Goldman takes on HK bond for free

INVESTMENT bank Goldman Sachs offered its services free to win the right to sell $1bn (£636m) of bonds for Hong Kong billionaire Li Ka-shing's listed flagship Hutchison Whampoa.

In an apparently eager bid to secure more business from the billionaire, Goldman did not collect an underwriting fee on arranging the bond sale for the ports-to-telecoms conglomerate. Just two months ago, Merrill Lynch pocketed £18.5m from Hutchison for supervising an earlier $1.5bn bond offering.

The pitch by Goldman highlights the intense competition between banking houses to snag work from Li, the region's most famous deal-maker who is known locally as Superman for his investing prowess. Goldman bought the Hutchison paper in advance, hoping to make profit on the sale but accepting the risk that the securities could drop. It then sold the bonds at the same level.

The bank has often worked with Hutchison and Li before. The billionaire's group taps the capital markets to raise cash for a series of deals, exercises that can bring the bankers millions. A Goldman spokesman would not comment.

Hutchison is likely to use the funds on the roll-out of its 3G telecoms networks in Britain, mainland Europe and Australia.

Li's huge investment in 3G is seen as one of his biggest gambles. Prices on some of 3's next-generation handsets in the UK are as much as £400.

Two of Wall Street's biggest players have reported strong earnings. JP Morgan Chase, America's second-largest bank, said its first-quarter post-tax earnings were up 43% to $1.4bn from a year ago. Merrill Lynch, the largest stand-alone investment bank not affiliated with a consumer bank, said profits rose 6% to $685m in the last quarter.