Kuok Cools on China as Tycoon Exits Hong Kong Media
Traditional Asian business leaders appear to be giving way to homegrown Chinese billionaires hungry for acquisitions.
Robert Kuok's move to sell Hong Kong's leading English-language newspaper, the South China Morning Post, to Chinese Internet giant Alibaba may be the start of a new trend of tycoons selling their assets in China.
HONG KONG—Malaysia’s richest man, Robert Kuok, built his fortune by transforming his father’s sugar-trading business into a property-to-logistics empire focused on China, securing prime real estate after being an early foreign investor and loyal friend to Beijing.
Now, Mr. Kuok’s decision to sell his media assets in the Chinese special administrative region of Hong Kong to Alibaba Group Holding Ltd. reflects a potential changing of the guard as traditional Asian tycoons, whose investments helped forge China’s economic success, give way to a new breed of homegrown, acquisition-hungry billionaires who come from within the Chinese system.
The 92-year-old Mr. Kuok has also considered selling some of his real-estate holdings in China and Hong Kong, people familiar with the matter said, as a slowing economy and rising competition have weighed on results. Profit fell last year at seven publicly traded companies in Mr. Kuok’s portfolio, although most saw an upturn in the first half of this year.
Mr. Kuok’s flagship Kerry Properties Ltd. has cut back the amount of property under development in China every year since 2012, according to company filings. Separately, Mr. Kuok’s luxury hotel chain, Shangri-La, has been impacted in China by lower revenue amid a persistent anticorruption campaign, with profits slumping 54% last year to $181 million. Increasingly, Shangri-La is opening in locations further afield, from London to Istanbul, and is planning more openings in India, the Philippines, Qatar and Sri Lanka.
Mr. Kuok’s companies are also building up their networks in Africa and Oceania, including constructing a large, mixed-use development near the airport in Accra, Ghana. The shift to a more global focus is reminiscent of Hong Kong tycoon Li Ka-shing, whose downsizing of his exposure to China and Hong Kong in favor of billion-dollar assets in Europe stirred criticism from China’s media earlier this year.
“You should see quite a number of Hong Kong businessmen trimming their China businesses in the next year or two, because profitability in China is declining,” said Eric Huang, partner of property-investment firm HCG Capital Partners, who has worked with wealthy Hong Kong families.
However, older tycoons with long-held investments in China are likely to sell at a measured pace, analysts say, wary of being seen to be reducing support for China. Mr. Kuok is likely to remain heavily committed to China, according to people familiar with his thinking.
Mr. Kuok and the Kerry Group companies didn’t respond to requests for comment.
Over the past few years, new Chinese billionaires have increasingly sought assets outside of mainland China as they look to diversify and broaden their investments. One of the more high-profile acquisitions in recent years has been U.S. theater chain AMC Entertainment Holdings Inc., which was purchased by Chinese billionaire Wang Jianlin’s Dalian Wanda Group in 2012. Some mainland billionaires are taking Chinese assets off the hands of Hong Kong tycoons. Earlier this month, Hong Kong billionaire Cheng Yu-tung’s New World China Land sold three Chinese property projects to mainland billionaire Xu Jiayin’s Evergrande Group.
By investing in logistics and infrastructure in Southeast Asia and Africa, Mr. Kuok is also tapping into Beijing’s more recent plans. The government wants to grow Chinese companies overseas and increase trade and influence through its “One Belt, One Road” initiative that spans dozens of countries as far as Europe.
Mr. Kuok’s firms are now reapplying his China strategy in other emerging markets, brokers and analysts said.
“They assist the local government and its people in developing the cities,” said Terence Tang, managing director at Collier International Capital Markets in Asia, who has worked with the Kuok family. “Thus, they are very much welcomed by the governments from these emerging markets.”
Mr. Kuok initially built his empire on sugar, as tycoons in Southeast Asia focused on traditional industries such as commodities, shipping and infrastructure in the 1970s and 1980s. He first advised Chinese leaders how to resolve a sugar shortage in 1973, according to an academic paper written by Malaysian professors. When Deng Xiaoping announced economic reforms in the late 1970s, Mr. Kuok was among the first tycoons to invest in China.
Mr. Kuok is known for developing close relationships with political leaders, including Singapore’s founder Lee Kuan Yew, said Lee Poh Ping, a professor at the University of Malaysia who has studied the tycoon.
Mr. Kuok began developing the landmark China World Trade Center in Beijing in the mid-1980s, now one of many flagship developments in prime locations in first-tier cities. After some foreign businesses pulled out of China and Hong Kong after the 1989 Tiananmen Square crackdown, when the army violently crushed student protests, Mr. Kuok continued to invest in China as a political statement to show that he wasn’t worried about the country, Mr. Lee said.
In 1993, Mr. Kuok expanded into Hong Kong’s media industry by purchasing a stake in the publisher of the English-language South China Morning Post from News Corp., parent of The Wall Street Journal. The paper proved to be a cash cow in the 1990s, stacked with company notices, job listings and advertisements. He bought a bigger stake in the company in 2007.
Managing the South China Morning Post, however, has gotten more complicated in recent years, as anti-Beijing tensions have flared up in Hong Kong and the Internet has decimated traditional advertising revenues. The newspaper has been blamed by Western media-watchers for not being tough enough on Beijing, yet at the same time, it has been blocked in China for coverage disapproved of by Chinese authorities.
“The newspaper has declined in the past few years,” said Ying Chan, director of Journalism and Media Studies Center at the University of Hong Kong. “Robert Kuok was happy to sell.”
Mr. Kuok told Singapore’s Straits Times newspaper in an interview last month that the sale was purely a “business decision.”
Write to Wei Gu at wei.gu@wsj.com and Wayne Ma at wayne.ma@wsj.com
Traditional Asian business leaders appear to be giving way to homegrown Chinese billionaires hungry for acquisitions.
Robert Kuok's move to sell Hong Kong's leading English-language newspaper, the South China Morning Post, to Chinese Internet giant Alibaba may be the start of a new trend of tycoons selling their assets in China.
HONG KONG—Malaysia’s richest man, Robert Kuok, built his fortune by transforming his father’s sugar-trading business into a property-to-logistics empire focused on China, securing prime real estate after being an early foreign investor and loyal friend to Beijing.
Now, Mr. Kuok’s decision to sell his media assets in the Chinese special administrative region of Hong Kong to Alibaba Group Holding Ltd. reflects a potential changing of the guard as traditional Asian tycoons, whose investments helped forge China’s economic success, give way to a new breed of homegrown, acquisition-hungry billionaires who come from within the Chinese system.
The 92-year-old Mr. Kuok has also considered selling some of his real-estate holdings in China and Hong Kong, people familiar with the matter said, as a slowing economy and rising competition have weighed on results. Profit fell last year at seven publicly traded companies in Mr. Kuok’s portfolio, although most saw an upturn in the first half of this year.
Mr. Kuok’s flagship Kerry Properties Ltd. has cut back the amount of property under development in China every year since 2012, according to company filings. Separately, Mr. Kuok’s luxury hotel chain, Shangri-La, has been impacted in China by lower revenue amid a persistent anticorruption campaign, with profits slumping 54% last year to $181 million. Increasingly, Shangri-La is opening in locations further afield, from London to Istanbul, and is planning more openings in India, the Philippines, Qatar and Sri Lanka.
Mr. Kuok’s companies are also building up their networks in Africa and Oceania, including constructing a large, mixed-use development near the airport in Accra, Ghana. The shift to a more global focus is reminiscent of Hong Kong tycoon Li Ka-shing, whose downsizing of his exposure to China and Hong Kong in favor of billion-dollar assets in Europe stirred criticism from China’s media earlier this year.
“You should see quite a number of Hong Kong businessmen trimming their China businesses in the next year or two, because profitability in China is declining,” said Eric Huang, partner of property-investment firm HCG Capital Partners, who has worked with wealthy Hong Kong families.
However, older tycoons with long-held investments in China are likely to sell at a measured pace, analysts say, wary of being seen to be reducing support for China. Mr. Kuok is likely to remain heavily committed to China, according to people familiar with his thinking.
Mr. Kuok and the Kerry Group companies didn’t respond to requests for comment.
Over the past few years, new Chinese billionaires have increasingly sought assets outside of mainland China as they look to diversify and broaden their investments. One of the more high-profile acquisitions in recent years has been U.S. theater chain AMC Entertainment Holdings Inc., which was purchased by Chinese billionaire Wang Jianlin’s Dalian Wanda Group in 2012. Some mainland billionaires are taking Chinese assets off the hands of Hong Kong tycoons. Earlier this month, Hong Kong billionaire Cheng Yu-tung’s New World China Land sold three Chinese property projects to mainland billionaire Xu Jiayin’s Evergrande Group.
By investing in logistics and infrastructure in Southeast Asia and Africa, Mr. Kuok is also tapping into Beijing’s more recent plans. The government wants to grow Chinese companies overseas and increase trade and influence through its “One Belt, One Road” initiative that spans dozens of countries as far as Europe.
Mr. Kuok’s firms are now reapplying his China strategy in other emerging markets, brokers and analysts said.
“They assist the local government and its people in developing the cities,” said Terence Tang, managing director at Collier International Capital Markets in Asia, who has worked with the Kuok family. “Thus, they are very much welcomed by the governments from these emerging markets.”
Mr. Kuok initially built his empire on sugar, as tycoons in Southeast Asia focused on traditional industries such as commodities, shipping and infrastructure in the 1970s and 1980s. He first advised Chinese leaders how to resolve a sugar shortage in 1973, according to an academic paper written by Malaysian professors. When Deng Xiaoping announced economic reforms in the late 1970s, Mr. Kuok was among the first tycoons to invest in China.
Mr. Kuok is known for developing close relationships with political leaders, including Singapore’s founder Lee Kuan Yew, said Lee Poh Ping, a professor at the University of Malaysia who has studied the tycoon.
Mr. Kuok began developing the landmark China World Trade Center in Beijing in the mid-1980s, now one of many flagship developments in prime locations in first-tier cities. After some foreign businesses pulled out of China and Hong Kong after the 1989 Tiananmen Square crackdown, when the army violently crushed student protests, Mr. Kuok continued to invest in China as a political statement to show that he wasn’t worried about the country, Mr. Lee said.
In 1993, Mr. Kuok expanded into Hong Kong’s media industry by purchasing a stake in the publisher of the English-language South China Morning Post from News Corp., parent of The Wall Street Journal. The paper proved to be a cash cow in the 1990s, stacked with company notices, job listings and advertisements. He bought a bigger stake in the company in 2007.
Managing the South China Morning Post, however, has gotten more complicated in recent years, as anti-Beijing tensions have flared up in Hong Kong and the Internet has decimated traditional advertising revenues. The newspaper has been blamed by Western media-watchers for not being tough enough on Beijing, yet at the same time, it has been blocked in China for coverage disapproved of by Chinese authorities.
“The newspaper has declined in the past few years,” said Ying Chan, director of Journalism and Media Studies Center at the University of Hong Kong. “Robert Kuok was happy to sell.”
Mr. Kuok told Singapore’s Straits Times newspaper in an interview last month that the sale was purely a “business decision.”
Write to Wei Gu at wei.gu@wsj.com and Wayne Ma at wayne.ma@wsj.com
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