Groomed to take family business forward

The Straits Times, January 23, 2012

No mollycoddling as YTL Group chief's batch of 27, made up of his offspring and relatives, prove their mettle at various units.

By Anita Gabriel , Senior Correspondent

MR JOSHUA Yeoh, 22, dutifully waits for his father Francis Yeoh to wrap up the interview at YTL Group's Singapore office in the bustling shopping belt of Orchard Road to hop on to a flight back to Kuala Lumpur.

That very evening, Mr Yeoh, 58, will celebrate with, no doubt, star-studded guests the new look of Starhill Gallery, a mall in upscale Bukit Bintang, one of his famed drab-to-fab creations.

The youngest of five siblings, Mr Joshua Yeoh recently graduated from Cambridge University with a master's in civil engineering, and has two more weeks to cap his internship at investment bank UBS Warburg after which he will cut his teeth in the mammoth business empire his father has painstakingly built up over almost four decades.

Ms Ruth Yeoh, 29, the elder daughter and executive director of YTL Singapore, peeks into the room to check in on her father during the interview. They exchange hugs and she saunters off to her office.

There is more where they come from. Ruth and Joshua are only two of a batch of 27 of the YTL bloodline (YTL stands for Yeoh Tiong Lay - founder of the group and the elder Mr Yeoh's father) pottering about in the many units that represent the smorgasbord of businesses held under the sprawling YTL umbrella which spans Malaysia, Singapore, Indonesia, China, Australia and Britain.

Eventually, one of these privileged young people - the children, nephews and nieces of Mr Yeoh, armed with elite academic qualifications - will lead the mammoth family enterprise beaten into steady shape by its chief steward.

The rest potentially stand to be chief executive officers of the conglomerate's respective businesses which Mr Yeoh has cleverly divvied up into 'bite-size' operations.

'They belong to the generation that tasted some wealth yet competed for the best universities on their own strength. That's the first test of meritocracy. All 27 of them have not been mollycoddled. That's my greatest joy,' says Mr Yeoh.

He admits that he can no longer micro-manage the group which has grown by leaps and bounds and has a fat kitty of RM12 billion (S$4.94 billion).

'I'm introducing CEOs now into each organisation, not MDs (managing directors) as that's the old way. I could macro- and micro-manage during my time then but not today. I can't be a strategic thinker as well as a micro-manager.'

The delegation of key tasks is very much a work in progress. In November last year, Ms Kemmy Tan, who joined YTL Group's Singapore property development arm in 2008, was appointed chief executive officer of YTL Land & Development.

In 2009, YTL Communications appointed Wing K. Lee as CEO to oversee the launch of the group's first step into telecommunications: its 4G mobile Internet services with a catchy 'Yes' ring to it.

Mr Jacob Yeoh, the eldest son of Mr Yeoh, is deputy CEO of the telecommunications firm.

'These young guys have to compete with these CEOs to be the best of the breed. When they succeed, one of them will be chief executive of the whole group, like me,' he says.

The sprawling empire

YTL GROUP was founded by Tan Sri Yeoh Tiong Lay, Mr Yeoh's grandfather came to Malaya from China's Fujian province in 1920 with no education nor kin.

It began as a petite construction business in 1955 and has grown from a single listed entity in 1985 to a huge business empire with businesses in regulated utilities, infrastructure, real estate, hospitality, and telecommunications.

A civil engineer, Mr Francis Yeoh took over the running of YTL in 1978 and grew it into a global conglomerate comprising six listed companies, which will soon be down to five as it is in the midst of privatising YTL Cement through a share swap. They have a combined market capitalisation of more than RM34 billion.

A decade ago, the group was completely reliant on its Malaysian business. Today, it derives more than 75 per cent of its revenue from abroad. The plan to hedge the group's business took place steadily and with calculation over a decade.

Mr Yeoh's penchant for scooping up valuable assets in distressed times and turning them into gems in the cash-plump stable is widely known.

YTL Power International, which is 53 per cent owned by YTL Corp (both are listed on Bursa Malaysia), bought Singapore's second-largest power company PowerSeraya in 2009 from Temasek Holdings for $3.8 billion, which included debt of $200 million. The purchase took place at the height of the global financial crisis.

Seven years before that, YTL, a relative unknown in Europe, trumped the Royal Bank of Scotland and became the proud owner of Wessex Water. The group bought the asset from a unit of failed energy trader Enron for £1.24 billion (S$2.4 billion).

In early 2010, Citigroup, to restore its balance sheet, sold one of Japan's most famous ski resorts Niseko Village to YTL Group for 6 billion yen (S$99.6 million).

'I've been watching Niseko for a while and had waited for the right time. Citigroup was willing to sell it at the right price and that's what made it compelling,' he says.

While PowerSeraya and Wessex fit snugly into the group's affinity for regulated assets, Niseko fell right into place with its high-end full-frills hospitality business.

Such opportunities in crisis have enabled the group to diversify its operations and spread its wings across many continents.

No surprise then that Mr Yeoh is hoping he can work the same kind of magic again in the current slowdown.

'I like headwinds. We can buy a lot of assets,' he says, true to form.

'If there's an economic implosion, the system cleans up by itself. Since 2008, there has not been such a cleanup. Not many dare mark to market their properties or assets,' he groans, clearly referring to the absence yet of attractively- priced assets for the group to pounce on.

He expects that turning point 'when something gives' to happen some time closer to the second half of this year.

The group is, predictably, trawling for regulated and property assets. On the radar are malls in China and Singapore.

'For Singapore, probably with this implosion of sorts, holders of assets who are highly geared may want to let go of malls,' he says.

A recognisable brand

IN SINGAPORE, the YTL Group's Starhill Global Real Estate Investment Trust, which is listed on the Singapore Exchange, owns Wisma Atria in Orchard Road and Ngee Ann City. The facade of Wisma Atria, a popular mall in uptown Orchard Road, is currently undergoing extensive redevelopment and will soon showcase double-storey flagship stores of international brands in the mid to high-end segments.

The group has also been expanding its real estate involvement here which currently comprises Sandy Island and Kasara The Lake on Sentosa Cove, and Westwood Apartments in Orchard Boulevard.

A short-term blip?

THE group is a darling of the stock market, well-liked by analysts given its steady cash flow and steadier management track record.

But that is not to say all is perfect. In late 2010, it ventured into the fiercely competitive business of mobile broadband. Some frowned on the decision given the high start-up cost of some RM3.3 billion and low average revenue per user (ARPU).

Their biggest concern is over the ability of the new business to generate returns that match the capital allocated to it.

'It will come as it's just a matter of time. So, I'm not worried about it. There will be a massive hockey stick demand for our network from subscribers,' he says, adding that he expects the group to turn around in two years.

'Steve Jobs (the late Apple founder) would have loved me as my network would make his FaceTime (face-to-face video calls) work smoothly.'