A confident move

Jardines is unwinding its cross-shareholding


Tessa Keswick – wife of former Jardine Matheson taipan Henry Keswick – published a lively memoir last year about her four decades of contact with China. One of the more intriguing aspects of The Colour of the Sky After Rain was the detail it offered on the couple’s friendships with Chinese business tycoons.

A burgeoning band of guests has been welcomed at the Keswick’s UK manor house in Oare over the past 20 years, including leading figures from the Yabuli Forum (an annual gathering of private-sector bosses in the Chinese town of the same name, see WiC393) and even Chen Dongsheng – Mao Zedong’s grandson-in-law (see WiC343).

The author also recounts how former Vanke boss Wang Shi would show up at their home at weekends. “[Wang] was taking time off from business to study Hebrew culture and language at Cambridge University… he would arrive suddenly at our house, sometimes unexpectedly, carrying a little backpack, having walked from the station. The backpack contained only one shirt; he would wash the one he was wearing at night,” she recalls.

Jardines’ relationship with Hong Kong’s leading businessmen in the 1980s was a more cautious one. Talks had begun between Britain and China over the colony’s future ownership and some Hong Kong Chinese tycoons – backed indirectly by Beijing – were eyeing up Jardine’s crown jewel Hongkong Land, the biggest landlord in the city’s business hub, Central.

To fend off hostile takeovers, Henry Keswick devised a crossholding structure between Jardine Matheson and a sister firm (and subsequently Jardine Strategic). The group also switched its primary listing from Hong Kong to Singapore in 1994 in a decision that defined a turbulent transitional era.

Most of the local moguls that locked horns with Keswick over the years have retired (see WiC402) – as has he. Jardines is now run by the younger generation of Ben and Adam Keswick (respectively executive chairman of Jardine Matheson and chairman of Matheson & Co). And in a sign of the company’s confidence in its prospects, the so-called ‘princely hong’ seems ready to drop the defensive shareholding that once protected it from predators.

The Hong Kong-based conglomerate announced this week that it will be unwinding the cross-holding. To do so Jardine Matheson plans to acquire the 15% stake in Jardine Strategic that it doesn’t already own in a $5.5 billion deal. Jardine Matheson will then become the sole holding company for all the subsidiaries.

The complicated shareholding has been blamed for curtailing wider investor interest in the group. Both Jardine Matheson and Jardine Strategic have traded at steep discounts to net asset value, the Financial Times notes. Covid-19 restrictions have also weighed on the group’s profitability more recently. Hongkong Land announced on Thursday that underlying net profit last year had fallen 11% to $963 million.

Yet Jardines has traded through much tougher times, calling Hong Kong home for nearly two centuries and playing a key role in the transformation of what Lord Palmerston once dismissed as a “barren rock”.

Analysts now wonder whether the company might follow the path of a series of mainland Chinese firms in seeking a secondary listing on Hong Kong’s bourse. Such a move would boost interest from the city’s retail investors and be seen favourably in Beijing as a stamp of approval for Hong Kong’s status as an international financial hub.

Singtao Daily says that Jardines isn’t likely to be a target for an unwanted takeover once the shareholding structure is revised. The Keswick family and related interests will still retain a 43% stake after the deal (and analysts have suggested that the family could always buy more Jardine Matheson stock if they need to ward off predators).

The group – which includes automotive giant Astra in Indonesia, Hong Kong retailer Dairy Farm and the hotelier Mandarin Oriental – has been expanding in mainland China in recent years. It bought a car dealership in 2014 (see WiC223); acquired a major stake in a Fujian-based supermarket chain (see WiC449); and set a land sale record in Shanghai last year when it paid Rmb31 billion ($4.7 billion) for a site on the Bund (see WiC487).

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