BlackRock to buy Hong Kong firm's Panama Canal port stake amid Trump pressure

BlackRock to buy Hong Kong firm's Panama Canal port stake amid Trump pressure

Reuters

05/03/2025

A view of the Balboa Port is pictured after Hong Kong's CK Hutchison agreed to sell its interests in a key Panama Canal port operator to a BlackRock Inc-backed consortium, Panama City, Panama, March 4, 2025. - REUTERS


AN investor group backed by BlackRock agreed to buy a majority stake in the Hong Kong-based company that runs ports along either side of the Panama Canal, giving a U.S. firm control of key docks amid pressure from the White House to take them from China.

The $22.8 billion sale by Hong Kong's CK Hutchison to U.S. and Swiss investors also includes dozens of ports in other countries, the companies announced Tuesday. The move appears to be a win for U.S. President Donald Trump's aggressive diplomacy just hours before he is due to tout the successes of the first six tumultuous weeks of his second term in an address to the U.S. Congress.

He vowed to wrest control of the strategic canal connecting the Atlantic and Pacific Oceans during his January 20 inauguration speech, falsely claiming China is operating it. The transaction appears to hand command of the vital docks on both entrances of the canal to U.S. interests.

Trump refused to rule out military action to assert U.S. control over the canal, which is operated by the Panama Canal Authority, an autonomous agency overseen by the Panamanian government, and surrounded by several ports.

The U.S. president has complained about the presence of Chinese and Hong Kong-based companies in Panama, and American officials and politicians have said CK Hutchison's control of the ports represents a security risk for the operation.

Last year, about 12,000 ships used the canal, which connects 1,920 ports across 170 countries. But its position is strategic for Washington as over three-quarters of all vessels passing through the canal originate in or are bound for the U.S.

The sale of licenses will result in the consortium gaining a 90% stake in Panama Ports Company, which has been the operator of the Balboa and Cristobal ports in the Central American country for more than two decades, CK Hutchison said in a statement.

BlackRock, the world's largest asset management firm based in New York, has briefed the White House and congressional leadership on the deal, a person familiar with the transaction said.

This would be BlackRock's largest infrastructure investment to date, that person said.

In theory the deal, by showing the firm to be acting in Trump's favor, could ease Republican pressure on BlackRock and its CEO, Larry Fink, over its past embrace of the use of environmental, social and governance (ESG) factors in investing.

But the company and Fink have remained under attack by Republicans and supporters of Trump's MAGA movement on climate and diversity issues.

The U.S. State Department, White House, National Security Council and Panama's government did not respond to requests for comment.

'HUGE VICTORY'

Ryan Berg, director of the Americas Program at Washington's Center for Strategic and International Studies, called the sale a win for the U.S. and said he hoped it put the debate over canal security to rest.

“In strategic competition with China in the Americas, this is a huge victory," he said.

CK Hutchison is a publicly listed company not financially tied to the Chinese government, though Hong Kong firms are subject to state oversight. Other ports in Panama are operated by companies from the U.S., Taiwan and Singapore.

Panama's authorities have announced an audit of CK Hutchison's contract, saying they are investigating its compliance with concession agreements. Panama's attorney general determined earlier this month that CK Hutchison's port contract was "unconstitutional." The Supreme Court in Panama was set to make the final ruling on its legal status.

U.S. Secretary of State Marco Rubio made his first overseas trip as top U.S. diplomat to Latin America last month, including to Panama, where he pressured the country over China's presence along the canal.

After his departure, Rubio hailed Panama's decision to exit China's Belt and Road infrastructure plan. He has expressed optimism in media interviews that Hutchison would not own the concessions in the future.

The sale of Panama ports licenses held by the unit of billionaire Li Ka-shing's conglomerate to a consortium that includes BlackRock, Global Infrastructure Partners and Terminal Investment will give it control of an 80% interest in Hutchison Ports for an equity value of $14.21 billion.

It will get control of 43 ports comprising 199 berths in 23 countries while delivering cash proceeds in excess of $19 billion for the Hong Kong-based consortium.

The sale does not involve any interest in Hutchison Port Holdings Trust, which operates ports in Hong Kong and Shenzhen, as well as South China, or any other ports in Mainland China, CK Hutchison said.

The consortium has agreed that negotiations will be on an exclusive basis for 145 days, the company said.

BlackRock completed the acquisition of Global Infrastructure Partners for approximately $12.5 billion in cash and stock last October. At the time, CEO Fink described infrastructure as "a generational investment opportunity."