Hong Kong’s elderly tycoons outline succession after scandal
HONG KONG, May 31 – Hong Kong’s powerful family-run conglomerates are rushing to reassure investors of their succession plans, spurred by a scandal involving the city’s biggest property developer that has thrown the spotlight on plans to hand down businesses.
Lui Chee-woo, the 82-year-old founder of developer K. Wah International Holdings and Galaxy Entertainment Group, which runs casinos in Macau, outlined today how management of the two companies would pass to his children.
Three other Hong Kong firms with extensive property holdings – The Wharf (Holdings), Henderson Land Development and New World Development – also gave details of the roles younger family members would play.
Some of Asia’s largest listed companies are family run, and succession plans are tightly held secrets, often only revealed through wills at the death of their founders.
The move to give details of the plans comes amid a high-profile corruption investigation involving Sun Hung Kai Properties, which has seen its shares plunge 22 per cent since co-chairmen Thomas and Raymond Kwok were arrested in March.
Institutional investors have pressed for details of the company’s succession plan and while Sun Hung Kai says it has one, it has not been announced.
“It definitely shows that an unclear game plan for the future of a company creates a lot of problems,” said Nicole Wong, property analyst at brokerage CLSA Asia-Pacific Markets.
“It’s shock therapy.”
With many tycoons behind Hong Kong’s most powerful companies in their 80s, the issue of succession is at the forefront of investors’ minds.
Asia’s richest man, Li Ka-shing, last week said that his eldest son, Victor, would take over at Cheung Kong (Holdings) and Hutchison Whampoa, the real estate to telecoms empire. The 83-year-old founder also said he would bankroll younger son Richard’s deals.
Hong Kong tycoons have typically rebuffed questions about succession while they were still at the helm.
Analysts said the fact that companies were drawing up such plans meant that leadership should pass from entrepreneurs used to making tough business decisions to managers running mature businesses.
“It’s nothing to do with policy, it’s nothing to do with the government or the economy, it’s just about time,” said Alfred Lau, property analyst at Bocom International, of the transition process companies were getting to grips with.
At K. Wah, founder Lui said that while he was not retiring, he had divided his empire.
“They are already in their positions,” a spokeswoman for K. Wah said today. “He did not exactly use the word succession plan, but it does have similar meaning.”
Eldest son Francis Lui will take charge of Galaxy and run the Macau business, the spokeswoman said.
The second son, Lawrence, will take care of the family’s business in the United States, while younger son Alexander Lui will take over the property business in Hong Kong, she said.
Daughter Paddy Lui will run its hotel business in Hong Kong, while younger daughter Lui Wai-ling heads group administration.
Wharf, a conglomerate that spans ports, communications and property, confirmed today how it has divided up the company’s units. Chairman Peter Woo’s daughter, Jennifer, is handling luxury retailer Lane Crawford, while son Douglas is managing director of its development arm, Wheelock Properties.
A spokeswoman at Henderson Land confirmed that chairman Lee Shau Kee’s eldest son, Peter Lee, is responsible for the group’s business in mainland China, while younger son, Martin Lee, looks after the business in Hong Kong.
“You can say it’s a succession plan,” the Henderson spokeswoman said. “They are both vice chairmen of the group but they have different core focus.” – Reuters