Showing posts with label success story. Show all posts
Showing posts with label success story. Show all posts

Friday, February 1, 2013

Congratulations to this visionary business taipan of Thailand, Dhanin Chearavanont (Chinese name in simplified characters: 谢国民)!

He is one of the most talented and gutsiest entrepreneurs in the world whom I admire very much.

I had seen Dhanin Chearavanont made an eloquent speech and answer questions at an open forum in fluent Mandarin at the last 2011 World Chinese Entrepreneurs Convention held in Singapore, and he had brilliant as well as wise ideas!

(This Forbes magazine cover image sourced from nationmultimedia.com)





(Image below sourced from economist.com)



HSBC Sells $7.4 Billion Ping An Stake to Thai Billionaire Dhanin


HSBC Holdings Plc (HSBA)’s $7.4 billion sale of its stake in Ping An Insurance (Group) Co. (2318) to Thai billionaire Dhanin Chearavanont was cleared by regulators, ending six weeks of speculation over the deal’s fate.

Dhanin’s Charoen Pokphand Group Co. and HSBC said payment was made in cash after the China Insurance Regulatory Commission approved the sale of 976.1 million Hong Kong-traded shares in the nation’s second-largest insurer. The transfer will take place by Wednesday, HSBC said in its statement.

China Approves HSBC’s Sale of Ping An Stake to Thai Billionaire

China Approves HSBC’s Sale of Ping An Stake to Thai Billionaire

China Approves HSBC’s Sale of Ping An Stake to Thai Billionaire
Tomohiro Ohsumi/Bloomberg
Pedestrians walk past a Ping An Insurance (Group) Co. advertisement in Beijing.

The transaction will generate a $2.6 billion profit for London-based HSBC, bolstering Chief Executive Officer Stuart Gulliver’s efforts to revive earnings. CP Group said on Jan. 11 it had the resources to complete the purchase, damping concern the deal would collapse after Caixin Online reported that China Development Bank Corp. withdrew financing.

“Given all the twists and turns, this outcome is quite a surprise and the best for all,” said Li Wenbing, a Beijing- based analyst at Bocom International Holdings. “With a relatively passive investor like CP, Ping An’s management can maintain their control on the firm’s operation and leverage some of CP’s expertise in tapping the rural financial sector.”

Shares in Ping An have gained 23 percent in Hong Kong trading since Dec. 4, the day before the sale was announced. That’s 20 percent more than the HK$59-a-share that CP Group agreed to pay.

HSBC, which has gained almost 12 percent in the same time- frame, fell 0.3 percent to close at HK$88 on Feb. 1. The stock has advanced about 13 percent in London since Dec. 4.

Chinese Funding

HSBC agreed on Dec. 5 to sell its 15.6 percent holding in Ping An to four subsidiaries of CP Group in two phases for about $9.4 billion. The first stage, comprising shares valued at about HK$15 billion ($1.93 billion), was completed Dec. 7. The rest required approval from the China Insurance Regulatory Commission by the end of today.

The acquisition of four-fifths of the shares would be funded with cash as well as a financing agreement from the Hong Kong unit of China Development Bank, HSBC had said in December.

CP Group didn’t use that credit facility from China Development Bank, which is a policy lender based in Beijing, to finance any part of the purchase, said a person with knowledge of the transaction. The person, who asked not to be identified, didn’t say how CP Group raised funds for the deal. Today’s statements made no mention of how the deal was funded.

Seed Business

Dhanin, 73, planned to make a foray into financial services after spending more than four decades building a family seed business into Thailand’s biggest agricultural company and conglomerate. His net worth was an estimated $6.6 billion as of today, according to the Bloomberg Billionaires Index. Almost 60 percent of the fortune is from overseas private companies.

The group’s historical ties to China include becoming the first foreign investor after Deng Xiaoping opened the economy in 1979, and continued management of local agricultural projects. CP said it could help develop rural areas in China through its investment in Ping An.

“This is good news as it removes the uncertainty,” Olive Xia, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd. who recommends investors buy the shares, said by phone. “We still prefer Ping An among Chinese insurers and the stock has some upside.”
One of the world's great entrepreneurs whom I admire is the respected ethnic Chinese billionaire Robert Kuok Hock Nien  (his full name in traditional Chinese characters: 郭鶴年; simplified Chinese characters: 郭鹤年) of Malaysia and of the famous Shangri-la Hotel Group.

Robert Kuok is visionary, global in thinking, Confucian in values, an inspiring Asian business taipan!

(Image below sourced from sabahkini.net)





(Image below sourced from forbes.com, which sourced it from SPH or Straits Times)


 



Here is a latest story in Bloomberg News about this remarkable world-class success:

Billionaire Kuok Says His Empire Can Last ’Generations’

Bloomberg Markets Magazine

When billionaire Robert Kuok introduced a luxury hotel brand in 1971, he named it Shangri-La, after the fictional utopia in which inhabitants enjoy unheard-of longevity.

Ensconced in his executive suite 32 floors above Hong Kong’s Victoria Harbor -- the room decorated with a pair of elephant tusks gifted by the late Tunku Abdul Rahman, the first prime minister of Malaysia -- the world’s 38th-richest person appears to have defied the aging process himself.

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Jumper/Getty Images
Western Europe's tallest office building will be home to one of Robert Kuok's new luxury Shangri-La hotels. Six are scheduled to be opened worldwide during the third quarter.


Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Grischa Rueschendorf/Bloomberg
Robert Kuok shovels dirt at a ground breaking ceremony for the Shangri-La Asia Ltd.'s new hotel in Guangzhou on Feb. 26, 2004. Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $35 billion.


Kerry Group chairman Robert Kuok

Kerry Group chairman Robert Kuok

Kerry Group chairman Robert Kuok
Grischa Rueschendorf/Bloomberg
The world’s 39th-richest person, who named his Shangri-La hotel chain after the fictional utopia in which inhabitants enjoy unheard-of longevity, is trim, dapper and straight backed at 89. The public and private companies his family controls include investments in Beijing’s tallest building and cooking oil brands that have gained a 50 percent market share in China.
 

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Imaginechina
Pedestrians walk past the headquarters of the South China Morning Post in Hong Kong. Robert Kuok's daughter, Kuok Hui Kwong, 35, is executive director of SCMP Group Ltd., which Robert Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million for a 35 percent stake.

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Qilai Shen/Bloomberg
Wilmar International Ltd.’s cooking oil brands —led by Jin Long Yu, meaning Golden Dragon Fish, seen in this photo — grease half of China’s woks and generate 48 percent of the company's revenue.


Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Eric Piermont/AFP/Getty Images
A waiter serves a customer at the bar at the Shangri-La Hotel in Paris.


Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Dario Pignatelli/Bloomberg
The development site for the Shangri-La Residences stands in Yangon, Myanmar on Nov. 20, 2012.
Photographer: Dario Pignatelli/Bloomberg

Enlarge image Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’

Kuok Says With Right Heir His Empire Can Last `Four Generations’
Marco Flagg/Bloomberg
A visitor looks out the window of Island Shangri-La hotel, owned by Shangri-La Asia Ltd., in Hong Kong. Robert Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 percent.
 

Kerry Group chairman Robert Kuok

Kerry Group chairman Robert Kuok

Kerry Group chairman Robert Kuok
ChinaFotoPress via Getty Images
Robert Kuok, chairman of Kerry Group Ltd., holds a trophy during the 2012 CCTV China Economic Person of The Year award at China Central Television in Beijing on Dec. 12, 2012.


Kuok had accumulated a fortune of $19.4 billion as of Jan. 31, according to the Bloomberg Billionaires Index. Trim, dapper and straight backed at 89, he shows no signs of stopping there, Bloomberg Markets magazine will report in its March issue.

This year, the media-shy Malaysian-born magnate will likely open his 71st sumptuously appointed Shangri-La. Six of them are scheduled to be opened in the third quarter alone, including one perched in the Shard, the 72-story London skyscraper that’s the tallest office building in Western Europe.

Meanwhile, the public and private companies his family controls continue to pump money into his ancestral homeland, China, where his investments range from Beijing’s tallest building to cooking oil brands that have gained a 50 percent market share in the world’s most populous nation.

‘Personally Powerful’

One of Kuok’s companies, Singapore-listed Wilmar International Ltd. (WIL), is the world’s biggest processor of palm oil and eighth-biggest sugar producer.

Others operate shipping and logistics businesses, a property portfolio stretching from Paris to Sydney and East Asia’s most influential English-language newspaper, the Hong Kong-based South China Morning Post.

“He’s so vital, so active and continues to be so personally powerful,” says Timothy Dattels, San Francisco-based senior partner at U.S. buyout firm TPG Capital LP and a director of Kuok’s Hong Kong-listed Shangri-La Asia (69) Ltd. “I can’t imagine a day without him at the top.”

Others can, which is why the question of succession looms over the Kuok empire as the patriarch prepares to mark his 90th birthday in October.

Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $40 billion.

As it stands, the family enterprises are seeking to recover from a rocky 2012 that featured some sharp share-price and profit drops.

First Interview

In his first interview with Western news media in 16 years, Kuok, who has eight children and numerous other relatives sprinkled through his executive ranks, says he won’t be worried when that day eventually comes.

“Everything on earth is dynamic,” he says in perfectly enunciated English. “I can only give my children a message, not money. If they follow it, we can go another three or four generations.”
Relatives run the most important of the Kuok businesses.

Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 percent.
A nephew, Kuok Khoon Hong, 63, co-founded and chairs Wilmar International, the largest Kuok-controlled company, with a market value of almost $20 billion, in which the Kuok family controls a 32 percent stake.

A daughter, Kuok Hui Kwong, 35, is executive director of SCMP Group Ltd., publisher of the 109-year-old South China Morning Post, which Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million for a 35 percent stake.

Focus Attention

As to who will succeed the master, most investors in Kuok enterprises focus attention on his eldest son, Kuok Khoon Chen, 58, who’s known as Beau.

Robert declined to confirm that Beau, who is deputy chairman of Kerry Group, will succeed him.
“Newshounds like excitement in their stories, whereas leadership of a business group is always a serious matter, and it would be wrong to put in writing any kind of assumption,” Kuok wrote in an e-mail following the interview.

Beau, who’s worked in his father’s businesses since 1978, is chairman of Kerry Properties Ltd. (683) The firm, 55 percent owned by Kerry Group, develops luxury apartments, shopping malls and offices mostly in China and Hong Kong.

“I know Beau, and he has a good team,” says Peter Churchouse, founder of Hong Kong-based property investor Portwood Capital Ltd. “But you have to wonder whether the second and third generations have the entrepreneurial and trading instincts that the father has.”

‘China Watcher’

The father’s instincts were honed over decades of personal and historical turbulence inconceivable to the generation vying to take over the family business.

That experience helped him become one of the first -- and best-connected -- foreign investors in China following Mao Zedong’s communist revolution.

“Robert is the best China watcher in the business,” says Simon Murray, chairman of Glencore International Plc, the world’s biggest commodities-trading company. “He understands the steel backbone of the Communist Party, but while other Hong Kong tycoons tend to be hugely subservient to Beijing, he is in no way obsequious.”

For all of Kuok’s prowess, 2012 was a tumultuous year for investors in his enterprises.

While Kerry Properties stock surged 57 percent in Hong Kong last year -- more than double the increase in the Hang Seng Index -- Wilmar International’s shares plummeted 33 percent, making it the worst performer in Singapore’s Straits Times Index. (FSSTI)

‘A Fraction’

The plunge wiped the equivalent of more than $8 billion from the company’s market value -- and almost $3 billion from the family’s fortune. This year, Wilmar’s share price has rebounded, rising 14 percent in January.

In any event, Kuok disputes Bloomberg’s valuation of his personal wealth at $19.4 billion; he says it’s “a fraction” of that amount, though he does not volunteer an alternative figure.

Wilmar’s woes stem from its massive exposure to China, where its cooking oil brands -- led by Jin Long Yu, meaning Golden Dragon Fish -- grease half the country’s woks and where it gets 48 percent of its revenue.

Beijing limited price increases on edible oils during most of 2011 and part of 2012, Wilmar said at the time.
Furthermore, the rising cost of soybeans, which Wilmar uses to produce cooking oil, hit a record $17.89 a bushel in September, squeezing earnings.

Rough Ride

In the first nine months of 2012, profit fell 29 percent to $779 million from $1.1 billion a year earlier.
Kuok’s Hong Kong-based companies have had a rough ride since the global financial crisis.

As of Jan. 31, Shangri-La Asia and Kerry properties shares were both down 19 percent compared with a 1 percent increase in the Hang Seng Index. Asked about such underperformance (583), Kuok says enigmatically, “It is right and proper for the investor to like or dislike a share.”

Underperformance isn’t the only problem at SCMP Group, whose share price had declined 69 percent as of Jan. 30 since Kuok acquired it. In 19 years, the South China Morning Post has churned through 11 editors, including one who served twice.

And although Kuok says his news executives publish without fear or favor, present and former staff members have publicly complained that the paper sometimes self-censors stories it thinks the Chinese government wouldn’t like.

‘Toned Down’

“Under his ownership, criticism of China has been toned down,” says David Plott, managing editor of Global Asia, a Seoul-based quarterly. “And if you look at the turnover of editors, it tells you one of two things: either Robert Kuok doesn’t know what he wants or he knows what he wants and he hasn’t gotten it.”
If that’s true, it might be a first for Kuok, whose life story has been one of single-minded achievement.

The son of Chinese immigrants who had settled in British- controlled Malaya, Robert Kuok Hock Nien -- his full name -- grew up speaking his parents’ Chinese Fuzhou dialect, English and even Japanese during Japan’s wartime occupation of the region.

Significantly, given the role China would play in Robert’s life, his mother encouraged him to achieve fluency in Mandarin and embrace his Chinese heritage.

Kuok’s parents ran a shop that sold rice, sugar and flour. Kuok recalls living with the smell of his addicted father’s opium pipe in his nostrils.

Family Business

Still, there was enough money for Robert to progress from a local English school to Raffles College in Singapore, where fellow students included Lee Kuan Yew, later the founder of modern Singapore.

Kuok never finished his studies. In 1941, Japanese troops stormed through the Malay Peninsula and in February 1942 captured Singapore. Kuok took a job with Mitsubishi Corp. With Japan’s defeat in 1945, his family resumed doing business under the British.

In 1949, after his father died, Robert; a brother, Philip; and other relatives founded Kuok Bros. Sdn., which later specialized in sugar refining.

Philip went on to become a Malaysian diplomat, and a second, much-admired brother, William, took an entirely different path again by joining the communist revolt against colonial rule. In 1953, William Kuok was killed by British troops in a jungle ambush.

Furtive Rendezvous

Robert Kuok, by contrast, used his English-language skills on visits to London to learn the sugar business while remaining based in Malaysia and later Singapore.

During the Cold War, he traded with both Western and communist blocs, meeting Cuba’s Fidel Castro and doing business with China’s Mao from as early as 1959.

In 1973, with China in the grip of the Cultural Revolution, Kuok was summoned to Hong Kong for a furtive rendezvous with two of Mao’s trade officials.

They confided that China was facing a sugar shortage. Kuok stepped into the breach, transferring his headquarters to Hong Kong that year.

It was a prescient move. In 1976, Mao died, and in 1978, Deng Xiaoping tore down the so-called Bamboo Curtain, initiating reforms that sparked 34 years of surging economic growth.

In 1984, Kuok opened his first Shangri-La on the mainland. The following year, he partnered with China’s foreign trade ministry to begin building the China World Trade Center (600007) in Beijing.

Enduring Mystery

In 1988, at his nephew Khoon Hong’s suggestion, he branched out into edible oils. By 1993, Coca-Cola Co. was impressed enough with Kuok’s China connections to form a bottling joint venture with him.
That lasted until 2008, when Coke bought back Kerry Group’s stake for an undisclosed amount, both companies pronouncing the outcome a success.

The family’s history of that period harbors an enduring mystery: a 16-year parting of the ways between Robert and Khoon Hong, who in 1991 left the Kuok Group to set up Wilmar with Indonesian entrepreneur Martua Sitorus.

It wasn’t until 2007 that Robert acquired a 32 percent stake in Wilmar and injected most of his agribusiness into it. Neither Robert nor his nephew would discuss the split.

For all his triumphs in the capitalist world, Robert Kuok says the biggest influences on his life were his devoutly Buddhist mother and his communist revolutionary brother, William.

‘Good Boys’

“Otherwise, probably I would have been an arrogant middle-class Chinese, only caring about materialism, worldly pleasures and fleshpot pleasures,” Kuok says, his moist eyes betraying a momentary sadness.

“When I am tempted, I think of what William went through. He sacrificed his life trying to help the underprivileged.”

Kuok says he has tried to pass on those values by not cocooning his children in privilege. Nor, he adds, does he place much emphasis on scholastic qualifications, including MBA degrees, when hiring senior staff.

Beau Kuok earned a bachelor’s degree in economics from Monash University in Melbourne; Ean holds a similar qualification from the University of Nottingham in England. Kuok describes Beau and Ean as “good boys.”

Among members of the extended family, Kuok speaks highly of Khoon Hong, his nephew at Wilmar.

‘Stupid Ones’

“There are stupid ones, there are mean ones, but he’s one of the cleverest,” Robert Kuok says. None of the second- generation Kuoks would comment for this article. Kuok says they make their own decisions. “I never control my children,” he says. “We are a very liberal, democratic family.”

The perils of succession are acute in Kuok’s bailiwick, according to researchers at the Chinese University of Hong Kong.

Their study of 250 family-controlled businesses in Hong Kong, Singapore and Taiwan from 1987 to 2005 shows that stocks typically plunged 60 percent over an eight-year period before, during and after a founder’s relinquishing control.

Joseph Fan, the finance professor who led the research, attributes this wealth destruction to the inability of the patriarch to pass on, even to family members, his most valuable, intangible assets, including relationships with governments and banks. “The founder is the key asset,” Fan says.

That’s why, Fan says, so many tycoons remain at the helm of their businesses well into their 80s and don’t disclose succession plans.

Octogenarian Rivals

Last year, following investor concerns over feuds that have split the second generation of some of Hong Kong’s most prominent families, two of Kuok’s octogenarian billionaire rivals in the property business, Li Ka-shing of Cheung Kong Holdings Ltd. and Lee Shau-kee of Henderson Land Development Co., finally disclosed which of their progeny would eventually take control.

TPG Capital’s Dattels says succession isn’t a concern when it comes to the Kuok businesses.

“There’s only one Robert Kuok, there’s no doubt,” he says. “But he has instilled his business philosophy deep into the family. With what he has built, they are well set to continue, whatever happens.”

Back at his Hong Kong headquarters, Kuok asks an assistant to bring him a favorite quotation. Written by his mother in Chinese and engraved on a steel plate, the aphorism reads:

“If my children and grandchildren can be like me, then they don’t require material inheritance. But if they are not like me, then of what use is my wealth to them?”

Those words beg the question investors in Kuok’s far-flung businesses are asking now more than ever: How like Robert Kuok are his heirs?

Sunday, November 11, 2012

Tale of an enterprising South African Jewish billionaire entrepreneur


South Africa Billionaire Unmasked Selling U.S. Groceries



Four days after Hurricane Sandy slammed into New York City and the surrounding states, billionaire Nathan “Natie” Kirsh ambled through the aisles of a 75,000-square-foot Restaurant Depot warehouse he owns in College Point, Queens.

Dressed in a Gore-Tex jacket and loafers, the 80-year-old South African squeezed past dozens of independent restaurant owners picking through heaps of carrots, lobsters and hot dogs. A frenzied bottleneck formed as street vendors and restaurant chefs -- each handling several shopping carts full of goods -- vied for a spot in line to pay.
Enlarge image South African Billionaire Nathan Kirsh

South African Billionaire Nathan Kirsh

South African Billionaire Nathan Kirsh
Simon Dawson/Bloomberg
Billionaire Nathan Kirsh said, “I want money, I just don’t want that money lying around. We are certain that inflation isn't going away, so it's smart to be borrowing cheaply and putting it into real assets."
Billionaire Nathan Kirsh said, “I want money, I just don’t want that money lying around. We are certain that inflation isn't going away, so it's smart to be borrowing cheaply and putting it into real assets." Photographer: Simon Dawson/Bloomberg
Enlarge image Tower 42 In London

Tower 42 In London

Tower 42 In London
Chris Ratcliffe/Bloomberg
Billionaire Nathan Kirsh agreed in December 2011 to pay 282.5 million-pound for the landmark Tower 42, the first skyscraper constructed in the City of London, seen here right.
Billionaire Nathan Kirsh agreed in December 2011 to pay 282.5 million-pound for the landmark Tower 42, the first skyscraper constructed in the City of London, seen here right. Photographer: Chris Ratcliffe/Bloomberg

“Chaos,” said Kirsh, who has a net worth of at least $5.1 billion, according to the Bloomberg Billionaires Index. “It’s fantastic -- and profitable.”

Through Brooklyn, New York-based Jetro Holdings, Kirsh controls 86 Restaurant Depots and 10 Jetro Cash & Carry stores, a chain that sells wholesale groceries to urban bodega owners. The closely held company generated at least $6.5 billion in revenue and $500 million in earnings before interest, tax, depreciation and amortization in the last 12 months, according to a person familiar with the company’s financial performance.

The retailer has a value of at least $5 billion, according to data compiled by Bloomberg, based on the average enterprise value-to-Ebitda and price-to-earnings multiples of two publicly traded peers: Issaquah, Washington-based Costco Wholesale Corp. (COST) and Brampton, Ontario-based Loblaw Companies Ltd. (L)

One-Time Dividend

Jetro’s Ebitda margin is almost double that of Costco, the largest U.S. warehouse-club chain. Kirsh said Jetro generates bigger profits because the company doesn’t deliver or extend credit to customers. It also owns most of the land under its stores and sells more perishable goods.

“We are private, we are profitable and we have fun,” the billionaire, who has never appeared on an international wealth ranking, said in an interview at his office in North London in October. “We just don’t scream about what we do.”

Kirsh wants to expand his food wholesaling business to new markets and add to his real estate portfolio, which consists of properties on four continents worth hundreds of millions of dollars. He said the company is looking to build Jetro stores in Latin America and Asia, and wants to stock wine and spirits at its Restaurant Depots.

He raised $1 billion in a private debt placement in April as yields on U.S. corporate bonds fell, and used the proceeds to repay short-term debt and pay a one-time dividend to Jetro shareholders. Kirsh owns 63 percent of the company, and employees hold another 10 percent. Private equity firms CCMP Capital Advisors LLC and Leonard Green & Partners LP acquired 27 percent of Jetro in 2004.

Global Inflation

The billionaire is using some of the cash to buy property, which he said is a hedge against global inflation. He controls about 70 percent of the Jetro and Restaurant Depot warehouses, as well as residential and commercial real estate in the U.S., the U.K., South Africa and Australia.

“Our business in the U.S. is a big business that throws off cash and we strip that cash,” Kirsh said in London. “I just don’t want that money lying around. We are certain that inflation isn’t going away, so it’s smart to be borrowing cheaply and putting it into real assets.”

Kirsh’s empire extends beyond food and real estate. He owns 30 percent stakes in Crest JMT Leather, a U.K.-based tanner, and Holmes Place, an Amsterdam-based fitness chain. He also controls half of Mumbai-based pipe maker, KiTec Industries; 38 percent of Yehud, Israel-based Magal Security Systems Ltd. (MAGS), a security company he acquired from Israel Aerospace Industries Ltd. in the late 1970s and listed on the Nasdaq in 1993; and 42 percent of Abacus Property Group (ABP) Ltd., the publicly traded Sydney-based real estate investment trust he helped to recapitalize in 2009.

Corn Milling

Kirsh made his first fortune in Africa. In 1958, he created a corn milling and malt business in Swaziland, a country 250 miles east of Johannesburg. Twelve years later, he acquired a South African wholesale food distribution business and began supplying stores owned by black shopkeepers, which were opening because of the government’s apartheid political structure.

The business grew to become the country’s dominant retailer and, by the mid-1980s, included furniture retailing, supermarkets, discount stores, an insurance operation and commercial property developments.
In 1983, South Africa-based insurance company Sanlam Ltd. (SLM) acquired 49 percent of his food distribution operation. Not long after, Kirsh learned that a top executive had gone on a building spree, entering into agreements to construct 22 shopping malls when Kirsh had only given him permission to build one. All of the malls were guaranteed by company assets. The commitment eventually cost Kirsh most of his fortune.

Entrepreneurial Icarus

Two years later, the South African economy began to stumble. Banks stopped lending to companies and countries began levying sanctions in a stance against apartheid. As interest rates soared, Kirsh approached Sanlam, which had minority rights on major financing decisions, about using a rights issue to pay down the mall loans.

Sanlam executives instead offered to inject the capital into the company, taking most of the assets in return. In the negotiations, Kirsh won control of Jetro, which then consisted of five stores on the east coast of the U.S.

“That was the end of an era,” he said about the episode in Adventures in Businessland, a corporate video he made in 2011 to mark his 51-year career. “Twenty-five years of work was blown away in one day.”
Under the headline “The Man Who Fell to Earth,” Kirsh was portrayed on the cover of Financial Mail magazine as an entrepreneurial Icarus, his face recoiling in dismay as he plummeted from the heavens.

“I got pulverized,” he told students at the London Business School in a 2011 lecture. “Therefore, one becomes a little bit more cautious to make sure you are not going to get pulverized a second time.”

Distribution Systems

Defeated, Kirsh moved to New York to run Jetro. He said he saw an opportunity to exploit weakness in the food distribution business in the U.S., which favored national grocery chains over smaller, independent stores.

“No one wants to run a huge truck out through Manhattan just to drop off four boxes, it just doesn’t make sense to them,” said Richard Kirschner, president of Jetro Holdings, in a telephone interview. “We were there to pick up the morsels.”

Jetro salesmen went from store to store talking up the benefits of shopping at their warehouse. The pitch: bodega owners no longer needed to buy more than they could sell, which would create more retail space in their stores. Without the burden of delivery costs and credit risks, Jetro was able to sell goods 20 percent cheaper than competing suppliers.

Restaurants, Bodegas

“When we arrived here, everybody just frowned on cash and carry as a meaningless form of distribution,” said Stanley Fleishman, Jetro Holdings CEO, who worked for Kirsh’s wholesale operation in South Africa and has been running the U.S. company since 1986. “The competition just blew us off as those guys selling second-tier product. That was the secret of our success.”

By the early 1990s, Jetro had grown to 10 outlets across the U.S. and was generating more than $400 million in revenue. Looking to modernize his management systems and fund expansion, Kirsh sold 80 percent of the business to Metro Holding AG, a Swiss supermarket business that was also a shareholder in Metro AG, one of Germany’s largest grocery conglomerates.

Jetro’s sales growth leveled off. Kirsh noticed that the restaurateurs shopping at his warehouses didn’t like jostling with bodega owners, who would shop less often and enter the checkout lines with ten-times the amount of goods.

Buffett Passes

He found a solution with Restaurant Depot, which he acquired in 1994, and turned into the company’s growth engine. Metro executives soon sold their interest back to Kirsh. Metro Holding has since been renamed Grospart AG, and is now a closely held investment company in Baar, Switzerland. A company spokesman said executives weren’t available for comment.

“I told them they were making a mistake,” Kirsh said. “The company was about to take off. I didn’t want them to come back in a few years telling me they were disappointed.”

Looking for capital to expand, Kirsh called on Berkshire Hathaway Inc. (BRK/A) CEO Warren Buffett who, around 2003, passed on the opportunity to invest in Jetro. A year later, Kirsh sold a 27 percent stake to CCMP and Leonard Green. With the 2012 dividend, he said, the new partners have earned back more than their original investment. Buffett did not respond to an e-mail seeking comment. Both private equity firms declined to comment on the financial details of their investments in Jetro.

‘Stupid People’

Real estate, Kirsh said, is the only sector where “stupid people” can make money. In December 2011, he agreed to pay 282.5 million pounds ($455 million) for Tower 42 -- the first skyscraper constructed in the City of London -- and the five buildings that sit on its 2.2-acre plot. He paid cash, and later arranged a 20-year loan that covered about half of the acquisition cost. More U.K. property purchases are likely, according to Philip Lewis, Kirsh’s global head of real estate.

His other holdings include stakes in commercial properties in Western Australia, through a 50 percent stake in Jandakot, Australia-based Ascot Capital Ltd., and in San Diego, California, where he invested in a student and residential housing development near the campus of California State University San Marcos.

He has seen a 50 percent increase in the value of his stake in Abacus, the Australian REIT that controls two prime office properties in Sydney’s central business district, self storage locations and a shopping center in nearby Drummoyne.

Four Trusts

In October, Kirsh acquired a white-stucco fronted Georgian building next to London’s Madame Tussauds waxworks tourist attraction near Regents Park. The building will become the new headquarters for the Kirsh Group in June, bringing his disparate portfolio of assets and businesses under one roof for the first time.

The octogenarian said he has been thinking about succession, and plans to divide his assets into four trusts, leaving 75 percent of it to his family and the remainder to fund charities, including his favorite cause, helping entrepreneurs. None of his children work in the family business.

The operation, he said, will one day be managed by Ron Sandler, the former CEO of the Lloyd’s of London insurance market who was also appointed by the U.K. government as chairman of Northern Rock Plc, which was nationalized in 2008.

“We have properties all over the place, we are liquid and we do not have one unsuccessful business,” he said. “All of my businesses are profitable. I am in the best space I have ever been.”

Monday, October 22, 2012

College drop-out Michael Farrell built world's largest mortgage real estate investment trust (REIT) named Annaly, an outstanding businessman and leader


My Comments on this businessman who personified success and outstanding leadership:

It is sad to read or hear praises about a good and/or successful person only after he or she dies. This is the case here of talented world-class businessman Michael A. J. Farrell, who just died at 61 years old because of cancer.

I have only read about Michael Farrell right now, after reading various obituary articles about him. He is still very young at age 61 and still at the prime of his accomplished life!

The life and business career of self-made man Michael Harrell is inspiring, and I want to share it.



(Undated picture below of Michael Farrel is from Annaly Capital Management, Inc.)




(Images below: Farrell Clan's ancient Coat of Arms in Ireland on the left and the New York-listed Annaly firm's corporate logo on the lower right side. The firm’s name "Annaly" refers to Farrell’s ancestors in Ireland who were the reigning clan of Longford and ruled from Annaly Castle, which is incorporated in the crest of the REIT’s logo. Michael Farrell is a modern self-made man with a keen sense of history.)








Michael A.J. Farrell, who built Annaly Capital Management Inc. into the world’s largest mortgage real estate investment trust, has died after being diagnosed with cancer earlier this year. He was 61.

His death was confirmed yesterday in a statement by the New York-based company, which didn’t provide additional details.

Farrell, who graduated high school at 16 with plans to become a commercial artist, instead turned to Wall Street, beginning at E.F. Hutton & Co. in 1971. After stints at Morgan Stanley and Merrill Lynch & Co., he started Annaly in 1997 and increased assets to about $128.3 billion at the end of June, turning the firm into one of the largest buyers of home loan debt backed by the U.S. He branched out with separate companies that buy non-agency bonds and commercial real estate securities.

“Mike will be missed not only for his stature in the business, but as one of the class guys in our industry,” said Shawn Matthews, chief executive officer of Cantor Fitzgerald & Co., the brokerage arm of Cantor Fitzgerald LP. “He hired me into this business and I have always considered him a mentor, great leader and true gentleman.”

Farrell, Annaly’s chairman and CEO, was receiving chemotherapy for cancer that “was caught early” and was considered treatable, according to a company statement in January. In May, the firm disclosed it was in remission, while this month, it said Wellington Denahan-Norris, Annaly’s co- founder, was appointed joint CEO to allow Farrell to focus on his “ongoing treatment.”

‘Fantastic Leader’

Annaly has returned more than 600 percent to shareholders since its initial public offering, outpacing the 94 percent gain for the Standard & Poor's 500 index. Shareholders almost doubled their money in the past five years as Farrell and Denahan- Norris, 48, navigated the financial crisis and then forecast how Federal Reserve efforts to boost housing and the economy would impact bond markets.

The two executives each earned $35 million in 2011, making them among the world’s highest-paid financial-services executives.

“He was a fantastic leader and friend and will be greatly missed,” Annaly said in the statement. “Our hearts go out to his family and all those who were fortunate enough to know him.”

(This photo by © Susan Farley/The New York Times/Redux)


Brooklyn Born

Farrell was born on April 10, 1951 in Brooklyn, New York. He graduated from high school at 16, according to an article published last year in Wake Forest Magazine. He and his wife, Mary Flynn, neither of whom completed college, committed $10 million to the school in “the largest cash commitment by a living individual in the university’s history.”

His son, Michael Edward Farrell, studied finance and economics at Winston-Salem, North Carolina-based Wake Forest University, graduating in 2010. Farrell is also survived by his wife and their children Caitlin, a 2008 graduate of College of the Holy Cross, and Taylor. In addition, he’s survived by Kelly, a daughter from his first marriage, and two grandchildren.

Farrell’s parents, Michael John and Vera, left Europe for the U.S. after World War II, during which the elder Farrell served as a member of the Irish Guards, nearly dying in the Operation Market Garden attack in September 1944. Once in Manhattan, he waterproofed skyscrapers, painted subway cars and worked as a janitor at an elementary school before dying in 1986 at age 66, according to the magazine.

Trading Bonds

Farrell told the publication he wanted to be a rock star after giving up on becoming an artist. Instead he ended up trading bonds, specializing in mortgages. In 1991, while head of fixed income at Wertheim Schroder & Co., where he also hired Cantor Fitzgerald’s Matthews, he met Denahan-Norris, with whom he founded Annaly six years later.

Farrell had concluded that REITs and mortgage bonds were a “perfect marriage between asset class and vehicle structure,” in part because they can be “buy-and-hold” investors, he said in a Bloomberg story in April. Unlike hedge funds or many mutual funds, REIT shareholders can’t withdraw money from the firms. Instead they buy and sell shares in the companies.

Farrell stood out for his colorful conference calls and shareholder letters that discussed broader themes through historical allusions and literature such as Christopher Marlowe’s “Doctor Faustus” and the 1970 book “Future Shock” by Alvin Toffler.

Bond Yields

While Annaly has benefited as the Fed held short-term interest rates near zero to bolster the economy, its shares have declined 6.1 percent through Oct. 19 since the central bank said in September it would purchase an additional $40 billion of mortgage securities a month.

That’s pushed down bond yields, narrowed spreads and reduced homeowner borrowing costs -- squeezing earnings and dividends for mortgage REITs. Annaly said Oct. 16 it may repurchase up to $1.5 billion of shares over a year.

The shares declined 0.5 percent today as of 9:42 a.m. in New York, compared with a 1 percent drop for a Bloomberg index of mortgage REITs.

The firm’s name refers to Farrell’s ancestors in Ireland who were the reigning clan of Longford and ruled from Annaly Castle, which is incorporated in the crest of the REIT’s logo, Wake Forest Magazine reported.




Below is a short bio-data of Michael Farrell:

Mr. Farrell is the Chairman and Co-Chief Executive Officer of Annaly and FIDAC. Prior to founding Annaly and FIDAC, Mr. Farrell was a Managing Director for Wertheim Schroder and Co., Inc. in the Fixed Income Department. He has previously served on the Executive Committee of the Public Securities Association Primary Dealers Division and as Chairman of the Primary Dealers Operations Committee and its Mortgage Backed Securities Division. Mr. Farrell serves on the Executive Board of the National Association of Real Estate Investment Trusts (NAREIT), is Chairman of the Board of Visitors of the Wake Forest Schools of Business, member of the Board of Trustees of Wake Forest University, a director of the U.S. Dollar Floating Rate Fund and Chairman of the Maeve Foundation.

Saturday, October 20, 2012

WHY I ADMIRE SELF-MADE BUSINESSMAN MITT ROMNEY. This is not about politics. I admire self-made man Mitt Romney for his amazing success.

Win or lose in the USA presidential election in November 2012, ex-Governor Mitt Romney has my utmost respect for flourishing in business, in his wholesome family life and ultimately in his sincere faith in God!






Some of the reasons why I admire and respect Mitt Romney:

1. He is a self-made man, who built up success via hard work and resourcefulness.

2. He is a savvy businessman, who understands the importance and inherent superiority of the free enterprise system to propel socio-economic progress. I admire his advocacy of small businesses!

3. He turned around the Winter Olympics in Saly Lake City, USA.

4. He turned around Massachusetts state when he was its governor.

5. He turned around business companies he led.

6. He is a disciplined man with solid moral values.

7. He is a good family man who loves his wife with fidelity and good to their kids.

8. Although I'm not a Mormon like Romney, I admire his sincere and lifelong devotion to faith in God.








Apologies for the political opinions expressed below by the Forbes contributor, though articulate and thoughtful those opinions, but let us objectively examine and focus on Mitt Romney's solid track record as a self-made businessman and also as a capable leader?

Read on and share your comments to me here in this blog or via email?

Richard Finger
Richard Finger, Contributor to Forbes magazine|
9/04/2012 @ 12:22PM |2,981 views

Why Is Success Being Punished?




For the first time in my lifetime, business success is being vilified as smarmy and the attendant corollary, the profit motive is therefore sleazy as well. Democrats derisively promulgate Mitt Romney’s net worth estimated at $200 to $250 million inferring that this is a disqualifying factor to allow him to be Presidential material.  Throughout the history of our great nation, a self made man like Mitt Romney has been celebrated.

Indeed, he is a paradigm of success to be emulated. Are criticisms equally vociferous of very rich democratic politicians? Ex-presidential contender John Kerry, worth hundreds of millions, with his passel of estates, new $7 million yacht…….his most accretive act was a brief fifteen minute ceremony to the widow Heinz.

Seldom, no never, have I heard any criticism of the Kennedy wealth….and this despite the fact that the last two generations, other than politics, work little and the family lucre allegedly coalesced around illegal import of alcoholic beverages (aka bootlegging) during the prohibition era. Does noblesse oblige now have stronger merit than hard work?

Compare Romney who started from scratch, worked for years, scraped, fought hard and got “dirt under his fingernails” to earn his money, to the hypocrisy of elitist rich democrats who inherited or married into their fortunes. Is Romney really the one who is out of touch with ordinary Americans?

His Tax Rate
Romney has been roundly disparaged for paying such low effective income tax rates. The disdain implies there is something unethical for paying the statutory mandated rates. Much of the Romney’s income comes from dividends and capital gains.

Devoting much of the last dozen or so years as an unpaid public servant, (three years as Chairman of 2002 Salt Lake City Olympics, donating his $1.4 mm salary and severance to charity and four years as Governor of Mass. )  it only makes sense that his estate would be managed to generate significant amounts of low tax rate income.

For 2010 and 2011 Romney’s returns show over $7 million in charitable donations on $42.5 million of income. This means they gave away 16.4% of their income and if this is added to their effective tax rates then the Romney’s paid in taxes and gave away over 30% of their money.

Perhaps Governor Romney believes that the charities of the private sector are much more efficient allocators of capital than our spendthrift federal government.

Different Business Models

This election is about a choice between two starkly different business models. On the left is the statist system where government becomes more and more intrusive into citizen’s lives. The most recent example being the to be implemented government mandated health care system. Statism means more and more welfare and subsidies.

When our current leader took office 40% of Americans were receiving some form of government aid. That figure has bulged up to 55%. Nearly 50% of all people pay no federal income taxes whatsoever. Continual higher taxes and more and more fiscal stimulus will be the answer to all problems.

More and more burdensome regulations will dot the business landscape. Our national debt will exceed $16 Trillion when the gavel falls Tuesday, in honor of the opening of the Democratic convention. What a symbolic start.

Our Debt to GDP ratio has soared from 70% to over 100% in less than four years. America looks more and more like continental Europe every day. And last time I looked there were still quite a few unresolved fiscal issues on their side of the Atlantic.

The facts are clear. As governor of Massachusetts, Governor Romney closed first a $650 million and the following year an estimated $3 billion deficit eventually achieving budget surplus. He slashed spending, eliminated some tax loopholes, reduced some local funding, and even cut some higher education dollars……it wasn’t a perfect solution but nothing is and at the end of the day it got done even with both legislative houses solidly Democratic. So Republicans and Democrats worked together.

Romney is a man who can compromise. The Salt Lake Olympics were running $379 million short of revenue goals and in the midst of a bribery scandal when Romney took charge.

Bottom line was the Games made a $100 million profit. So the other side of the ledger offers a man who has both a long history of private sector experience in addition to a proven record that he has the expertise and the will to change budget deficits into surpluses.

Bain Capital And The Campaign

Mitt Romney founded Bain Capital in 1984. It is the crown in his magnificently successful career. Of over 350 direct investments over 80% of companies have increased revenues. But this campaign seeks to denigrate his achievements.

Deflecting the debates away from the real issue, which are policies to achieve economic growth to childish attempts to focus on tax rates paid by a self made man shows signs of desperation? Tonight or tomorrow the Democrats have recruited a couple of Bain employees to speak.

While the lineup is uncertain, one is thought to be Jonathan Lavine, a democratic “money bundler” and managing partner at Sankaty Advisors, a Bain subsidiary. Another may be Steve Pagliuca, Bain managing director and part owner of the Boston Celtics.

Their supposed mission is to portray Governor Romney as a person who invested in companies to take all the money out, bankrupt them, destroy all the jobs and make millions for himself…..and all these nefarious deeds done with malice aforethought. That’s hardly the result at Staples and many, many of other success stories.

I am really interested to see how a guy like Mr. Pagliuca bashes Romney when he has made enough money at the company Romney founded, to be part owner of a sports franchise with a worth probably over $1 billion. I wonder if John Kerry is giving him a ride down to Charlotte on his Gulfstream.  

Do the private equity (PE) investments sometimes lose jobs or is PE a provider of capital to allow small businesses to thrive, expand and increase their worker base by exponential amounts? The answer is both. But net, net PE is far and away an enterprise that is a net creator of employment. You don’t have to believe me but you can’t hide from the statistics.

The giant pension fund CalSTERS has invested $1.25 billion with Bain Capital. Spokesman Ricardo Duran says that since “1988 Bain and private equity companies like them have outperformed every asset class which CalSTERS has allocated the cash of its 856,360 largely unionized members.”

From 1998 to 2008 Purdue, U.of Virginia, U.of California, U.of Michigan and U.of Washington trusted at least $425 million to Bain. Princeton, Yale, and Harvard all bastions of liberal thought have invested their endowment funds with Bain. Since 2000 another group of a dozen state pension groups including Texas, Ohio, and Pennsylvaniahave given over $1.56 billion of retiree’s money to Bain.

Would these giant pensions and endowments continually over 10 and 20 year periods continue pouring assets into a money losing venture? The answer is unequivocally no….of course not. These men and women who are the money managers are fiduciaries, so as trustees they are bound to protect their employee base.

Please note the wonderful irony in all of this; Bain Capital providing consistent investment returns to pension funds, in which many of the retirees’ were heavily democrat union members.

Great Hypocrisy

If PE is “Darth Vader” -like evil empire, then why would the current administration seek help from Washington based PE firm Carlyle Group to save a Philadelphiaoil refiner owned by Sunoco (SU) slated for closure? Carlyle will invest $200 million to upgrade the facility which will protect the 850 union workers slated for layoff before November elections.

Naturally, EPA emissions standards have been relaxed which was part of the reason the refinery was closing in the first place. It is interesting, no it is the apogee of hypocrisy, that Carlyle is defined as “good” PE and Bain the unsavory.

It is sad commentary that our current leadership must attempt to belittle a great American success story to deflect focus from his own failed policies.

Has the ethos of our country shifted to such extent that the citizenry cannot hail a man who not only has been made his wealth honestly but also donates millions of dollars annually?

As a recent bumper sticker articulated so well, “I really don’t care where he was born, it’s where he lives is the problem.”