Corporate manoeuvre of a tycoon

  • Business
  • Saturday, 05 Mar 2016

IN recent times, Tan Sri Quek Leng Chan has been said to be one of the many big-name investors who have lost a little money due to the oil price rout.

Quek had invested in mid-cap stock TH Heavy Engineering Bhd in 2012 at 45 sen per share, building up his stake to 9.1%.

The stock doubled in value not long after Quek’s entry, hitting a high of RM1.03 on Feb 19, 2014.

However, the company’s turnaround plan hit a snag, dragging it into further losses, no thanks to the oil price slump.

The publicity-shy tycoon eventually exited the company in April last year, marking losses at around 11.5 sen per share or close to RM13mil.

To be fair, this is small change when juxtaposed against Quek’s holdings – he is valued at US$5.3bil (RM22bil) according to Forbes, which ranks him as Malaysia’s third-richest tycoon.

The tycoon’s other corporate plays have made him the big bucks.

Who can forget that Quek netted a whopping RM11bil – the highest price ever paid for an Asian bank – when he sold his controlling stake in Dao Heng Bank of Hong Kong to Singapore’s DBS Bank in 2001.

In 2006, the tycoon was the mastermind behind the sale of global air-conditioning maker OYL Industries Bhd to Daikin Industries Ltd of Japan in a deal worth a whopping RM7.6bil.

Later in 2008, he sold his fibreboard-making business to Evergreen Fibreboard (M) Bhd for RM213.23mil.

Some bankers reckon that the 74-year-old tycoon – whose Hong Leong/Guoco empire holds a multitude of companies in the financial services, hospitality and leisure, and gaming sectors – still has cashpiles left over from proceeds from these business sales.

One of Quek’s high-profile corporate exercises was Hong Leong Bank Bhd’s (HLB) acquisition of EON Capital Bhd (EON Cap) in 2009, an exercise that had dragged on for 15 months complete with boardroom tussles, legal suits and a bevy of unconfirmed suitors.

Hong Kong-based private equity fund Primus Pacific Partners with 20.2% in EON Cap, had bitterly opposed the takeover, as it stood to make a huge loss if it sold its stake that had been acquired at RM9.55 per share.

Primus went to court to prove the legality of the offer. After the longest takeover battle in Malaysian banking history, HLB acquired EON Cap for RM5.06bil.

Quek is renowned for driving a hard bargain, always buying low and selling high to make a tidy profit.

He had in the past taken up stakes in the new listings of Kencana Petroleum Bhd and Petra Perdana Bhd and was also an investor in Multi-Purpose Holdings Bhd and fertility treatment company TMC Life Sciences Bhd.

In the middle of last year, Quek’s Singapore-listed GuocoLand Ltd sold off its interest in an integrated property development project in Beijing for 10.5 billion yuan or RM6.8bil without realising the potential value of the asset.

The 1.58bil yuan net income generated from the sale was considered a small pile.

However, Quek was willing to settle for less and farm out his money elsewhere because the Beijing project was a sore point for GuocoLand, having been plagued by legal disputes for almost eight years.

Quek’s Beijing move is a lesson for many corporates in the current challenging times.

In October, Bursa-listed GuocoLand (M) Bhd said its associate company was selling a large piece of land in Sepang to Petroliam Nasional Bhd-owned Putrajaya Holdings Bhd.

Around RM116mil of the sales proceeds would be attributable to GuocoLand, in which Quek has around 65%.

His move piqued market interest as to whether it was a sign of the times to come for the property market and Quek was cashing out of an asset class that was going into a downturn.

Then again, Quek’s business philosophy is “never to fall in love with your business and selling when the price is right”.

But things do not always go his way.

In 2013, he failed to privatise Hong Kong-listed Guoco Group Ltd although he had raised the offer price from the initial HK$88 in December 2012 to HK$100 per share four months later.

In the same year, his attempt to take private Hong Leong Capital Bhd (HLCap) at RM1.71 per share was thwarted.

Interestingly, the share prices of both companies rose above what Quek’s companies had offered to take them private.

This was not the first time Quek had tried and failed to take Guoco private.

His first attempt in 2004 failed because the offer price was lower than the company’s market price at the time.

It would not be too farfetched to say that he would make a third attempt.

As far as Quek’s Malaysian financial institutions are concerned, bankers reckon that Hong Leong Financial Group Bhd (HLFG) and its 64.4%-owned HLB would need to undergo a restructuring at some point to meet Basel III requirements.

A privatisation of HLFG also makes sense, given that it is undervalued relative to its holdings due to the holding company discount.

It would appear that there is just no slowing down Quek, although he is passing on the baton to the next generation at a leisurely pace.

Last May, his youngest son, Quek Kon Sean, led the family into the e-commerce business with the launch of GemFive, which sells everything from electronics and fashion to furniture.

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