BlackRock to Buy Panama Canal Ports From CK Hutchison
There seemed to be no way for Panama to get Washington off its back.
On Tuesday, Wall Street intervened.
An investment group led by BlackRock, a giant American asset manager, said it had agreed to buy two ports in Panama owned by a Hong Kong company that became the focus of the tensions between Panama and Mr. Trump. There seemed to be no way Panama could get Washington off its back.
On Tuesday, Wall Street intervened.
An investment group led by BlackRock, a giant American asset manager, said it had agreed to buy two ports in Panama owned by a Hong Kong company that had become the focus of the tensions between Panama and Mr. Trump.
BlackRock will buy the ports, which sit at either end of the canal, and over 40 others from the Hong Kong conglomerate, CK Hutchison, for about $19 billion. The deal also shows the American companies’ ability to benefit from the Trump administration’s America First foreign policy. And for some historians, it brings up memories of the outsize power that Wall Street banks have had in Latin America.
“Where are the Panamanian voices here?” said Peter James Hudson, an associate professor at the University of British Columbia and the author of “Bankers and Empire: How Wall Street Colonized the Caribbean.” “They are completely lost in this larger story of Trump’s efforts.”
President Jose Raul Mulino of Panama appeared to downplay the geopolitical implications of the proposed acquisition, describing the deal in a social media post as “a global transaction, between private companies, motivated by mutual interests.”
For BlackRock, it’s the latest sign of its desire to expand beyond what it is historically been known for — managing trillions of dollars for everyday investors in stock and bond funds. BlackRock is buying the ports through Global Infrastructure Partners, an investment firm it bought last year for almost $13 billion that owns and operates many ports, airports and data centers.
The conversations between the BlackRock-led consortium and executives at CK Hutchison, which is owned by the Li family, one of Asia’s wealthiest, began a few weeks ago, according to a person familiar with the discussions.
The Li family believed it was under political pressure to exit the ports business, particularly its holdings in the Panama Canal, the person said.
The Panama Canal provides a crucial shortcut, connecting the Pacific and Atlantic Oceans. The Panama Canal is a vital shortcut connecting the Pacific and Atlantic Oceans. Vessels don’t need to stop in Panama’s ports before going through. Trump has repeatedly said that he wants to the United States to take back control of the canal, which was ceded to Panama by the United States in 2000. The concessions were extended for another 25-year period in 2021. The BlackRock investment group will be buying the companies that own the port concessions.
In the past several days, executives at BlackRock, including Laurence D. Fink, its chief executive, and a board member, Adebayo Ogunlesi, briefed Mr. Trump; the Treasury secretary, Scott Bessent; the secretary of state, Marco Rubio; and others on the deal, according to two people involved in the deal. One of the people who was briefed about the discussions stated that the Li family specifically wanted an American buyer. Another person familiar with the transaction said that there were three other bids. It is doing the deal with a partner known as Terminal Investment Limited, which operates ports served by the world’s largest container shipping company, Mediterranean Shipping.
The deal adds to Terminal Investment’s portfolio of ports in Europe and Latin America, and in addition to operating ports in the Panama Canal, the buyers were particularly interested in CK Hutchison’s ports in Asia.
“These world-class ports facilitate global growth,” Mr. Fink said in a statement.
This deal also shows just how central Mr. Ogunlesi has become to BlackRock. After BlackRock acquired Global Industrial Partners (GIP), Mr. Ogunlesi was made the largest individual shareholder. He separately sits on the board of Terminal Investment Limited.
“BlackRock couldn’t have done it without GIP, and GIP without BlackRock,” said Ralph Schlosstein, chairman emeritus of the investment bank Evercore and a co-founder of BlackRock. “The connectivity that Larry has with public sector leaders around the globe and the capabilities that Bayo brings to the table are a compelling combination.”
The Trump administration’s support of the BlackRock-led deal to buy these ports comes after Mr. Fink and the firm has been the target of many conservative lawmakers and politicians for his past comments urging corporations to consider environmental, social and governance, or E.S.G., goals. BlackRock has recently, and especially in the last few weeks, backed away from E.S.G. and diversity initiatives.
CK Hutchison is part of the conglomerate founded by Li Ka-shing, who was Hong Kong’s richest man at one point. Mr. Li retired from the company in 2018 and passed control to his son Victor Li. The conglomerate includes retail chains, telecommunications networks and energy companies.
Mr. Trump has also attacked the fees that the Panama Canal charges to shipping companies for using the waterway. The fees have gone up in recent years, but the Panamanian agency that runs the canal has said droughts, investments in upgrades and sheer demand were responsible for the increases.
The ports concessions awarded to CK Hutchison in 2021 were recently challenged in a Panamanian court by two lawyers who contended that the concessions were unconstitutional. The lawsuit sparked speculation that the Panamanian attorneys behind the challenge were acting on behalf of other entities who would profit from the ouster of CK Hutchison. But Norman Castro, one of the lawyers, said in an email that he and the other lawyer were acting strictly in a personal capacity and out of respect for the country’s constitution.
Panamanian authorities promised to conduct an audit to verify that Hutchison “is properly reporting its revenues, payments and contributions to the state.” On Jan. 21, nearly a dozen auditors entered the company’s offices to begin their work. Mr. Mulino said the audit would continue and help determine the “relationship” between the government and the port concessionaire.
Lauren Katzenberg contributed reporting.
