Magazine article Global Finance

Guangdong's Financial Innovator

Magazine article Global Finance

Guangdong's Financial Innovator

Article excerpt

The man behind the ZheJiang Expressway issue is a new force in Hongkong

Now that China rules Hongkong, keep an eye on an obscure investment banker named Kang Dian-obscure, that is, until recently. Kang, a mainlander with financial savvy and lots of guanxi (connections), was the brains behind a high-profile stock issue in mid-May: the flotation of 30% of Zhejiang Expressway, a 248-kilometer toll road that connects Shanghai with Hangzhou and Ningbo. Though Barclays de Zoete Wedd acted as lead manager on the HK$3.5 billion (US$452 million) issue, it was Kang who made the deal happen.

Kang heads Guangdong Capital, the investment arm of Guangdong Enterprises, the holding company for the province next door to Hongkong. The toll road is owned by Zhejiang province, next door to Shanghai. A majority stake in the highway was about to be sold to an Australian group, but Kang persuaded Zhejiang's governor to retain control and list in Hongkong instead, which would open the door to future fundraisings. To cut through red tape, Kang flew in China's top securities regulator and the head of the China Construction Bank, a big lender to infrastructure projects. Kang's investment bankers then restructured the highway's books and recommended candidates to manage the offering. BZW won the deal, then got the local government to rid the balance sheet of much of its debt and to guarantee inflation-indexed rate adjustments every three years on tolls-the only such deal ever negotiated in China. Guangdong Capital underwrote 5% of the issue and kept 1% for itself.

A history buff from Liaoning province (he is more comfortable speaking Mandarin than Cantonese), Kang, 49, is the son of a retired top military officer with clout in Beijing. But unlike many other Beijing princelings, Kang has a reputation for honesty. "He is not money-minded," says Willis Ting, a deputy at Guangdong Capital whom Kang recruited from Bankers Trust. …

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