January 21, 2015 / 9:04 PM / in 3 years

Canning Fok, at the 'Hong Kong Heart' of Li Ka-shing's deal machine

* Fok, 36 years at Li’s group, behind most big deals

* Fok planned the group overhaul announced on Jan. 9

* He is Hong Kong’s top tax payer for 5 years -report

* Has a reputation as a fast, persuasive negotiator

By Denny Thomas

HONG KONG, Jan 22 (Reuters) - In late summer 2014, as mass protests rocked central Hong Kong, Canning Fok sat in his office quietly planning a business overhaul that would make his boss Li Ka-shing, Asia’s richest man, richer still.

After Li revealed the fruits of Fok’s labour on Jan. 9, describing it as a “watershed” moment in the history of his business group, shares in his principal companies, Cheung Kong Holdings and Hutchison Whampoa, jumped more than 14 percent.

For three months, Fok worked with his core five-member team on “Project Diamond” to put the basic structure in place, then recruited HSBC to execute the plan, people familiar with the matter told Reuters.

The overhaul, aimed at tackling a valuation discount caused by the group’s conglomerate structure, will split 86-year-old Li’s empire into two camps, one focusing on property, and the other housing businesses including telecoms, infrastructure and ports.

“The Li family decided the timing, and then Canning took over,” one person who has worked with the family said. Fok, who is currently on a road-show to win shareholder support for the deal, declined to comment through a Hutchison spokesman.

Fok, now 63, had been an auditor at Arthur Andersen when he wrote directly to Li asking for a job 36 years ago. Li gave Fok a personal hearing and hired him for Cheung Kong, according to a German newspaper. He impressed with his calm effectiveness and rose through the ranks to become Li’s most trusted lieutenant and the family’s Mr Fix It.

When Fok, backed by his “brains trust” team, is sold on a proposal, he takes it to Li and his son Victor for their approval and is rarely turned down, the sources said.

THE FIELD MARSHAL

Fok has been behind most of the group’s big deals of the past two decades, including the purchase of Orange Austria and Telefonica’s Irish business, selling out of its Indian telecom venture and bringing in State Grid Corp of China as a key investor in the initial public offering of group company HK Electric Investments.

In all these deals, Fok has personally led the negotiations, relying on his network of top-level contacts, the sources said. He has on occasion taken a private jet to close a deal - his own, since Hutchison, where he is group managing director, does not have a corporate jet.

“Canning is the field marshal, and he controls the Li empire,” said a person familiar with Fok’s negotiations.

In a region where M&A is often painfully slow, Fok is noted for his persuasiveness and an ability to deliver in a hurry.

Last year as the group’s health and beauty retailer A.S. Watson was preparing to list on the market, Fok decided to gamble on an alternative fundraising avenue that would avoid the uncertainty of an IPO and bring in the kudos of a big global fund.

He called Singapore sovereign wealth fund Temasek Holdings , which had been looking to buy a small stake in the IPO, and convinced its leaders over a brief series of meetings to sign their biggest ever deal, paying $5.7 billion for a 25 percent stake. Failure could have wrecked the listing.

“HONG KONG HEART”

He also has a reputation for sticking to his guns on pricing. When he tested buyers’ interest in Hong Kong supermarket operator ParkNShop in 2013, he set a $3 billion price tag. Though he got offers just 10 percent shy of that sum, he walked away, according to people who have worked with him.

Though Fok has been instrumental in building Li’s empire to a behemoth spanning 50 countries, with listed companies worth more than $100 billion, he keeps his cards close to his chest.

“He comes across a little bit enigmatic. He’s really quiet, listens a lot,” said a person who has worked on several of Li’s deals.

That makes him “a very good chess player” when it comes to negotiations, the person said.

He hasn’t always had things his own way - his big push into European telecoms has yet to deliver - but he has been richly rewarded for his service, making him Hong Kong’s biggest individual tax payer for the past five years, according to local media reports.

At home, as at work, the married father of four doesn’t do things by halves. A keen musician, he has five pianos, one of them 200 years old, according to a local media report, and wrote the music and lyrics, including the title track, for eight songs on the “Hong Kong Heart” album by singer Irene A. (Additional reporting by Alice Du, Elzio Barreto and Lawrence White; Editing by Will Waterman)

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