Jardine House was Hong Kong’s tallest building until 1980 when it was surpassed by the Hopewell Centre in Wanchai. Xu Jiatun, head of the Hong Kong branch of Chinese news agency Xinhua – a role which in that era made him the country’s unofficial envoy to the British colony in the 1980s – predicted that Hopewell’s chairman Gordon Wu would soon be the city’s richest man.
Xu was impressed by Wu’s drive and the manner in which the Princeton-trained engineer was ready to do things ahead of the rest. Hopewell was the first of Hong Kong’s property majors to invest in toll roads across the border in the Pearl River Delta, for instance. Wu was also the first Chinese tycoon to put major money into railway projects in Thailand and power plants in Indonesia.
If these investments were being made today, Wu would have been seen as a strong backer of two of the Chinese government’s signature policies: the Greater Bay Area blueprint for Guangdong, and Chinese President Xi Jinping’s Belt and Road Initiative.
Of course, Xu did it several decades before these grand plans were conceived.
But early movers don’t always enjoy the spoils. Wu missed out badly on Hong Kong’s property boom in the 1990s and Hopewell’s international expansion also backfired when the Asian financial crisis saddled the company with heavy debt in the late 1990s.
Fortunately China’s booming economy handed Hopewell a lifeline when its expressways in Guangdong began to pay off.
That unit of the company, Hopewell Infrastructure Investment (HII), operates the Guangzhou-Shenzhen Superhighway and the Western Delta Route. The former expressway was the first toll road directly connecting Guangzhou with Shenzhen, an important artery for the region’s economic development.
Last December, Hopewell announced plans to sell a majority stake in HII to an investment holding firm under the Shenzhen municipal government for HK$9.9 billion ($1.26 billion).
In selling its stake to the Shenzhen authorities, Hopewell said it was helping the development of the Greater Bay Area, the multi-year effort to weave Hong Kong, Macau and nine key cities in Guangdong into a global megalopolis.
“The most important thing is that we can offer help to the local government,” Wu told reporters, adding that the cash return for HII was recognition for many years of work.
When a Hong Kong tycoon sells a mainland-based asset it often stokes accusations in the Chinese media of ‘unpatriotic’ conduct (as the city’s richest magnate Li Ka-shing discovered; see WiC297).
This was less of a concern for Wu, though, who explained that a substantial portion of the proceeds will be reinvested in new businesses in the Greater Bay Area.
According to HK01, a news portal, another reason why Wu offloaded his stake is that the concession period for HII’s infrastructure projects is set to expire in 10 years time. The Shenzhen government valued HII’S stake generously, too, at more than 20 times earnings (Zhejiang Expressway, a Hong Kong-listed counterpart, trades at 7.5 times earnings).
The expressway sale brings a new business connection Wu’s way as well. In late September, HII said it would also sell new shares to property major Vanke and an investment fund under China Taiping Insurance for about HK$1.5 billion.
Currently, Hopewell’s sole property project in China is Hopewell New Town, a residential-cum-commercial complex at Guangzhou’s international airport. It also operates a small power plant in Heyuan, also in Guangdong, via a joint venture with the Shenzhen government. With the proceeds of the HII sale, maybe Wu will be working with partners like Vanke to recycle some of the cash into a new property plan.
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