Li Ka-shing, Hong Kong's richest man, and a group of fellow tycoons are underwriting about US$1.1 billion of HSBC Holdings Plc's stock sale, lending support in a city that accounts for a third of the bank's investor base.

A man walks past HSBC headquarters in Hong Kong. Billionaire Li Ka-shing, Hong Kong's richest man, and a group of fellow tycoons are underwriting about US$1.1 billion of HSBC Holdings Plc's stock sale. [Shanghai Daily]

Li, Lee Shau-kee, Joseph Lau and Cheng Yu-tung, who between them have a combined wealth of US$33 billion according to Forbes magazine, will underwrite HSBC's offer to sell shares to existing investors at 254 pence (US$3.58) apiece, said their representatives. Equivalent to HK$28 (US$3.60), that is almost half the value HSBC's Hong Kong-listed shares closed on Friday, the last trading day before the sale was announced.

'The bank'

HSBC, founded in Hong Kong more than 140 years ago, is so synonymous with the city of 7 million people who refer to it simply as "the bank." Based in London and with operations in 86 countries and territories, HSBC gets most of its profit from Asia and is Hong Kong's largest provider of mortgages, Bloomberg News said.

Should HSBC's operations deteriorate, the tycoons "will be prepared for an exit," said Winson Fong, who helps manage US$2 billion at SG Asset Management HK Ltd. "They are very rich people, and you shouldn't use them as reference unless your pockets are the same size as theirs."

Fong said that his comments reflect his personal views, not his firm's.

HSBC, Europe's biggest bank by market value, plans to raise 12.5 billion pounds in the United Kingdom's biggest rights offering, after 2008 profit fell 70 percent. It joins Standard Chartered Plc and DBS Group Holdings Ltd in turning to existing investors to shore up balance sheets battered by the global recession.

HSBC will pay arrangers Goldman Sachs Group Inc, JPMorgan Chase & Co and eight other firms 2.75 percent in fees from the funds the London-based bank plans to raise.

Li, who has a net worth of US$16.2 billion according to Forbes, will underwrite about US$300 million of the offer because he is "confident" in the bank, said a spokeswoman at his flagship firm, Cheung Kong (Holdings) Ltd.

(Shanghai Daily March 4, 2009)