We heard it all the times, from South Korea to Hong Kong to India, wealthy families battle publicly over inheritance, turning siblings against each others. So, how would Asia richest man Li Ka Shing, who operate one of the continent’s biggest business empire, sidesteps possibility of family feud?
Hong Kong richest man Li Ka-shing, who is 83 this year, says he mapped out a succession plan for one of Asia’s biggest family fortunes, ensuring a smoother transition for his flagship company Cheung Kong Holdings. Mr Li told investors that while he had no plans to retire, elder son Victor Li would eventually take over at Cheung Kong Holdings and Hutchison Whampoa, the billion-dollar conglomerate he founded.
The billionaire, whose personal wealth of US$25.5 billion ranked him ninth on the 2012 Forbes Billionaires List, said on other hand he would bankroll younger son Richard Li’s acquisitions, helping him to expand a business centered on Hong Kong’s fixed line carrier PCCW and his other business ventures. When asked how he plans to support Richard, the patriarch said: “That’s simple. Give him cash.”
“Victor will assume the stakes I hold in the listed firms, including the 40 percent stake in Cheung Kong and the 35 percent stake in Canada-listed Husky Energy,” Li told reporters. “He will be responsible for Cheung Kong’s group business in the future.” The current market value of Li’s 40 percent stake in Cheung Kong and his 35 percent stake in Canada-listed Husky Energy is around HK$140 billion ($18 billion).
Elder son will take over flagship company Cheung Kong and Hutchison Whampoa
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, leading to bitter internal feuds. Sun Hung Kai Properties, Asia’s largest real estate developer, Samsung, South Korea biggest conglomerate, and India’s largest private company Reliance Group are some examples of companies who have been embroiled in bitter family disputes over leadership.
“It is a very good move as it is clear-cut who is having what, avoiding potential struggle for shareholding, and it is good for the long-term stability of the group,” said Conita Hung, head of equity research of Delta Asia Financial.
Li Ka Shing has established the future roles of 47-year-old Victor in Cheung Kong and Hutchison Whampoa, while 45-year-old Richard, in another company, PCCW Limited, emphasizing that the two will avoid direct competition. The senior Li also instilled younger son Richard a sense to pursue his own business interests.
Li will use all his currently available money to fund younger son Richard’s business acquisitions
“Richard already has the business he likes and has a couple of sizeable companies. He will have my full support,” Li said, adding that his financial support may be “a number of times” his son’s current assets. Richard also controls Pacific Century Premium Developments Ltd and Pacific Century Regional Developments Ltd.
In effect, Li vested elder son Victor’s interests in real estate, port, retail and energy, while younger son Richard’s interests in telecommunications, wireless and ICT. The two would not have any executive role in each others companies. Li said he is making the succession arrangements now so the brothers “wouldn’t have conflict” over his business interests.
“Li’s succession plan is a little surprising to us as it is a bit earlier than we expected,” said Linus Yip, chief strategist at First Shanghai Securities. “But it is a positive move for the group as a whole and can benefit its long-term development as it removes a time bomb,” Yip said. “The succession is set to be smooth and no major impact is expected on the management.”
Even though elder bro gets the larger main company, younger bro has PCCW, a telecom monopoly in Hong Kong - plus cash to fund further ventures
Hong Kong’s second richest family, Sun Hung Kai’s Kwok brothers, Raymond and Thomas, took control of the city’s largest property developer in 2008, leading to a continuing feud with their elder brother, Walter. In neighboring Macau, the family of Macau casino billionaire Stanley Ho, who has three surviving wives and 16 children, battled publicly over his assets, before a truce was declared.
Victor Li, who was sitting next to Li Ka-shing when he discussed the succession plans, said Friday he is “always happy” with his father’s arrangements. Richard Li, who doesn’t hold a title in his father’s companies, is glad that Li would fund his ambitious business plan, which would see his fortunes rise “several-fold” from the support. Richard Li is currently estimated to be worth $1.2bn, according to Forbes magazine.
This won’t be the first time the elder Li has offered to help his younger son his business ventures. In 2010, Richard bought AIG Investment from American International Group Inc. when the U.S. insurance giant AIG was hit by the global financial crisis and had to sell assets to repay the U.S. government’s bailout.
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