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Showing posts with label succession issue. Show all posts
Showing posts with label succession issue. Show all posts

Saturday 25 April 2015

Entrepreneur Liew Kee Sin from SP Setia to Eco World, passing the baton to the right person

Liew and his son Tian Xiong (left) at the interview. The biggest shareholder of Eco World Development Group is Tian Xiong, who at 22 in 2013 became the major shareholder of the company.

Entrepreneur who drives the smaller Eco World group is still a much talked-about figure in corporate world

AT 57 years of age, Tan Sri Liew Kee Sin can easily count himself to be one of the most talked about personality in Malaysia’s corporate circle – by the Government, the private sector and property investors.

Amidst the unravelling of events over the past four years, including his exit from SP Setia Bhd, Liew continues to be among the corporate figures today that enjoy the adulation of some and the wrath of others.

Since leaving SP Setia a year ago, Liew has been furiously on the ball, trying to “regain” what he has lost. He has kept a fast and furious pace, though buffeted on every front by unabating current.

Although he has previously overcome challenges thrown at him, the pressure this time is different, in severity and magnitude. It’s a pressure cooker in Eco World Development Group Bhd (EWB), he admits.

“The momentum is on-going. It forces me to be the face of Eco World,” he says.

The positive side to all these is that he has about 300 out of a staff count of 800 who joined him from his previous company. This round of rebuilding includes his son, Tian Xiong, 24. That may also account for him being more driven than before.



While he has made a success of the 4,000 acres in S P Setia’s flagship development in Shah Alam years ago, today’s climate of high house prices and stagnant wages mean his team would have to work doubly hard. So far, however, most of his projects in the Klang Valley and Johor seem to enjoy take-up rates of 80% and above.

His latest launch in Batu Kawan, Penang, has prices hovering in the RM700,000-RM800,000 bracket.

Credited with making something out of 4,000 acres in Shah Alam, Liew is trying to do the same in Semenyih, Selangor, and Batu Kawan, Penang, on a smaller scale. Liew says his objective is to set a new benchmark in terms of concepts, ideas and designs for branding purposes.

Next month, he will be launching 1,130 units in London City Island with a gross development value (GDV) of £617mil, at a time when house prices are frothy, with wages stagnant. The May 7 elections is another dampener. The Employees Provident Fund (EPF) has just sold a building at a profit and may be selling another.

The weakening ringgit works for and against him. For local investors, a property abroad is a good hedge against exposure to any possible future weakening of the ringgit. The downside is that the pool of buyers shrink with the weaker ringgit.

However, the target market for the London City Island project goes to Hong Kong, Singapore and London.

Even as he is keeping his finger on sales, other challenges faces Liew and the Eco World group.

Eye on SPAC

In October last year, Liew and his team proposed to list Eco World International Bhd (EWI) as a SPAC (special-purpose acquisition company). But the Securities Commission has yet to approve the application.

While awaiting the SC’s nod for the the proposed SPAC, in January, he and his right hand man Datuk Voon Tin Yow in their personal capacity, via a private vehicle, entered into a joint venture with UK-based Ballymore on a 75:25 basis to develop three projects in London – with the first slated to kick off next month.

The plan was to inject the three properties into EWI, which will be the vehicle for the proposed SPAC. Shareholders of EWB would not be left out as they would be offered up to a 30% stake in EWI.



It was a neat plan – at least on paper.

But the snag is that a SPAC is a blank cheque listing. It is supposed to list without pre-identified and ready assets, which is an issue when it comes to EWI. This is despite Liew’s plan to inject the private purchases “at cost plus holding costs” – meaning Liew and Voon do not profit from the asset injection.

“But this goes against the spirit of SPAC guidelines as set by the SC. A SPAC is a blank cheque listing ... a cash box looking for assets,” says a merchant banker.

“To go global, we must react quickly to market conditions, better design concepts and learn. We have the skill set,” he says. He learned a lot managing and marketing Battersea. No matter how challenging a project, “you gotta break it down to smaller bits”.

Nevertheless, Liew hopes to see some development with respect to the SPAC application within the next month or so.

Keeping EWB and EWI on separate lanes will help him to manage the gearing of both companies and reduce dilution for shareholders of EWB that includes his son, who is the major shareholder.

Liew says he also does not want to park the London assets under EWB because they are too big for its balance sheet.

Although his stake has diluted from 35.05% in 2013 to 13.52% on March 27, 2015, he is still the major shareholder.

Visionary though he may be, time was on his side when Liew built his previous “priced possession”, which is S P Setia. He built S P Setia over the years at a more even pace while the momentum and task he faces today with regards to the Eco World Group has been nothing short but blistering.

Within two years, the company has accumulated 5,396 acres with a GDV of about RM55bil. Debts was up at RM1.15bil as at Jan 31, 2015, from RM215mil in September 30, 2014. (Sept 2013: RM52mil). EWB completed a rights issue raising RM800mil and will undertake a placement. At the end of the corporate exercise, EWB’s gearing will be less than 0.6 times and it will be sitting on a pile of cash that will be used for working capital to develop the massive land bank here.

Liew says he received a lot of offers to work with landowners.

“People ask, why so aggressive? It’s because of the brand. We want to charge ahead in Malaysia. We are using up about 800 acres a year.”

Dealt a good hand

Although Liew has been dealt a good hand in his working life, he may be losing another priced project, all within two years.

As he goes about tying up loose ends on the Battersea chairmanship, a legacy from S P Setia days, and finishing the restructuring in EWB by the end of this month, questions about conflicts of interest have surfaced.

The Battersea Power Station is a 40:40:20 project with S P Setia and Sime Darby holding equal share and EPF remaining 20%.

“When I resigned from S P Setia in April 2014, the Battersea board suggested I wait till September 2015. At that time, there was no Eco World Ballymore (Holding Co Ltd, a developer of the three projects) yet.”

The private vehicle belonging to Liew and Voon – Eco World Investment – has a 75% stake in EcoWorld-Ballymore while UK-based Ballymore Group owning the rest.

At about June of last year, he declared to the board of Battersea of his interest to go into property development in Britain. He was told to wait.

Six months later in January this year, Liew and Voon went public with their 75% stake in the UK-Malaysia joint venture. At that point, he felt “obligated to resign” but was told to wait.

“We have three projects which may seem to be competing with Battersea Power Station although in terms of price point, they are priced differently.”

The latest Battersea Phase 3A units are priced at £1,700 per sq ft while the EcoWorld-Ballymore units are being sold at about £1,000 per sq ft. About 90% of the EcoWorld Ballymore units will be less than £1mil.

Ironically, a vexing issue confronting Liew these days is his chairmanship of Battersea. The roots of the situation he is caught in today can be traced to his entrepreneurship that created Malaysia’s biggest property company that he lost control to Permodalan Nasional Bhd – after a protracted corporate exercise which started in 2011.

Liew, however, is still capable and motivated to use his set of skills to further create value for himself and those around him. But the dichotomy is between duty and interest.

“I do not want to offend anyone anymore. But I (also) feel duty bound,” says Liew.

The Battersea project, which is Liew’s brainchild when he was in S P Setia, has several key milestones in the next one year.

Phase one of the project will be handed over to buyers next year. Work on Malaysian Square – the pride and joy of Malaysia – has just started. Work on London’s underground Northern Line extension, which connects to Battersea, begins this year. These milestones will help the investment to appreciate.

The British authorities are concerned about the reconstruction of the four white chimneys and the restoration of the power station brickwork. So Battersea has quite a bit of important obligations to meet in the next one year and it cannot afford any slip-ups.

“I am under a lot of pressure ... Morally, I should resign. But when I buy (my land in London), I also declare (to the board). I am duty bound to declare on the grounds of good governance. At the same time, I am also duty-bound as chairman because this year is crucial for the Battersea.

“I am trying to get out of this (situation) because I want to reduce the areas of conflict between myself, the Government and everybody else. I have lost S P Setia and I should gentlemanly give up (Battersea),” says Liew.

Time will only provide an answer.

With London mayor Boris Johnson ending his term in 2016 – and considering Liew has a good working relationship with him – there are are more than several reasons for shareholders of Battersea to continue to retain him for another year as chairman. Before works such as the construction of the underground station and reconstruction of white chimneys take off, there is a lot of interaction with the London authorities, something that is not easy to cultivate.

Interest versus duty

Whatever the outcome of his Battersea chairmanship, there are at least two broad contentious issues here. His fiduciary responsibility and duty of care is one. Liew has taken that duty seriously and returned value for that which was entrusted to him. The second issue is his skill set. Life has obviously given Liew a good card, despite his losses.

Now, the question that arises is if he should wait if opportunities come, complete all ties with Battersea and S P Setia before embarking on new ventures that may not come knocking every day?

Every day, directors are offered various opportunities which conflict with their fiduciary duty. Often times, the fiduciary duty of directors, parallel to trustees, can be onerous. But the law is the law.

Yet, in many ways, Liew’s situation is parallel to a 1978 case of Queesland Mines Ltd v Hudson. The company Queensland Mines was an iron ore mining company that established as a joint venture between A Ltd and F Ltd. Hudson was the managing director of A Ltd and had negotiated with the Tasmanian government for mining licences.

Just before the licences were issued, Hudson’s joint-venture partner ran into financial difficulties and was unable to proceed with the venture.

Hudson resigned, taking the licences with him, and formed his own company. At considerable risk and expense, Hudson exploited the licences and earned profits. Queensland later filed a suit against Hudson for what it claimed was abusing his position to divert opportunties for himself.

However, the courts ruled that although the opportunity to make profits came to Hudson through his position at Queensland Mines and was something that the board was made aware of, Hudson was not in a position of conflict.

The position Hudson was prior to 1978 is the predicament Liew faces today. In both these cases, the contention boils down to timing and turn of events.

If one were to consider the big picture and balance out the events surrounding Liew in the last four years, should he not be allowed to exploit the resources due to him because of his skills and expertise? Or should he be shackled by time and ties, despite having added value to those he has been entrusted with? That would be unfair to Liew.

The legacy issue – passing the baton to the right person

AT the spanking new Eco World International Centre in the Gardens office block in Kuala Lumpur recently, a photo session was in progress. There was a light-hearted camaraderie in the air.

Tan Sri Liew Kee Sin and his top management were present, all of them in their white Nehru-collared shirt with green trimmings.

The photo session was as much symbolic as telling. It was as if to say: “These are the people I will need to grow Eco World Development Group Bhd (EWB).”

With a staff strength of about 800, about 300 of them were from Liew’s previous company S P Setia Bhd. Despite the market conditions working against the property sector and crushing issues confronting him, Liew was his usual warm, confident self.

A lot of this has to do with the people around him. Liew was named chairman in March and his right-hand man Datuk Voon Tin Yow, previously from S P Setia, joined the group officially as executive director.

A notable addition was newbie Liew Tian Xiong, 24, bright-eyed and smiling. He first surfaced in 2013 and has been seen as a proxy of his father. The presence of that young man has changed the landscape for Liew.

Passing the baton

It is a legacy issue. As one considers the property sector, a number of the country’s developers have in one way or another paved their sons and daughters to join Dad.

There is Datuk N.K. Tong, 47, group managing director of Bukit Kiara Properties Sdn Bhd who joined Datuk Alan Tong, who is known as Condo King for his work in Sunrise Bhd’s Mont’Kiara.

It was the elder Tong who saw the potential of the area, then Segambut and bought 100 acres there. Over the years, Mont’Kiara has progressed to become a thriving suburb and is currently considered as “an aspirational location” among the young.

Ken Holdings Bhd group managing director Sam Tan, 35, joined his father Datuk Kenny Tan. That was 2004, and he was 24.

Over at the Sunway group, Sarena Cheah, 40, the daughter of Sunway Bhd founder Tan Sri Dr Jeffrey Cheah and anointed successor, will assume full control of the group’s key property unit effective May 1. She may well have been the youngest to join Dad, when she was just 20, in 1995. She started out in the corporate finance and group internal audit divisions.

Passing the baton cannot be done overnight. There is a lot of planning to do. There is also the task of moulding and nurturing the right person for the job and looking over the shoulder of the young person to ensure they are constantly on the straight and narrow. If there are more than one, then there is the selection process of who will take up the position of annointed successor.

After the painful lesson of having lost S P Setia, Liew would clearly circumspect legacy and stewardship issues.

Which takes this story to next level.

Who is working for who?

The years of passing the baton may be painful, for both parties. This explains why the years of preparation are so crucial before the final moment of actually handing over the reins. In each of the three cases – N.K., Sam and Sarena – the children joined Dad and allowed themselves to be moulded.

Which takes us to the next question.

Is Tian Xiong working for Dad, or is Dad working for Tian Xiong?

Every parent wants the best for their children and Liew is no exception.

By joining the company now, Tian Xiong will have “the history” of the company. But will he be able to take on turbulent times?

He ponders: “It’s a pressure cooker here.”

If the staff do not accept him, he will never be the “real boss”, says Liew.

Of late, Liew has been keeping the young man closely by his side.

The rationale, says Liew is that, whatever Tian Xiong had learned in EWB in the last two years, he would take years to learn outside. So he better learn fast and learn now.

Stewardship

It is not just passing the baton. It is stewardship.

Says Tian Xiong after Liew steps out of the room: “Every night, from 9 to 10pm, he would nag me about how I dress, my tie, what time I get into office, how long I took for lunch and what I did after lunch. And other larger office and market issues.

“He also told me that I have to earn it, that it is not going to drop on me, that I have other siblings,” says Tian Xiong.

On whether he was pressured into returning to Malaysia from Melbourne where he graduated in 2012 with a Bachelor of Commerce from the University of Melbourne, Australia, he says he returned on his own free will.

The young man first surfaced in 2013 as a buyer for a little known company Focal Aims Holdings Bhd. His emergence “caused a tsunami” because during that period, there was many questions as to Liew’s move.

Tian Xiong started out in corporate finance department for the first two years and is currently in corporate marketing.

By Thean Lee Cheng The Star/Asia News Network

Related news:
    Related posts:
S P Setia's head honcho Liew resigns, looking forward to mentoring in Eco World. Ten months after S P Setia Bhd unveiled its succession plan, head honcho Tan Sri Liew Kee Sin has announced his intention to resign as president and chief executive officer. Also quitting the ... Liew would leave the property giant on April 30 while Teow would stay on until July 31. Liew and Teow would continue to be involved in the Battersea Power Station project in London until ..
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Tan Sri Liew Kee Sin, President Executive officer of SP Setia Berhad, with the Malaysian Ernst & Young Entrepreneur of the Year 2011 award yesterday at the J W Marriot Hotel in Kuala Lumpur. Liew stands out for his ...

Wednesday 22 January 2014

S P Setia's head honcho Liew resigns, looking forward to mentoring in Eco World


Ten months after S P Setia Bhd unveiled its succession plan, head honcho Tan Sri Liew Kee Sin has announced his intention to resign as president and chief executive officer.

Also quitting the company is chief financial officer Datuk Teow Leong Seng.

Liew’s departure was expected by industry observers but Teow’s resignation came as a surprise as he was named deputy chairman in the property player’s succession plan earlier, analysts told StarBiz.

Liew would leave the property giant on April 30 while Teow would stay on until July 31.

Liew and Teow would continue to be involved in the Battersea Power Station project in London until September 2015 given the prominence of the international project.

Liew would also remain managing director for Qinzhou Development (M) Consortium Sdn Bhd, a Sino-foreign joint venture company to develop the China-Malaysia Qinzhou Industrial Park in the republic until the same period.

Sources said the property magnate would eventually emerge in Eco World Development Group Bhd after his stint in S P Setia.

It is also speculated that present chief operating officer Datuk Voon Tin Yow, who was appointed the company’s acting president and chief executive officer, might also resign later.

In a statement, S P Setia said Voon’s appointment would be effective from May 1, 2014 until April 30, 2015.

Voon would be supported by executive vice-president Datuk Khor Chap Jen who would be appointed acting deputy president during the same period, it said.

Non-independent non-executive director Tan Sri Lee Lam Thye has also resigned yesterday to focus on his new role as the deputy chairman of the National Unity Consultative Council.

S P Setia chairman Tun Zaki Tun Azmi said: “Whilst the board and I are greatly saddened by the departure of Liew, Teow and Lee, we are confident that the group will continue to be in steady hands under Voon and Khor.”

Observers expected its biggest owner Permodalan Nasional Bhd (PNB) to take more proactive measures in managing its talents as well as setting the company’s direction going forward.

It was earlier reported that Datuk Jamaludin Osman of I&P Group Sdn Bhd – PNB’s property arm – was among the candidates tipped to take over Liew’s stewardship. There were also talks of a possible asset injection by PNB into S P Setia.

Liew said: “Given the solid footing which the company is on, I believe the time has arrived for me to step down after 18 years as CEO.

“With my children all growing up and starting out on their own career paths, I am looking forward to spending more time with them, mentoring and guiding them.”

Liew’s eldest son, Tian Xiong, is a major shareholder and director in Eco World, another property firm set up by former S P Setia top brass.

S P Setia fell five sen to close at RM2.88 while Eco World was up one sen to RM4.15.

Analysts said the market has priced in Liew’s retirement from S P Setia and they expected the company’s operation to remain intact for the time being.

Bloomberg data showed that its forward price-to-earnings (P/E) was 13.4 times compared to 16.06 times currently. Its average P/E ranged from 17 times to 20 times from financial year ended Oct 31, 2011 (FY11) to FY13.

Liew is instrumental in growing S P Setia from a RM200mil entity in 1998 into a multi-billion ringgit international property company.

With him at the helm, S P Setia achieved sales of RM8.24bil in FY13, almost double from what it registered in FY12.

The group has 4,782 acres of undeveloped land bank worth RM102bil while its unbilled sales stood at RM9.6bil as at FY13.

- Contributed by Ng Bei Shan The StarBiz/ANN

Who’s who in Eco World




Fresh from graduating as a Bachelor of Commerce from Melbourne University late last year, Liew Tian Xiong, 22, is not short of persuasive skills that a sales person possesses as he introduces EcoSky to StarBizWeek when we visited Eco World Development Sdn Bhd’s sales gallery.

In fact, one of the key performance indicators he has to meet, is to sell off 30 units of its KL project, EcoSky, which will then determine whether he gets his bonus.

Besides sales and marketing, he is also involved in project planning, land acquisition and liaising with land consultants.

Asked on people who influenced him, the affable young man says: “I have probably learnt from my father throughout my whole life. He taught me to keep my head down and listen to people, and to keep asking questions.”

He says he has learnt from both CEO Datuk Chang Khim Wah and COO Datuk S. Rajoo and what he is going through, is essentially a fast track management training programme.

Chang says: “There is a lot of things (for him) to learn. He’s doing groundwork like sales and marketing, planning and reading legal documents although he is holding the director’s card.”

“Tan Sri Liew (Kee Sin) told me that I can scold him (Xiong). I was scolded by Tan Sri Liew back then, so it’s pay back time now,” Chang jokes.

However the relationship among the management team when StarBizWeek met up with them is warm and fervent.

Chang quips: “We even play futsal with him (Xiong)… ”

The experienced management personnel like Chang and Rajoo had known each other for about two decades, but Xiong, at his tender age, seems to be gelling well with them.

Xiong’s younger brother, Tian Rong, 20, is also with the company as a contract staff. He is pursuing an economics degree from University London College and is having a stint in the company.

The man who helms Eco World, Datuk Chang Khim Wah, 50, joined S P Setia in 1994 and had been there for about 20 years. Prior to that, he was a consultant engineer in Australia. He was one of the members instrumental in setting up S P Setia’s Johor Baru division and went on to set up an office in Singapore and Jakarta.

He concedes that the team has S P Setia’s DNA in terms of team effort and competitiveness. His relationship with Liew was depicted as an understanding that required little words.

“We don’t speak long sentences (but) we understand each other,” he shares.

Chang’s counterpart, Rajoo, 50, assumes the position of COO in Eco World. He spent his first seven years in S P Setia in the Klang Valley helping the development of Bukit Indah Ampang and Pusat Bandar Puchong

and subsequently in some of the township developments in Johor where he then worked closely with Chang.

After that, he was overseeing S P Setia’s projects in the northern region for seven years and had carried out 13 projects with a gross development of more than RM2bil in the Pearl of the Orient.

Heah Kok Boon, 46, the chief financial officer of Eco World, is a chartered accountant who has over two decades of experience in the field of corporate finance, corporate fund raising, investments, merger and acquisition as well as other finance-related areas.

He was with S P Setia’s corporate affairs department for six years prior to his current role.

When introducing the major shareholders behind Eco World, Chang says Leong and Rashid are the two major shareholders.

“These two names are more than enough (for Eco World’s credibility),” Chang says, joking that Xiong has no shares in the property outfit.

One of its major shareholders and directors, businessman Tan Sri Abdul Rashid Abdul Manaf, 65, was trained as a legal practitioner from Middle Temple London.

He was chairman for the board of S P Setia Bhd from March 12, 1997 until Oct 25, 2012.

Another director, who is a corporate figure, is Datuk Eddy Leong Kok Wah, 58. He holds a master of business administration from University of Hull, United Kingdom, and is also a member of Institute of Bankers (UK). He has an extensive career in the banking industry and is currently an executive director of Salcon Bhd and also sits on the board of a few other companies. He was in S P Setia’s remuneration committee from Sept 21, 2005-Feb 28, 2013.


Related posts:
1. Succession issue: give children a message,not money
2. Robert Kuok is still top among 40 richest Malaysians

Friday 14 June 2013

Success is a state of being

VERY often the benchmark of ­success is wealth. Everyone is judged by the external signs of wealth.

People pass ­disparaging remarks about those who are doing service or providing for others but are not wealthy and do not display the signs of wealth.

If people identify more with their external conditions or roles, they will inevitably feel inferior or superior to others and so lack self respect.

The ways in which society works often blinds an ­individual from realising his/her own ­self-worth. For example, society sometimes gives ­acknowledge-ment only to those who are wealthy or occupy a position of authority. In reality, every individual has the right to know that worth is inherent in every human ­being.

Self worth can help ­individuals avoid feelings of inferiority or superiority. The middle path is a dignified way of life.

Success is not a material thing. It is a state of being. We might call it contentment, ­happiness or even peace.

How do you define success? It is the completion of a task, another job well done, an exam passed, a promise kept, or a mountain climbed.

Whatever we believe success to be will have a profound ­influence on our lives.


Bridget Menezes is the author of Self-Empowerment and Spiritual Counsellor. Readers can email her at lifestyle.bridget@thesundaily.com.

Saturday 2 February 2013

Succession issue: give children a message,not money

Billionaire Kuok says empire can last generations

When billionaire Robert Kuok introduced a luxury hotel brand in 1971, he named it Shangri-La, after the fictional utopia in which inhabitants enjoy unheard-of longevity.

Ensconced in his executive suite 32 floors above Hong Kong’s Victoria Harbor -- the room decorated with a pair of elephant tusks gifted by the late Tunku Abdul Rahman, the first prime minister of Malaysia -- the world’s 38th-richest person appears to have defied the aging process himself.

Kuok had accumulated a fortune of $19.4 billion as of Jan. 31, according to the Bloomberg Billionaires Index. Trim, dapper and straight backed at 89, he shows no signs of stopping there, Bloomberg Markets magazine will report in its March issue

Kuok Says With Right Heir His Empire Can Last `Four Generations’
A waiter serves a customer at the bar at the Shangri-La Hotel in Paris. Photographer: Eric Piermont/AFP/Getty Images 
 

This year, the media-shy Malaysian-born magnate will likely open his 71st sumptuously appointed Shangri-La. Six of them are scheduled to be opened in the third quarter alone, including one perched in the Shard, the 72-story London skyscraper that’s the tallest office building in Western Europe.

Meanwhile, the public and private companies his family controls continue to pump money into his ancestral homeland, China, where his investments range from Beijing’s tallest building to cooking oil brands that have gained a 50 percent market share in the world’s most populous nation

Kuok Says With Right Heir His Empire Can Last `Four Generations’ Robert Kuok shovels dirt at a ground breaking ceremony for the Shangri-La Asia Ltd.'s new hotel in Guangzhou on Feb. 26, 2004. Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $35 billion. Photographer: Grischa Rueschendorf/Bloomberg

‘Personally Powerful’


Kuok Says With Right Heir His Empire Can Last `Four Generations’
One of Kuok’s companies, Singapore-listed Wilmar International Ltd. (WIL), is the world’s biggest processor of palm oil and eighth-biggest sugar producer. 

Wilmar International Ltd.’s cooking oil brands —led by Jin Long Yu, meaning Golden Dragon Fish, seen in this photo — grease half of China’s woks and generate 48 percent of the company's revenue. Photographer: Qilai Shen/Bloomberg

Kuok Says With Right Heir His Empire Can Last `Four Generations’ Western Europe's tallest office building will be home to one of Robert Kuok's new luxury Shangri-La hotels. Six are scheduled to be opened worldwide during the third quarter. Photographer: Jumper/Getty Images

Others operate shipping and logistics businesses, a property portfolio stretching from Paris to Sydney and East Asia’s most influential English-language newspaper, the Hong Kong-based South China Morning Post.

“He’s so vital, so active and continues to be so personally powerful,” says Timothy Dattels, San Francisco-based senior partner at U.S. buyout firm TPG Capital LP and a director of Kuok’s Hong Kong-listed Shangri-La Asia (69) Ltd. “I can’t imagine a day without him at the top.”

Kerry Group chairman Robert Kuok Others can, which is why the question of succession looms over the Kuok empire as the patriarch prepares to mark his 90th birthday in October.

The world’s 39th-richest person, who named his Shangri-La hotel chain after the fictional utopia in which inhabitants enjoy unheard-of longevity, is trim, dapper and straight backed at 89. The public and private companies his family controls include investments in Beijing’s tallest building and cooking oil brands that have gained a 50 percent market share in China. Photographer: Grischa Rueschendorf/Bloomberg  

Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $40 billion.

As it stands, the family enterprises are seeking to recover from a rocky 2012 that featured some sharp share-price and profit drops

First Interview

In his first interview with Western news media in 16 years, Kuok, who has eight children and numerous other relatives sprinkled through his executive ranks, says he won’t be worried when that day eventually comes.

“Everything on earth is dynamic,” he says in perfectly enunciated English. “I can only give my children a message, not money. If they follow it, we can go another three or four generations.” 

Relatives run the most important of the Kuok businesses.

Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 percent.

A nephew, Kuok Khoon Hong, 63, co-founded and chairs Wilmar International, the largest Kuok-controlled company, with a market value of almost $20 billion, in which the Kuok family controls a 32 percent stake.

A daughter, Kuok Hui Kwong, 35, is executive director of SCMP Group Ltd., publisher of the 109-year-old South China Morning Post, which Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million for a 35 percent stake.

Kuok Says With Right Heir His Empire Can Last `Four Generations’ Pedestrians walk past the headquarters of the South China Morning Post in Hong Kong. Robert Kuok's daughter, Kuok Hui Kwong, 35, is executive director of SCMP Group Ltd., which Robert Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million for a 35 percent stake. Source: Imaginechina

Focus Attention

As to who will succeed the master, most investors in Kuok enterprises focus attention on his eldest son, Kuok Khoon Chen, 58, who’s known as Beau.

Robert declined to confirm that Beau, who is deputy chairman of Kerry Group, will succeed him.

Kuok Says With Right Heir His Empire Can Last `Four Generations’ The development site for the Shangri-La Residences stands in Yangon, Myanmar on Nov. 20, 2012. Photographer: Dario Pignatelli/Bloomberg

“Newshounds like excitement in their stories, whereas leadership of a business group is always a serious matter, and it would be wrong to put in writing any kind of assumption,” Kuok wrote in an e-mail following the interview.

Kuok Says With Right Heir His Empire Can Last `Four Generations’ A visitor looks out the window of Island Shangri-La hotel, owned by Shangri-La Asia Ltd., in Hong Kong. Robert Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 percent. Photographer: Marco Flagg/Bloomberg
 
Beau, who’s worked in his father’s businesses since 1978, is chairman of Kerry Properties Ltd. (683) The firm, 55 percent owned by Kerry Group, develops luxury apartments, shopping malls and offices mostly in China and Hong Kong. 

“I know Beau, and he has a good team,” says Peter Churchouse, founder of Hong Kong-based property investor Portwood Capital Ltd. “But you have to wonder whether the second and third generations have the entrepreneurial and trading instincts that the father has.”

‘China Watcher’

The father’s instincts were honed over decades of personal and historical turbulence inconceivable to the generation vying to take over the family business.

That experience helped him become one of the first -- and best-connected -- foreign investors in China following Mao Zedong’s communist revolution.

Kerry Group chairman Robert Kuok “Robert is the best China watcher in the business,” says Simon Murray, chairman of Glencore International Plc, the world’s biggest commodities-trading company. “He understands the steel backbone of the Communist Party, but while other Hong Kong tycoons tend to be hugely subservient to Beijing, he is in no way obsequious.”

Robert Kuok, chairman of Kerry Group Ltd., holds a trophy during the 2012 CCTV China Economic Person of The Year award at China Central Television in Beijing on Dec. 12, 2012. Source: ChinaFotoPress via Getty Images

For all of Kuok’s prowess, 2012 was a tumultuous year for investors in his enterprises.

While Kerry Properties stock surged 57 percent in Hong Kong last year -- more than double the increase in the Hang Seng Index -- Wilmar International’s shares plummeted 33 percent, making it the worst performer in Singapore’s Straits Times Index. (FSSTI)

‘A Fraction’

The plunge wiped the equivalent of more than $8 billion from the company’s market value -- and almost $3 billion from the family’s fortune. This year, Wilmar’s share price has rebounded, rising 14 percent in January.

In any event, Kuok disputes Bloomberg’s valuation of his personal wealth at $19.4 billion; he says it’s “a fraction” of that amount, though he does not volunteer an alternative figure.

Wilmar’s woes stem from its massive exposure to China, where its cooking oil brands -- led by Jin Long Yu, meaning Golden Dragon Fish -- grease half the country’s woks and where it gets 48 percent of its revenue.

Beijing limited price increases on edible oils during most of 2011 and part of 2012, Wilmar said at the time.

Furthermore, the rising cost of soybeans, which Wilmar uses to produce cooking oil, hit a record $17.89 a bushel in September, squeezing earnings.

Rough Ride

In the first nine months of 2012, profit fell 29 percent to $779 million from $1.1 billion a year earlier.

Kuok’s Hong Kong-based companies have had a rough ride since the global financial crisis.

As of Jan. 31, Shangri-La Asia and Kerry properties shares were both down 19 percent compared with a 1 percent increase in the Hang Seng Index. Asked about such underperformance (583), Kuok says enigmatically, “It is right and proper for the investor to like or dislike a share.”

Underperformance isn’t the only problem at SCMP Group, whose share price had declined 69 percent as of Jan. 30 since Kuok acquired it. In 19 years, the South China Morning Post has churned through 11 editors, including one who served twice.

And although Kuok says his news executives publish without fear or favor, present and former staff members have publicly complained that the paper sometimes self-censors stories it thinks the Chinese government wouldn’t like.

‘Toned Down’

“Under his ownership, criticism of China has been toned down,” says David Plott, managing editor of Global Asia, a Seoul-based quarterly. “And if you look at the turnover of editors, it tells you one of two things: either Robert Kuok doesn’t know what he wants or he knows what he wants and he hasn’t gotten it.”

If that’s true, it might be a first for Kuok, whose life story has been one of single-minded achievement.

The son of Chinese immigrants who had settled in British- controlled Malaya, Robert Kuok Hock Nien -- his full name -- grew up speaking his parents’ Chinese Fuzhou dialect, English and even Japanese during Japan’s wartime occupation of the region.

 Significantly, given the role China would play in Robert’s life, his mother encouraged him to achieve fluency in Mandarin and embrace his Chinese heritage.

Kuok’s parents ran a shop that sold rice, sugar and flour. Kuok recalls living with the smell of his addicted father’s opium pipe in his nostrils.

Family Business

Still, there was enough money for Robert to progress from a local English school to Raffles College in Singapore, where fellow students included Lee Kuan Yew, later the founder of modern Singapore.

Kuok never finished his studies. In 1941, Japanese troops stormed through the Malay Peninsula and in February 1942 captured Singapore. Kuok took a job with Mitsubishi Corp. With Japan’s defeat in 1945, his family resumed doing business under the British.

In 1949, after his father died, Robert; a brother, Philip; and other relatives founded Kuok Bros. Sdn., which later specialized in sugar refining.

Philip went on to become a Malaysian diplomat, and a second, much-admired brother, William, took an entirely different path again by joining the communist revolt against colonial rule. In 1953, William Kuok was killed by British troops in a jungle ambush.

Furtive Rendezvous

Robert Kuok, by contrast, used his English-language skills on visits to London to learn the sugar business while remaining based in Malaysia and later Singapore.

During the Cold War, he traded with both Western and communist blocs, meeting Cuba’s Fidel Castro and doing business with China’s Mao from as early as 1959.

In 1973, with China in the grip of the Cultural Revolution, Kuok was summoned to Hong Kong for a furtive rendezvous with two of Mao’s trade officials.

They confided that China was facing a sugar shortage. Kuok stepped into the breach, transferring his headquarters to Hong Kong that year.

It was a prescient move. In 1976, Mao died, and in 1978, Deng Xiaoping tore down the so-called Bamboo Curtain, initiating reforms that sparked 34 years of surging economic growth.

In 1984, Kuok opened his first Shangri-La on the mainland. The following year, he partnered with China’s foreign trade ministry to begin building the China World Trade Center (600007) in Beijing.

Enduring Mystery

In 1988, at his nephew Khoon Hong’s suggestion, he branched out into edible oils. By 1993, Coca-Cola Co. was impressed enough with Kuok’s China connections to form a bottling joint venture with him.

That lasted until 2008, when Coke bought back Kerry Group’s stake for an undisclosed amount, both companies pronouncing the outcome a success.

The family’s history of that period harbors an enduring mystery: a 16-year parting of the ways between Robert and Khoon Hong, who in 1991 left the Kuok Group to set up Wilmar with Indonesian entrepreneur Martua Sitorus.

It wasn’t until 2007 that Robert acquired a 32 percent stake in Wilmar and injected most of his agribusiness into it. Neither Robert nor his nephew would discuss the split.

For all his triumphs in the capitalist world, Robert Kuok says the biggest influences on his life were his devoutly Buddhist mother and his communist revolutionary brother, William.

‘Good Boys’

“Otherwise, probably I would have been an arrogant middle- class Chinese, only caring about materialism, worldly pleasures and fleshpot pleasures,” Kuok says, his moist eyes betraying a momentary sadness. “When I am tempted, I think of what William went through. He sacrificed his life trying to help the underprivileged.”

Kuok says he has tried to pass on those values by not cocooning his children in privilege. Nor, he adds, does he place much emphasis on scholastic qualifications, including MBA degrees, when hiring senior staff.

Beau Kuok earned a bachelor’s degree in economics from Monash University in Melbourne; Ean holds a similar qualification from the University of Nottingham in England. Kuok describes Beau and Ean as “good boys.”

Among members of the extended family, Kuok speaks highly of Khoon Hong, his nephew at Wilmar.

‘Stupid Ones’- Perils of succession

“There are stupid ones, there are mean ones, but he’s one of the cleverest,” Robert Kuok says. None of the second- generation Kuoks would comment for this article. Kuok says they make their own decisions. “I never control my children,” he says. “We are a very liberal, democratic family.”

The perils of succession are acute in Kuok’s bailiwick, according to researchers at the Chinese University of Hong Kong.

Their study of 250 family-controlled businesses in Hong Kong, Singapore and Taiwan from 1987 to 2005 shows that stocks typically plunged 60 percent over an eight-year period before, during and after a founder’s relinquishing control.

Joseph Fan, the finance professor who led the research, attributes this wealth destruction to the inability of the patriarch to pass on, even to family members, his most valuable, intangible assets, including relationships with governments and banks. “The founder is the key asset,” Fan says.

That’s why, Fan says, so many tycoons remain at the helm of their businesses well into their 80s and don’t disclose succession plans.

Octogenarian Rivals

Last year, following investor concerns over feuds that have split the second generation of some of Hong Kong’s most prominent families, two of Kuok’s octogenarian billionaire rivals in the property business, Li Ka-shing of Cheung Kong Holdings Ltd. and Lee Shau-kee of Henderson Land Development Co., finally disclosed which of their progeny would eventually take control.

TPG Capital’s Dattels says succession isn’t a concern when it comes to the Kuok businesses.

“There’s only one Robert Kuok, there’s no doubt,” he says. “But he has instilled his business philosophy deep into the family. With what he has built, they are well set to continue, whatever happens.”

Back at his Hong Kong headquarters, Kuok asks an assistant to bring him a favorite quotation. Written by his mother in Chinese and engraved on a steel plate, the aphorism reads:

“If my children and grandchildren can be like me, then they don’t require material inheritance. But if they are not like me, then of what use is my wealth to them?”

Those words beg the question investors in Kuok’s far-flung businesses are asking now more than ever: How like Robert Kuok are his heirs? - Bloomberg

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