News Clifford Chance advises China Merchants Capital on its US$870 million investment for a 40% stake in HKT’s passive network infrastructure assets

Global law firm Clifford Chance has advised China Merchants Capital (CMC) on its US$870 million investment for a 40% stake in a project company holding Hong Kong telecommunications services provider HKT Limited (HKT)’s passive network infrastructure assets. The transaction is the largest M&A transaction involving passive network infrastructure in Hong Kong in recent years.

The transaction involves an innovative structure that mutually benefits CMC and HKT. This investment by CMC is expected to lead to a strengthened long-term relationship and wider collaboration between CMC and HKT to support new service offerings in the Greater Bay Area and other new geographies.

The cross-practice Clifford Chance team advising on the transaction includes:

• M&A aspects: Partner Julie Fu, counsel David Olds, senior associate Cynthia Mo, associates Ryan Siu, Charmaine Lee and Adam Boulanger, and trainee solicitor Katrina Hung;
• Financing aspects:
  • Equity financing: Partner Liyong Xing, senior counsel Teresa Leung, senior associate Jovi Au-Yeung and associate Sylvia Wong;
  • Debt financing: Partner Edith Leung, counsel Harrison Tsoi, associate Phoenix To and trainee solicitor Vanessa Li; and
• Antitrust aspects: Beijing partner Yong Bai, Hong Kong counsel Dayu Man and Beijing associate Lan Nan.

Lead partner Julie said, “We are delighted to support our longstanding client CMC on its global ambitions as a leading infrastructure investor to grow its portfolio of infrastructure assets. This transaction demonstrates why clients come to us for large-scale transactions: our firm brings together multiple specialist teams to seamlessly deliver the best advice and strategies that align with their needs – efficiently and effectively.”

Julie adds, “The growth of the digital economy and accelerating demand for digital services in Asia Pacific is driving investor interest in key infrastructure such as passive network infrastructure. They are the highway for which many future technologies depend upon for scale and connectivity.”

China Merchants Capital is an alternative investment and asset management platform jointly owned by China Merchants Group and GLP, managing nearly 70 RMB and foreign currency funds, with total assets under management of approximately RMB300 billion (as of end 2023).

Hong Kong-listed HKT is a leading technology, media and telecommunications company offering local fixed line, local data and broadband, international telecommunications, mobile, media entertainment, enterprise solutions and other telecommunications services. Its market-leading premium passive access network has the most extensive coverage in Hong Kong.

Clifford Chance has advised on several M&A and financing transactions involving digital infrastructure in Asia Pacific, most recently advising on the US$3.9 billion financing for the development of Dito’s nationwide 4G and 5G telecommunications network in the Philippines, OMS on its US$400 million investment by KRR to accelerate growth of its digital infrastructure and a US$213 million debt facility for AdaniConneX, the largest data centre financing deal in India.