Bids for PCCW subsidiary closed today

The Hong Kong-listed telecommunications group has received 'a number of proposals' for its sale of a minority interest in a subsidiary. Private equity firms including TPG are reported to have bid.

The bidding for a 45 percent interest in HKT Group Holdings, a newly incorporated subsidiary of PCCW, the Hong Kong-listed telecommunications group, closed today. HKT is a consolidation of PCCW's  telecommunications services, and media and IT solutions businesses.

PCCW is controlled by billionaire Richard Li.

UK newspaper Financial Times cited unnamed sources as having said that TPG is one of the firms to have submitted its bid.

TPG was involved in a bidding tussle with Australia's Macquarie Bank for the media and communication assets of PCCW in 2006, when the deal did not ultimately go ahead. China Netcom, a state-owned telecommunications company with the second largest stake of 20 percent in the company, had expressed its opposition to the deal at the time and the transaction was not approved by the Chinese government either. 

Ultimately, Hong Kong financier Francis Leung made a bid for Richard Li's 22.7 percent stake in the company. His bid was accepted and PCCW formally ended talks with TPG and Macquarie. Both their bids were estimated to be worth more than $7 billion (€4.4 billion).

Li was quoted as saying at the time: “[The deal] may not be as good as a successful asset sale, but the circumstances dictate that we cannot have an asset sale. So the best I can do is to entertain the local consortium, which meets the concerns of Netcom and the company.”

Earlier in January that year, TPG-Newbridge had made an offer for a 25 percent stake in Li’s Singapore-listed Pacific Century Regional Development (PCRD), the holding company through which Li controls PCCW. That deal did not go ahead either following the outcome of the bids for PCCW in Hong Kong.

Macquarie is also believed to have been considering a bid for the 45 percent stake in HKT, according to the report. Other firms believed to be in the running are Blackstone, KKR, MBK Partners and Providence Equity Partners.

PCCW could not be reached.

A spokeswoman for UBS, which is managing the sale, said in an email that the bank “has received a number of proposals and is now in the process of evaluating them,” and declined to comment further.