Highlight: Kuok tightens grip on Shangri-La

The Edge Malaysia, March 26, 2013

Robert Kuok Hock Nien has tightened his grip on Shangri-La Hotels Malaysia Bhd by raising his equity interest to 74.98% from 52.78% previously.

Shangri-La made an announcement to Bursa Malaysia yesterday that Kuok, through his family investment vehicle Kuok Brothers Sdn Bhd, had bought the 22.2% equity interest (98.01 million shares) in Shangri-La from Standard Chartered Private Equity Ltd.

Standard Chartered Private Equity is a unit of Standard Chartered plc, partly  owned by Temasek Holdings Pte Ltd.

The share purchase is expected to spark speculation that a privatisation might be on the cards. The acquisition of the block for RM328.4 million under a share purchase agreement dated March 20 between Standard Chartered Private Equity and Kuok Brothers, was completed on March 25.

The transacted price of RM3.35 apiece for the block was at a steep discount of 18.4% to Shangri-La’s trading price of RM4.11 at the time of the transaction.

But the price was 1.7 times the company’s net assets per share of RM1.97 at the end of last year. Shangri-La’s share price has been on an upward trend over the past 12 months — the stock is usually hardly traded. It climbed to RM4.20 yesterday from RM2.97 a year ago.

Shangri-La’s net profit grew 36.6% from RM49.3 million for its 2008 financial year ended Dec 31 (FY08) to RM67.3 million in FY12. Temasek emerged as a substantial shareholder in Shangri-La in September 2007.

The sovereign fund “inherited” the shares in the hotel group held by Standard Chartered plc when it bought into the British banking group in 2006 via the estate of the late billionaire Khoo Teck Puat.

Other substantial shareholders in Shangri-La include Aberdeen Asset Management with an 11.6% stake, or over 51 million shares as at March 25, filings show. The fund has been actively trading in the shares since February.

Kuok’s equity interest of 52.78% is held via his Kerry Group’s 21.74% shareholding in Hong Kong-listed Shangri-La Asia Ltd.  The tycoon’s move to raise his equity stake in the luxury hotel operator caught many by surprise given that Kuok has been divesting some of his businesses in Malaysia in recent years. 

A significant sale would have been his sugar refinery business to Felda Holdings Bhd for RM1.5 billion in late 2009 — which appeared to remove the “sugar king crown” from Kuok.

But, the tycoon’s interest in sugar did not wane. Shortly after, Kuok pumped in A$1.75 billion (RM5.66 billion) through his Singapore-listed flagship Wilmar International to buy Australian CSR Ltd’s sugar and ethanol business — Sucrogen.

He retained his sugar king crown. Prior to that, in 2007, Kuok undertook a share swap exercise by having Wilmar International take over and privatise PPB Oil Palms Bhd, the plantation arm of PPB Group Bhd. The deal raised many eyebrows. 

Kuok’s niece Kay Kuok Oon Kwong has been managing director at Shangri-La Hotels Malaysia since November 1998. One of his sons, Kuok Khoon Ean, is presently executive chairman and CEO of Shangri-La Asia. Another son, Kuok Khoon Ho is chairman of Kuok Brothers Sdn Bhd.

Based on yesterday’s closing of RM4.20, it will cost Kuok RM462 million to buy out the hotel group founded by him. This would certainly not be too pricey for him.