Recently I attended a very rowdy shareholders' meeting of UIC (United Industrial Corporation - name is largely historical since its main business/assets are property). The event itself is not very interesting, but it brings my mind to focus on the long running saga of who has ultimate control over Singapore Land Limited, a company that owns various prime office buildings in the central business district. Though these are now somewhat overshadowed by the new financial district being created in Marina, they remain highly desirable properties. In particular, with some tenants moving out to Marina, the older buildings could be re-developed, which will intensify the issue of who has final say on them.

Currently, UIC is 40% owned by the UOB Group, mainly through UOL (United Overseas Land), and 35% owned by the Filipino Gokongwei Group. The Board of Directors has representations from both groups, but the former is in control though not enjoying majority ownership. UIC owns about 75% of Singland, and the Singland board has most of the same members as the UIC board. The UOB control was achieved during the late 90s Asian financial crisis, when the then controlling Indonesian Salin group (林绍良)faced with a difficult situation in Indonesia after the fall of Suharto, decided to invite UOB to buy part of their shareholdings and help run UIC while they were fully preoccupied at home. Subsequently, they sold their remaining shares to the Gokongwei group, then below 30%; UOB group's shareholding was somewhat less, and since then both have accumulated additional shares. When Gokongwei group's holding exceeded 30%, a takeover offer had to be mounted, but as the purchase price was low it was not necessary to follow it through. Similarly, early last year Morgan Stanley sold its 10% holding to UOL, triggering another low priced takeover offer that needed not be followed through. At the time Gokongwei side was unable to compete for the block of shares because they had purchased UIC shares within the.previous 6 months at higher price, and after such a large purchase they would have to mount a new takeover at the highest paid recent price, which they preferred to avoid.

On the surface, the two camps maintained an amicable relation, but I would guess a rivalry for control exists; the UOB group has control, and sees no reason to let go; the Gokongwei group, having shown its willingness to spend a large amount of money buying the shares over a decade, would presumably have larger ambition than being just a passive investor. However, neither group would want to enter a bidding war resulting in having to buy out the majority shares they do not own (60% for one, 65% for the other)at a very high price. The situation remains one of short term truce until majority control is gained by someone, and one scenario for this to happen would be for a third party, say a cash rich American/European hedgefund, or HK/China/Indonesian property company, that gets the Gokongwei group's agreement to sell out to them, and then mounts a takeover offer. Depending on the price offered the UOB may or may not want to make a higher offer. Once this is settled, the successful party getting UIC will also have to take over Singland under the stock exchange rules, but given UIC's existing majority and lack of competition, this would not be expensive.

In other words, the UOL-UIC-Singland control chain has UIC as its weak link, and it offers an entry point for someone keen enough on the Singland prime properties to pay the necessary price. Currently there is also the issue of management complexity: any major actions regarding the Singland assets require decisions by three boards, and some types of decisions may require approval by shareholder voting in which the controlling party has to abstain because it is in some way a "related party", i.e., it stands to benefit from the decision. The situation is therefore somewhat unstable.

 I thought the most peaceful solution would be:

1. UIC distributes Singland shares to shareholders; Gokongwei camp would end up with 25% of singland, UOB camp about 30%
2. UOL swaps its UIC shares for Gokongwei camp's singland shares, and buys out the remaining minority shareholders
this allows the UOB camp to have complete control over the prime Singland properties, instead of the current situation of having to deal with 3 boards and 3 sets of minority shareholders.The Gokongwei group will at last get control of UIC, though a much slimmed down one - I am sure they would much prefer to have UIC with the Singland buildings, but might settle for the alternative scenario.

- old article


Mr Wee Cho Yaw (Chinese: 黄祖耀; pinyin: Huáng Zǔyào)has at last decided to hand over control of UOB to his son Ee Chong, and it is a good time for me to summarise what I know of him.

When I first came to Singapore in 1983, there were a few (unconfirmed) stories circulating about him: he was supposed to be unpopular with the Chinese community for agreeing, as Chairman of Nanyang University Council, to its absorption into NUS, and the government was supposedly out to "get" him for one thing or another. This soon changed: in 1987 UOB was given permission by the stock exchange to take over Industrial and Commercial Bank, and everyone who talked about it agreed that this would not have been possible if Mr Wee was someone the government was trying to "get". The course of events illustrates a number of aspects of the Singapore system.

In addition to UOB, Mr Wee's family company also controls through various corporate channels major listed property/hotel companies UOL, UIC, Singapore Land, Haw Par, Hotel Plaza, Hotel Negara, and until its recent divestment to the Indonesial Lippo group, OUE. The building up of this conglomerate occurred gradually. Haw Par, for example, was originally under the Aw family that owned the Singtao newspaper group and other businesses in Hongkong, and used to have several newspapers in Singapore and Malaysia. Long before my arrival in Singapore this old conglomerate broke up, with the newspapers joining the company that eventually became SPH, while the properties and other businesses passed trhough several hands, including some scandal ridden foreign speculators, but eventually ended in the UOB group.

Shortly after my arrival, I began to read about UOB's attempt to take over Goldhill Plaza and some other properties, mortgaged to the bank by their owner family which had problem servicing the loan. Eventually UOL became the owner. UIC/Singapore Land were previously unrelated to UOB, till they went through an expensive merger process that first resulted in Singapore Land becoming a UIC subsidiary, then with the Indonesian Salim (林绍良)group becoming the controlling shareholder of UIC; the Salim group, however, soon invited Mr Wee to join them in running UIC, and later sold its shareholdings to the Philippines's Gogongwee group, leaving the UIC/SingLand in the UOB stable.

During the same period, a number of smaller banks, ICB the largest among them, became part of UOB. This was also the period when Keppel Bank took over Tat Lee, and was a few years later itself taken over by OCBC. However, in 2001 occurred UOB's major coup: shortly after the OCBC-Keppel Bank merger, DBS made a takeover offer for OUB, with the support of its then CEO Peter Seah but apparently without the prior clearance of OUB's major shareholder, the Lien family, which preferred to sell out to UOB instead. OUE, Hotel Negara and several other significant businesses all became part of the UOB group.

And all this expansion was taking place under the shadow of new MAS regulations that, when first announced, was believed to be aimed at causing the break up of the UOB group: banks were forbidden from owning more than 10% of any non-financial businesses, meaning that UOB had to divest major parts of its property and hotel stakes. In addition, a business linked to a bank can only own up to 2% of the bank's shares. Previously, the various UOB subsidiaries owned significant percentages of the bank's shares, so that, added to the family company's percentages and other allies', help to provide majority control. Yet, through a number of steps over several years, including distribution of shares of subsidiaries to bank's own shareholders, share buybacks by the bank itself, and selling of some of the shares to the family company, Mr Wee was able to retain control of everything except for OUE.

I am not privvy to the various inside machinations. All I know is, as an opportunity to take over something comes up, Mr Wee was there to take it, and somehow has not suffered any problem of over extending himself or dilution of control that others fell victim to. I saw him rise and rise but do not know how he did it. I am not sure anyone else understood it all either

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Favorite quotes:
"History repeats, first time as tragedy, second time as farce" - Marx
历史重复,一次悲剧,一次闹剧 - 马克思
"Those who forget their history are condemned to repeat it" - Santayana 忘记历史注定重复历史 - 山塔亚那
"Those who remember their history are also condemned to repeat it" - Yuen 记得历史也注定重复历史 - 阮宗光
"Oscar Wilde was wrong about cynics knowing price not value; cynics know value is always less than price" - Yuen

         foundation     王尔德说错了;愤世的人不是知价不知值,而是知道价高值低 - 阮宗光