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Hong Kong’s tycoons catch the privatisation bug as they pick up assets at rock-bottom prices amid stock market’s slump

  • Controlling shareholders have initiated five take-private transactions valued at US$8.76 billion in Hong Kong since the start of February, Refinitiv’s data says
  • Total take-private deals jumped to a 12-month high of US$6.2 billion in February

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Illustration: Brian Wang
Eric NgandYujing Liu
When Spencer Fung first unveiled his US$150 million, three-year plan in 2017 to remake the 111-year-old trading company founded by his great-grandfather into a trailblazer in the digital era of online shopping and smart retailing, he was in charge of a HK$30 billion (US$3.9 billion) giant that had made its fortune as the broker between the two largest economies on earth.
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Since then, a trade war has sullied ties between the United States and China, tearing asunder the intricate global network of suppliers and customers that had taken decades to stitch together.

In March, the unthinkable happened: the world economy was devastated by a pandemic, and the share price of Li & Fung plunged, reducing its value to a mere HK$4 billion. That threw a wrench into Fung's ambitious restructuring works. Within days of plumbing those depths, Fung announced that his family – along with a partner in Singapore – would take Li & Fung private.

“In light of global economic uncertainties, the company’s transformation will involve execution risk, and the associated benefits will require a longer time to materialise. The offerers believe that the transformation of the company will be more effectively implemented away from the public equity markets.” Fung, the firm's CEO and its fourth-generation leader, said in a statement on March 20 in announcing the take-private plan. Fung declined to be interviewed for this story.

Spencer Fung, Group Chief Executive Officer of Li & Fung, briefs the media on the company’s three-year plan in Lai Chi Kok on 17 June 2019. Photo: Nora Tam
Spencer Fung, Group Chief Executive Officer of Li & Fung, briefs the media on the company’s three-year plan in Lai Chi Kok on 17 June 2019. Photo: Nora Tam
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Li & Fung's shares were removed from the Hong Kong stock exchange on May 27, bringing down the curtains after 28 years on Asia's third-largest capital market, and in the city the Fungs called their home since 1937.

The company is part of a wave of privatisation deals that has swept across Hong Kong’s stock market since the start of this year, as depressed valuations amid poor investor sentiment provided golden opportunities for controlling shareholders to buy out their companies’ assets at rock bottom prices.

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