CMS, Linklaters lead as HK tycoon buys UK gas company

CMS Cameron McKenna and Linklaters have won roles advising on the acquisition of UK gas company Wales & West Utilities by Cheung Kong Infrastructure (CKI), part of Hong Kong billionaire Li Ka-shing’s business empire, for £645m.

Li, who last year bought Northumbrian Water Group for £2.41bn through CKI, has made a habit of investing in the UK utilities sector, buying EDF’s UK power grids for £5.8bn in 2010 as part of a consortium that included CKI.

CMS corporate partner Charles Currier and energy partner Robert Lane led for the Hong Kong group on this week’s deal, with competition partner Susan Hankey, tax partner Aaron Fairhurst and finance partner Nancy Eller also advising.

CMS’s client was a consortium led by CKI that also included Power Assets Holdings and Cheung Kong Holdings, with each holding a 30 per cent stake in the investment. The remaining 10 per cent stake will be taken by the Li Ka Shing Foundation, a Hong Kong charitable organisation founded by Li.

Wales & West is being sold by a group including Macquarie Global Infrastructure Funds 2 Sarl, Macquarie Luxembourg Gas Sarl, AMP Capital Investors, Codan Trust Company (a trustee for Industry Funds Management’s global infrastructure fund) and CPP Investment Board European, part of the Canadian Pension Plan group.

Linklaters took the role acting for the consortium of sellers, fielding London corporate partner Jessamy Gallagher. The lead corporate associate on the magic circle firm’s mandate was Derek Tong.

Gallagher is one of the firm’s relationship partners for Macquarie (14 November 2012).

CMS’s instruction for CKH on the off-market transaction follows Li’s selection of a broad range of firms on previous deals. The City firm did not have to pitch for the latest deal, winning the role through its relationship with the company, with the firm advising CKI on a failed bid for E.ON’s UK electricity distribution arm Central Networks last year (3 March 2011).

CMS also advised National Grid Transco on the sale of what was Wales & the West Gas Distribution Network to the Macquarie fund-led consortium in 2005.

Li’s company hired a Freshfields Bruckhaus Deringer team led by London corporate partners Piers Prichard Jones and Edward Braham for the Northumbrian Water deal (2 August 2011) and has previously used Norton Rose, which advised CKI and United Utilities on their joint £1.4bn purchase of the North of England gas distribution business from National Grid in 2004, fielding London corporate partner Alan Crookes and Abu Dhabi corporate partner Alan Bainbridge. CMS’s Currier and Lane had already been instructed to advise National Grid when the bidders including CKI came on the scene.

DLA Piper advised CKI as part of the consortium buying EDF’s power grids in 2010, with City corporate partners Kiran Sharma and Jon Hayes leading. Sharma joined Ropes & Gray’s London office last year (28 February 2011).

It is understood that Freshfields was instructed for the Northumbrian Water takeover because it was a take-private, while the latest target, Wales & West, is not a listed company.

The Wales & West deal is still awaiting European Commission approval, which is expected at the end of September.

For more on Macquarie’s selection of law firms, see City analysis