It is the second biggest IPO in Hong Kong this year. But the size of Lumena’s $149 million offering – which began trading this week – is less interesting than the man behind the company. That’s because he’s the same billionaire who says he is buying the Hummer brand.
Li Yan controls Tenzhong Heavy Industry Machinery, the firm which has offered to buy the iconic American gas-guzzler from GM (see WiC19).
But in the Lumena Resources prospectus he goes by the name Suolang Duoji. The Oriental Morning Post explains that this name is Tibetan, and may have been adopted by the Buddhist Li for religious reasons. Suolang means ‘blessing’ and ‘luck’; while Duoji stands for ‘King Kong’ and connotes strength and toughness.
With his dual identity, a degree of mystery inevitably surrounds the billionaire entrepreneur.
But the Lumena IPO and the bid for Hummer have raised his profile significantly. The Chinese media has spent the past fortnight trying to find out more about him.
The newspaper Money Week – which begins its article with the complaint that Li doesn’t answer his mobile phone as often as he should – says he was born in Zigong in Sichuan province, and started out as a blue collar worker with the city’s maintenance division.
In the mid-1980s he left the government’s employ to start his own firm, Huatong Road & Bridge Company – where he made his first fortune in construction.
Li then acquired a timber processing plant from the state. He spotted that the company’s valulay in its land – which he was able toborrow against.
He now has three business lines.Tengzhong Heavy – which plans tobuy Hummer – is based in Chengdu and manufactures heavy machinery and vehicles such as dump trucks. It has been expanding through a wave of M&A.
The second business line, based in the Sichuanese city of Deyang, is involved in plastics, and manufactures polyphenylene sulfide.
The third line was acquired in 2004, when Li transformed Lumena from a sluggish state-owned enterprise into a highly successful business.
The firm makes thenardite, an important raw material for the manufacture of detergents, pharmaceutical products and paper pulping. According to FinanceAsia Lumena’s earnings have risen tenfold since Li took over, and the firm now enjoys 11% of the global thenardite market. It is expected to make Rmb500 million ($73 million) in profit this year.
Former associates of Li told inquisitive newspapers that he is a determined character who rarely fails in his endeavours. But he remains modest in appearance, and guarded with his words. The low profile entrepreneur collects Han Dynasty antiques and has assets worth an estimated Rmb5 billion.
In the IPO, Li sold 30% of Lumena – of which he is chairman – decreasing his own stake to 40%. He picked up HK$346 million ($45 million) in the process, a move which the China Daily reported was for “personal business purposes”.
It is not clear if there is a connection between the timing of the IPO and the Hummer bid.
In one of his few public statements, Li admitted that negotiations over Hummer have actually been ongoing for eight months.
But no one knows the exact price tag – it has been put at anywhere between $100 million and half a billion dollars – and it is unclear how it will be financed. Which leads some media to question whether Li sold his Lumena stock to help pay for Hummer.
Lumena, meanwhile, is the investor community’s first experience of Li. And so far it has been a happy one. On its first day of trading, Lumena stock rose 14%, even as the Hang Seng Index declined.
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