HAGIM Partnership with China Merchant Capital Leads to First Infrastructure Investment in Asia.
Frankfurt am Main, July 11, 2024
Following HAGIM’s agreement to closely collaborate with China Merchant Capital in the infrastructure sector during CEO Thomas Herbert’s visit to China in January 2024, the first joint investment has now been made.
On June 26, 2024, China Merchants Capital (CMC) and Apex Link Communications Holdings Limited, a wholly owned subsidiary of Hong Kong Telecommunications Limited (HKT), signed a purchase agreement worth $870 million to invest in HKT’s passive fiber-optic and copper access network in Hong Kong.
The investment represents the largest transaction in the passive network infrastructure sector in the Hong Kong market in recent years. In addition to the transfer of HKT’s passive fiber-optic and copper access network, the purchase agreement also includes all local fiber-optic cables in Hong Kong as well as in-building cabling.
HKT itself holds a 60% stake in the newly established company, while CMC holds 40%. As part of the collaboration between CMC and HAGIM, it is envisaged that HAGIM, together with the Frankfurter Leben Group and other institutional investors, will be able to participate in infrastructure investments in Asia.
The assets transferred to the new company consist of advanced, high-quality facilities that provide the most extensive coverage of passive network infrastructure in Hong Kong and establish market leadership for related services in Hong Kong.
In addition, HAGIM is currently working to provide European institutional investors with access to this asset class during the second half of 2024—through a diversified portfolio of Asian infrastructure projects with predictable income distributions.
Weak Performance
However, this growth proved to be more of a curse than a blessing, as Atos in particular temporarily continued its downward trend following its downgrade to CCC (-25% in March). Additionally, March was weighed down by very weak performance from the subordinated bonds of Altice France (-41%) and Altice International (-18%).
The weakest performance in 2024, however, was posted by the Thames Water holding company bond, which recorded a return of -76% during its time in the index.
Since the beginning of the year, the CCC segment has thus posted a negative return of -0.9%, while BB bonds are clearly positive at +2.0% and B bonds at +3.2%.
Thomas Herbert, CEO of HAGIM, commented:
“This investment demonstrates that HAGIM is able to leverage the strengths of its shareholders to gain regulated access to attractive investment opportunities. Smaller and medium-sized institutional investors, in particular, often have only limited access to these asset classes. Asia remains a dynamically growing region with excellent investment opportunities.”
About Hong Kong Telecommunications Limited (HKT)
HKT is listed on the Hong Kong Stock Exchange and was the first telecommunications service provider in Hong Kong to introduce 50G PON (Passive Optical Network) technology.
About China Merchants Capital (CMC)
CMC is also one of the world’s largest infrastructure operators and manages numerous infrastructure projects in China, Southeast Asia, Japan, Korea, and the broader APAC region.
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