This time, Li Jiagang did not hesitate at all, saying, "I want to acquire the publicly traded shares of Hong Kong Electric." His voice was not loud, but every word was clear. "I know that HSBC is one of the major shareholders of Hong Kong Electric, and has the right of first refusal and the channels. I only want 30% of the publicly traded shares of Hong Kong Electric, and I will acquire the rest myself or find a way to do so."
"Hong Kong electric lights?"
Upon hearing the name, both Sir Michael Sandberg and Paul Pao were taken aback, as they had both assumed that Li Jiagang would make some outrageous demands.
Unexpectedly, this was the only request he made.
Because in 1978, Hong Kong Electric was still a public utility company.
Without proper operation and packaging, profits are low.
Moreover, the business is complicated, the investment costs are considerable, the maintenance costs are high, and the electricity costs are strictly controlled by relevant departments, so it is not considered a very valuable company in the eyes of businessmen.
This is why, even though the British Hong Kong government allowed "Hong Kong Electric" to be privately operated by a company in 77, no company was willing to take over its management.
At the time, HSBC only purchased 10% of the shares casually in order to appease the British Hong Kong government.
Other companies like Standard Chartered, Jardine Matheson, and Hutchison Whampoa also acquired stakes ranging from 3% to 10% in order to appease the British Hong Kong government.
The remaining shares of HK Electric are held by various institutions, neighborhoods, and companies on Hong Kong Island.
The management of Hong Kong Electric remained with the British Hong Kong government. These people who purchased shares did not participate in management; it was purely to appease the British Hong Kong government.
As for making money, the rate of return is very low, and it's not worth mentioning to those businessmen.
As for why HK Electric's revenue is so low.
The main reason is that the power plant has long lacked professional management, the old machinery has caused high costs, and the lack of management in various aspects has led to a decrease in electricity sales efficiency and utilization.
Historically, after Hong Kong Electric was taken over by Jardine Matheson in 1980, it carried out its first unit upgrade, clarifying the roles of power plant maintenance personnel and reducing unnecessary staff and positions to lower costs.
At the same time, the wiring was upgraded.
By adopting better cables to maximize power efficiency and utilization, costs and burdens were reduced in all aspects, resulting in a 30% increase in Hong Kong Electric's profits that year.
After Li Ka-shing took over in 85...
The power station was relocated, and the generating units were upgraded again, utilizing lower-cost technology for power generation. At the same time, electricity prices were raised, and coupled with the population boom in Hong Kong in 85, the number of buildings, shopping malls, entertainment venues, and so on on Hong Kong Island increased, causing electricity demand to multiply several times.
Especially after 86.
With the widespread adoption of electronic devices and the increase in electrical appliances in Hong Kong, Hong Kong Electric's annual profits have been rising year by year.
A light bulb company made Li Ka-shing a fortune.
This is one of the benefits of Hong Kong Electric.
Many people may not know that HK Electric is not only a power plant company, but also has a real estate company under its umbrella.
"King Wing Development Limited" is a wholly-owned real estate subsidiary of HK Electric.
This real estate company was not primarily engaged in building construction, but rather managed the land revitalization of HK Electric, holding land reserves in North Point, Ap Lei Chau, and other areas. It was not an external holding company, nor a profit unit of HK Electric.
Although this real estate company does not generate profits externally, it owns many prime plots of land, which is one of the reasons why Li Jiagang wanted to acquire "Hong Kong Electric".
The golden age of Hong Kong's real estate market is about to begin, and he must develop real estate.
"That's right, and I don't have enough funds. HSBC needs to provide a loan to help me acquire the light bulbs," Li Jiagang stated firmly, explaining the purpose of his trip.
Upon hearing Li Jiagang's words, Sir Michael Sandberg hesitated for only a moment before nodding: "OK! Mr. Li, I can help you with this." Acquiring Hong Kong Electric's public shares would be no challenge for HSBC, and it would also be a great deal.
He could also solve the problem for the British Hong Kong government of the need for joint management of "Hong Kong Electric" but no one was willing to take over, and he might even receive praise from the British Hong Kong government.
For Shen Bi, this was a win-win situation.
Seeing that Sir Michael Sandberg had agreed, he suppressed his excitement: "Sir Michael Sandberg is so generous. In that case, please prepare the contract, Mr. Sandberg." Li Jiagang couldn't wait to sign the contract to avoid any unexpected problems.
"Wait! Li."
"If I were to buy Hong Kong Electric shares for you at a price below market value, what about the price of this Wharf Holdings transaction...?" Sir Michael Sandberg didn't elaborate, but tentatively asked about Li Jiagang.
Li Jiagang certainly understood what he meant.
"The price of HK Electric will be reduced by the amount that the market price falls below."
"how?"
"readily!!!"
Both Sir Michael Sandberg and Paul Pao were very satisfied with Li Jiagang's straightforwardness.