KHOO KAY-PENG

He is amongst Asia's wealthiest tycoons.   We have worked with Tan Sri Dr. Khoo Kay-Peng.    When he purchased Laura Ashley, 太太 joined in on the meeting in Boston with the new management he inherited.  He and his family are devoted and generous international philanthropists.   Often he co-invests with his friend Robert Kuok - as he did with the South China Morning Post.   He cashed out that investment to purchase Laura Ashley.      


Tan Sri Dr. Khoo Kay Peng is the Chairman and Group Chief Executive of the MUI Group of companies, which is a diversified conglomerate with interests in the Asia Pacific, Australia, the US and the UK. Previously, Tan Sri Khoo had served as Director of Banking Operations in Bank Bumiputra Malaysia Berhad and as Vice Chairman of Malayan Banking Berhad. Currently, he is a trustee of Malaysian Humanitarian Foundation and Regent University, Virginia, USA.

Malaysian tycoon enters fray on side of Southern Bank boss
Khoo Kay Peng's vehicle buys 4.03% of bank's parent Killinghall

16 Nov 2005 - Malaysian tycoon Khoo Kay Peng has come to the aid of embattled Southern Bank boss Tan Teong Hean.

On Monday, Mr Khoo's MUI Properties told Bursa Malaysia it has bought 4.03 per cent of the bank's parent company, Killinghall, for RM18.4 million (S$8.3 million).

Southern Bank is being eyed for takeover by Malaysia's second-biggest lender CIMB - a prospect Mr Tan does not relish, and which is why he has been beefing up his defences.

Mr Khoo's entry appears to be a calculated shot across CIMB's bow. A devout Christian who is rarely seen in public, he is believed to be an old friend of Mr Tan. Indeed, he let Mr Tan into banking by selling more than 20 per cent of Southern Bank to Tan-controlled Killinghall back in 1984.

Mr Khoo's move illustrates Mr Tan's determination to put up a fight against CIMB - although most analysts reckon the odds are stacked against him for two reasons.

One, the deal makes sense. And two, CIMB is a powerful government-linked company.

Since CIMB's takeover intentions became clear last month, Southern Bank has circled its wagons. It has spent RM28 million buying back seven million of its own shares.

These are now precluded from voting in the event of a takeover bid - a move that effectively raises Mr Tan's voting interests in the bank.

Killinghall is a listed company that owns the single-largest share - 16.4 per cent - of Southern Bank.

Beyond that, Mr Tan and his partners - the Sultan of Malaysia's Selangor state and Syed Yusof Syed Nasir - control Ramuda, a private company that owns 32 per cent of Killinghall on a diluted basis.

Last week, Southern Bank sold its entire interest in Killinghall - 14.7 million shares or a 7.8 per cent stake - to unidentified buyers, almost certainly friendly to Mr Tan.

This followed purchases of Killinghall stock by Mr Tan's wife Lim Siew Lay, who has announced that she owns 7.5 per cent of Killinghall.

Now, with the entry of Mr Khoo, interests close to Mr Tan may control close to 20 per cent of Killinghall.

On Monday, Killinghall said it had received a letter from CIMB inviting it to begin exploratory talks on a possible merger.

Killinghall said it will seek approval from Malaysia's central bank before 'responding to CIMB's written invitation.'

Not everyone thinks Mr Tan will lose to CIMB. In a recent report, AmSecurities said there 'is a higher than 50 per cent chance that this deal will not go through'.

Its reason: Southern Bank believes RM5 per Southern Bank share is a good place to start negotiations, and that's too rich for CIMB. 'Both parties thus have to compromise and reach a middle road but, at this stage, it is hard to see how this can happen,' said AmSecurities. - SINGAPORE BUSINESS TIMES


Home furnishings and women's garments retailer Laura Ashley has a big international name, but worldwide sales are in free fall. Few realise that the quintessentially English brand with its flagship store in London's Regent Street and factories in Wales is actually controlled out of Malaysia. And that might be a big part of the problem.

Asia's entrepreneurs are not good at building brands. That is the conventional wisdom. And traditionally it's true. Mostly they remain traders who make money by dealing in high-volume, low-margin commodities and who loathe spending on intangibles such as consumer research, marketing and brand development.

But a strong brand means higher margins. Many Asian entrepreneurs understand this but lack expertise in brand building. So some have adopted a backdoor method of owning a brand: they have bought into existing brands that have been developed in the West. Malaysians have been particularly keen to take this route. Several well-known Australian brand names such as Snappy Tom pet food, Safcol canned tuna and Video Ezy now have Malaysian owners, for example.

The acquisition of Laura Ashley by Malaysian businessman Khoo Kay Peng and his MUI Group is an example on the international scene. The retailer has hundreds of stores worldwide and 30 franchised outlets in Australia including its prominent Melbourne Central store in Lonsdale Street. (MUI also controls ASX-listed Network Foods.)

Famous for its floral print fabrics and dresses, Laura Ashley was founded by the British designer of the same name. Ashley died in 1985 from a brain hemorrhage after falling down the stairs at her daughter's English country home on her 60th birthday. The company was publicly floated the following year and began to make losses soon after.

By 1998, Laura Ashley was in danger of collapse. MUI Group entered, paying $US73 million for a 40 per cent stake. This recapitalised the chain and, for its part, MUI imagined it was picking up a ready-made international brand cheaply. But was MUI well placed to handle a now struggling international brand? With interests in hotels, resorts, food, media, travel, property, construction and financial services, to say that group management was stretched is something of an understatement. MUI struggled to restore Laura Ashley to profitability. It now is, but for how long? Sales slumped a massive 11.4 per cent last year.

Like-for-like sales in Britain fell 10.2 per cent and 22 stores were closed (though six new ones opened). Reportedly, sales are down another 14 per cent this year.

Management at Laura Ashley has been unstable too: the company has had 10 chief executives in 14 years (which admittedly also takes in the period before MUI Group acquired control). The past few CEOs have been Malaysian including the current CEO, Lillian Tan. She has retailing experience in Malaysia, but even in the relatively benign Malaysian market MUI's retailing interests have struggled. And now Tan must manage Laura Ashley worldwide, including in the all-important but fiercely competitive London retail market.

The company last week announced it would close its high-visibility flagship Regent Street store, near London's busy Oxford Circus tube station. It will be a big blow to the brand. The premises have not seen a rent rise since 1957. The rent is to increase 19 times its current level.

A company statement said such a hike would make it unprofitable to continue. What it was really saying is that the store hasn't really been profitable on today's commercial terms all along. Regular sales and offers are eating into margins and have left customers wondering if they should ever pay full price for anything at Laura Ashley. This week, for example, it is offering customers in Britain up to half off on its home furnishings range.

Khoo, who now has a 24 per cent stake as well as MUI's 34 per cent, can hardly afford problems at Laura Ashley. MUI Group is hundreds of millions in debt (earnings do not cover debt repayments), is way too complex and has well-known corporate governance problems. It is now very much on the nose with investors. Its listed Malaysian companies are doing poorly: MUI Industries, MUI Properties and Pan Malaysia Corporation lost a combined $US547 million last year. The group has been selling assets to plug holes in its balance sheets, including the Victoria Hotel in Little Collins Street, its cement business in Malaysia and, as of last week, eight hotels in Britain, which raised $US60 million ($A78 million) in cash.

Khoo is an active fundamentalist Christian who has traded assets among his network of fellow Christian entrepreneurs. He has formed joint ventures with American evangelist Pat Robertson (founder of the Christian Coalition) and bought two family hotels in North Carolina from Jim Bakker, another former televangelist. And on taking control of Laura Ashley, Khoo appointed Pat Robertson to its board of directors. (Robertson resigned in mid-1999.)

Rumours have circulated that with all Khoo's problems, Laura Ashley might be the next asset on the block. You can bet that insiders have been sounded out about the stake already. Possible buyers include Indonesia's Riady family, which already has big retailing interests in Indonesia and might be looking for an international brand of its own. They are ethnically Chinese, too, importantly are part of Khoo's fundamentalist Christian network and have done business with him in the past.

If the stake comes onto the open market, it will only be because it has been rejected by friends and other insiders already.
  - 30 June 2005  MALAYSIA TODAY

Editor's notes:   Tan Sri Khoo sold his interest in the South China Morning Post and invested in Laura Ashley in 1998 or thereabouts.

Dr. Khoo Kay Peng received Christ in 1976 and was baptized that same year together with his wife, Pauline and children. He is the Chief Executive of Malaysia United Industries, a vibrant, growing corporation. He ascribes his success in the business world to God's grace and blessing on his life. His contribution to nation-building has earned him two titles, "DATO" and "TAN SRI," awarded both by the Sultan of the State of Johor and the King of the Nation of Malaysia. The Prime Minister appointed him Chairman of the Tourist Development Corporation in 1995. The Curtin University of Technology in Perth, Western Australia, conferred a Doctor of Letters to him for his contribution to education. He lives a God-fearing life and always desires to do the will of God.  - AGTS

Editors note:   Tan Sri K.P. Khoo is a valued client whose friendship we have been blessed for over two decades now.  

 


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