(Bloomberg) — China has told state-owned firms to hold off on any new collaboration with businesses linked to Li Ka-shing and his family, according to people familiar with the matter, after the Hong Kong billionaire irked Beijing with his plan to sell two Panama ports to a global consortium.
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The directive was issued to state-owned enterprises last week at the behest of senior officials, the people said, asking not to be identified discussing private matters. Existing tie-ups are not affected, they added.
Under the directive, state enterprises wouldn’t immediately get approval for business activities linked to the tycoon. The regulators are also reviewing what investments the family has in China and abroad in a bid to better understand the breadth of their business dealings, the people said.
CK Hutchison Holdings Ltd., CK Asset Holdings Ltd., Horizons Ventures Ltd. and Pacific Century Group didn’t respond to requests for comment. The State-owned Assets Supervision and Administration Commission, an agency overseeing Chinese state companies, and the Ministry of Commerce also didn’t respond.
The order to pause new dealings doesn’t necessarily mean Beijing will bar state firms from working with businesses linked to Li. But it does ratchet up pressure on the 96-year-old billionaire after CK Hutchison’s deal with a BlackRock Inc.-led consortium to sell ports in Panama and elsewhere put his conglomerate’s flagship entity in the crosshairs of US-China tensions.
CK Hutchison’s shares briefly erased gains after the report, only to climb back up again as investors watch for developments on April 2, the date the parties plan to sign the sale agreement. CK Asset, on the other hand, declined 1.09%.
The ports sale, which is expected to net CK Hutchison more than $19 billion in cash proceeds, triggered scrutiny in Beijing after US President Donald Trump hailed it as the US reclaiming the strategic waterway from Chinese influence, though the Panama ports are just two out of 43 facilities being divested globally.
China is also looking into the sale for potential national security and antitrust violations, Bloomberg reported earlier this month. Yet it’s uncertain how much leverage Beijing has, given that Chinese and Hong Kong ports are not included in the transaction. The impact on CK Hutchison from a halt on new business with state-owned companies may also be limited.
