Is the long-standing Wee-Gokongwei rivalry over UIC set to soften?

Singapore

THE state of play over Singapore-listed United Industrial Corp (UIC), the biggest office landlord in the city state long embroiled in a tug-of-war between two of South-east Asia's wealthiest families - Singapore's Wee and the Philippines' Gokongwei - could shift gear with the recent passing of billionaire John Gokongwei.

At least, that's what the market may be indicating.

On Monday, following the weekend news of Mr Gokongwei's death, the generally subdued UIC stock saw trading volumes jump nine times higher than the daily average with 430,000 shares done and finished at an over three-month high of S$2.95 - up 10 Singapore cents or 3.5 per cent. The counter's performance was even more stark against losses in the Singapore bourse and its regional peers as sentiments were rattled by fresh violence in Hong Kong's prolonged protest.

With the passing of Mr Gokongwei, 93, who according to Forbes, was the third-richest Filipino with a net worth of about US$5.3 billion (S$7.2 billion), questions have cropped up on whether the long-standing one-upmanship he had with Singapore's banking and property magnate Wee Cho Yaw over UIC may well be over - or will persist, this time, with his family members.

Presently, United Overseas Land (UOL), the Wee family's flagship property firm, owns 50.14 per cent in UIC while JG Summit Holdings, a Philippines-listed conglomerate which is the holding company of the Gokongwei family's business interest, owns 37.05 per cent of UIC.

UIC, a property group valued by the market at S$4.2 billion, owns extensive prime properties such as Clifford Centre, SGX Centre and The Gateway plus top-tier hotels including the Mandarin Oriental.

Truth is, the Filipino-Chinese billionaire and philanthropist had retired three years ago, passing the leadership of JG Summit, a company he founded and built into a sprawling empire spanning food products, air transportation, banking, hotels and real estate to his only son (among six siblings) Lance Yu Gokongwei.

Mr Lance is JG Summit's president and chief executive while James Go, Mr Gokongwei's youngest brother, is chairman. Both Mr Lance and Mr Go are also directors of UIC which has Mr Wee as chairman.

Back then, as the leadership baton was passed down, analysts had speculated that Mr Lance's stance on UIC may differ from his father's and this could present an opportunity for Mr Wee to take over UIC but this didn't happen as envisaged.

Since then, however, expectations have risen that UIC may be a target of privatisation. Further fanning such hopes is UIC's low free float of 12.8 per cent, close to the minimum threshold of 10 per cent that faces delisting risks.

Such expectations may have partly galvanised UIC's stock on Monday. The mainboard-listed property group had also released its third-quarter scorecard after market close last Friday - it earned a net profit of S$53 million, 13 per cent less than a year ago on the back of a 28 per cent rise in revenue to S$194 million.

The business rivalry between Mr Wee, the patriarch of the Wee family that owns South-east Asia's third largest lender United Overseas Bank (UOB) and Mr Gokongwei began in 1999 when the Filipino tycoon scooped up a 23 per cent stake in UIC which counted Singapore Land, owner of Singapore's prime commercial real estate as its crown jewel, from crisis-struck Indonesia's Salim Group.

Over the ensuing decades, the titans would play catch up, taking turns to raise their holdings in UIC even as the other inched closer until two years ago when Mr Wee emerged with a clear upperhand, cementing his hold over the firm as a majority owner.

Previously, both men's mandatory conditional offers for UIC - Mr Gokongwei's bid in 2005, followed four years later by Mr Wee - had flopped, not least because of their underwhelming price tags. They would however, to some extent, employ the same playbook to shore up their holdings in UIC following the failed bids by taking advantage of a quirk in Singapore's takeover code that allowed them to accumulate up to one per cent of the company stock every six months.

Now, the notion that the two-decade-long Wee-Gokongwei rivalry over UIC may soften with the passing of Mr Gokongwei, if true, could shift the dynamics for the property firm. Or not.

One observer said: "South-east Asian billionaires consider Singapore as a safe haven to keep their money. The Gokongweis do not need the money. They probably have enough liquidity, so my guess is they would rather keep the money in the property firm as a long-term interest".

"Unless, of course, they are offered a great exit price."

Based on Mr Wee's dexterous manoeuvrings up till now to grab as much of UIC "on the cheap", however, one would be well advised not to hold one's breath.