Li Ka-shing's sale of ParknShop has flopped, but he still has other options. The tycoon's holding company, Hutchison Whampoa, shelved a potential sale of the Hong Kong supermarket chain, after targeting an ambitious valuation of over $3 billion. But there are other ways to raise funds.
ParknShop should have had a strong appeal for buyers, with its 7 percent earnings before interest, tax, depreciation and amortization (EBITDA) margin and strong grip on the Hong Kong market. It had around 40 percent share of the city's supermarket sector in the first half, according to Nielsen Homescan.
Li's next move could be to repackage ParknShop with AS Watson. If AS Watson could attract the same 12 times trailing EBITDA multiple as US chain Walgreen, it would be worth at least $19.7 billion - even without a premium for faster growth from Asian markets. Hutchison Whampoa could in theory float just a 25 percent stake of the retail business and raise more than it would have got from selling the whole of ParknShop, without giving up control.
The author is Una Galani, a Reuters columnist.