From greenhorn to business magnate
New Straits Times, Thursday, April 11, 2002
YTL still very much a family business
MONEY GAME is a new weekly column written by P.Y. Chin, a veteran journalist and newspaperman. His column, which will appear every Thursday, will discuss various complex corporate and business deals for the benefit of the ordinary reader.
Sometime in the late 1970s, a few days after Francis Yeoh (he did no have any titles then – just a graduate who had returned from abroad to help his father’s construction business) bought a relatively unknown listed company called Hongkong Tin (whose domicile was still in London), he told this writer over dinner one night:
“Watch this counter. It will fly like it has never flown before. Follow it and you will never regret.”
When he said that, those around the dinner table that night did not seem to take his words seriously.
At that time, the local corporate sector was still in its infancy, and many were sceptical of those who owned listed companies blowing their own trumpet too loudly, and Yeoh was no exception. Many thought he was just another greenhorn swimming for the time in “shark-infested” corporate waters. So most did not pay much attention to him.
Today, some 20 years later, most of those non-believers have either vanished from this earth or have reached their sunset age. Or, like this writer, are still very much alive to see that Yeoh had meant what he said.
Indeed, Yeoh delivered what he had promised in less than 10 years from that day, which was just after the mid-1980s recession.
Hongkong Tin, which was then part of the Straits Trading stable of listed companies, became YTL Corporation, the listed umbrella of all the listed companies of the Yeoh Tiong Lay’s (Yeoh’s father, who is a legendary figure in the construction industry) family today.
More than that, Yeoh has managed to turn the YTL name into an international entity with his latest RM6.69 billion purchase of British water firm Wessex Water via YTL Power International, the Yeoh family’s international outfit.
Prior to that, the YTL name was already a known entity overseas, mainly in power generation and civil construction.
To understand the rational behind the purchase of Wessex Water is to understand the character of a man who believes and acts contrary to what others believe and do.
Yeoh has over the last 20 years, especially in the mid 1980s recession, proven many times over that he is master of his own destiny.
He knows what he wants, he means what he says and he delivers what he promises.
Last week, when he announced the proposed listing of YTL e-Solutions on the Mesdaq, Yeoh was reported to have said: “YTL is a contrarian. Every time investors don’t want it, we want it.”
To those who know Yeoh well, that YTL philosophy sounds more like Yeoh’s vision of things. Going by his track record, he has always been doing the right things at the right time in the right place.
In the recession of the mid-1980s, he mentioned to this writer at his office one day: “It is time to hibernate, but we do not go to sleep. What YTL will be doing is to prepare itself for the brighter days ahead.”
So what he did then was to put the whole YTL house in complete order – streamlining the administration, making internal procedures more efficient, computerising internal operations, and collecting data for analysis.
All these were carried out while other construction groups were grappling to remain above water as they kept sinking under mountains of debts and lack of projects.
That few years that Yeoh undertook to clean the house paid off, and when the recovery appeared suddenly in the late 1980s and early 1990s, YTL was in top form while many others in the same industry just stood aside watching the opportunity pass by.
Looking back, Yeoh’s efforts during the recession of the mid-1980s could be interpreted by corporate historians as a classic case-study of a second-generation Chinese family that had successfully transformed a traditional family-owned business into one run by professionals.
Yet control still lay with the Chinese patriarch.
In those days, many Chinese family-owned businesses were almost facing extinction with the onslaught of corporate professionalism and rapidly changing economic environment triggered off by advances in technology.
Many failed to transform into progressive and modern businesses run by professionals. The successful transformation of the Yeoh’s family business was seen by many as being quite remarkable.
Yeoh’s father, Yeoh Tiong Lay, started his construction business in 1955, and for 20 years his name was one to be reckoned with in the industry, especially through an association called the Master Builder’s Association, of which most construction companies were members, even till today.
To give credit where it is due, Yeoh Tiong Lay’s construction business would not have survived as a Chinese family-owned business for long if not for the transformation carried out by Yeoh.
But Yeoh did not just transform his father’s business into a modern corporate entity.
His father’s business was mainly into property development of Government buildings, such as schools, district offices and hospitals.
Yeoh further developed the second business – construction of government buildings – making YTL the only “expert” in this field. In other words, what Yeoh did was to follow the axiom “Do what you know best”.
Of course he did add on a few other businesses – hotels and manufacturing cement, for instance. (For the latter, he had his own brother run the business.)
In the 1990s, Yeoh tagged on a new business – power generation – thus becoming the first in Malaysia to be an independent power producer. Through this business, he moved overseas.
Bu mid-1990s all power generation business were placed under YTL Power International, the international outfit.
The purchase of Wessex Water marks yet another new business – water development.
In the corporate circles, Yeoh is a person who is either liked or disliked.
Those who like him probably do so as he kept his promise that YTL Corporation (as well as the other listed vehicles) would always reward its shareholders.
True, many of those who bought into YTL when Yeoh first put his hands into it and are still owning YTL shares today, would have been substantially richer beyond their wildest dreams, given the numerous rounds of rights and bonus issues and cash calls. Even with the YTL e-Solutions flotation, YTL Corporation shareholders will get the share allocation.
Those who dislike Yeoh have always pointed to his close relationships with the powers-that-be.
But many would agree that that relationship with the powers-that-be started during the time of his father.
In this context, Yeoh’s critics have the nastiest of words to say about him, most of which could not be repeated here.
The latest vocal criticisms centred on the closure of part of Jalan Bukit Bintang in the Kuala Lumpur tourist shopping belt during the weekends to facilitate Bintang Walk as a pedestrian mall. The decision to close the road has since been revoked.
At the time of the closure, many of Yeoh’s critics referred to him as the Bukit Bintang taiko (meaning Big Brother) – a reference made to him because YTL owns some major buildings along Jalan Bukit Bintang, namely J.W. Marriott hotel, Starhill shopping centre, Lot 10 shopping centre and the YTL building.
Such criticism are very common to many successful Malaysian businessmen who are always the envy of others, and especially so where the line between business and politics blurs considerably in the Malaysian corporate landscape.
But Yeoh has weathered those criticisms well over the years, maintaining a low profile wherever necessary. But more importantly, he delivered what he promised, and meant what he has said – much to the happiness of not only the shareholders but also those in the political arena.
Today is the third decade of Yeoh’s reign at the helm of the YTL Group. He may last for another decade or even longer. But at the end of the day, he will have to pass the steering wheel to the next person, and let that person be the driver as he takes a back seat.
So far there is no one to take over from him. Maybe as someone said, it could be time for him to look seriously at the next rung.
Of course the YTL business is still very much a family-owned business, and the patriarch is still around to be the commander, giving his final deciding vote of authority.
Hopefully, the YTL Group will not succumb to the Chinese saying that “a family-owned business cannot survive beyond the third generation”.
PY Chin can be reached at email@example.com.
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