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Banking

Hong Kong: Asset sales continue at Hutchison

In another example of Hutchison Whampoa raising cash to continue the long-term funding of its loss-making 3G business, the conglomerate announced in June the sale of stakes in Hong Kong's port operations to Singapore arch-rival PSA International. The group, led by Hong Kong's richest man, Li Ka-shing, announced the sale of a 20% interest in cash cow Hutchison International Terminals (HIT) and a 10% stake in Cosco-HIT, a joint venture with China Ocean Shipping (Group) Co.

The deal gives Hutchison cash of $925 million and a one-off gain of $707 million, which will go some way to filling holes in the group's financial results and 3G funding needs. Last year Hutchison's 3G businesses lost $2 billion before depreciation and amortization costs.

HIT has long been a core business for Hutchison, and the deal actually looks like a smart trade for the Hong Kong-headquartered conglomerate. In addition to the cash, Hutchison will retain full control of its Hong Kong port operations.

It has also forced government-owned PSA International to bid what looks like a full price at a time when HIT's earnings have slowed considerably. The company's relatively weak performance is a result of competition from mainland Chinese ports, in which Hutchison has already invested heavily.

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