In Hong Kong, we build a global business empire

Chapter 755 They're scared! Standard Chartered Bank is truly scared!

The noise from the press conference had not completely subsided, and only the busy figures of staff cleaning up the mess remained in the conference hall.

The seemingly restrained yet turbulent handshake between Lin Haoran and Li Jiacheng, broadcast live on TVB Jade, has become the most shocking business scene in Hong Kong this Monday.

Who would have thought that this business competition would end so quickly?

Last Thursday, Galaxy Securities suddenly made a large-scale purchase of shares in Cheung Kong Holdings and Hutchison Whampoa. By noon, it announced that it had acquired more than 30% of Cheung Kong Holdings' shares and had become the largest shareholder of Hutchison Whampoa.

At the time, everyone thought that the battle for control of the company had only just begun and that the two sides would fight back and forth, making it a very exciting affair.

However, just two days later, news broke that some shareholders of Cheung Kong Holdings had "defected" and betrayed Li Ka-shing.

Just four days after the incident, this Monday, the battle has already been decided as the two key figures reappeared in the public eye!

Lin Haoran's victory was so decisive and swift that it surprised everyone.

Throughout the entire ordeal, we never saw Li Jiacheng use any retaliatory measures.

Was Li Jiacheng defeated so easily?
Although no one could believe what they were seeing, the undeniable facts were right there in front of them, leaving them no choice but to believe it.

No one would consider Li Jiacheng a weakling.

After all, he made a stunning move, like a snake swallowing an elephant, and successfully acquired Hutchison Whampoa from Huifeng Bank at a very low cost. No one else could have done it with such courage and methods!
Therefore, the only reasonable explanation is that Lin Haoran is simply too powerful, so powerful that even a powerful figure like Li Jiacheng, who dominates the business world, was easily defeated by him.

Previously, Jardine Matheson and HSBC had also fallen victim to Lin Haoran, but their defeats were far less swift than this.

At this moment, Lin Haoran silenced all the bigwigs in Hong Kong's top business district.

Nowadays, the bigwigs in Hong Kong's business world wouldn't dare to provoke Lin Haoran anymore. To be precise, they're more worried that Lin Haoran will turn his attention to them.

Once Lin Haoran sets his sights on them, their hard-earned family business will likely be in grave danger!
At this moment, Lin Haoran's influence in Hong Kong's business world reached its peak.

Even Standard Chartered Bank has held a high-level meeting at its headquarters, and the meeting decided that Standard Chartered Bank will no longer seek to be enemies with Lin Haoran, nor will it seek to seize market share from Hang Seng Group.

This isn't simply admitting defeat; it's genuine fear.

They didn't want the Hong Kong market, which they had worked so hard to acquire, to be taken away by Lin Haoran again.

But they knew that if they continued to be enemies with Lin Haoran, it would only be a matter of time before Lin Haoran took over the Hong Kong market.

Even if Hang Seng Group fails to seize the market share of British-owned enterprises, it will be severely damaged and other forces will take advantage of the situation, just like when Standard Chartered Bank took over Huifeng Bank.

Standard Chartered Bank is scared.

There are too many examples in front of them; those who oppose Lin Haoran will not have a good outcome.

Although Standard Chartered Bank is a multinational financial group, under normal circumstances, they are indeed confident that they are not afraid of Lin Haoran.

However, after acquiring Huifeng Bank, their market in Hong Kong has become Standard Chartered Bank's largest market. They do not want to lose this largest market, so the best option is to coexist peacefully with Lin Haoran.

As for expanding market share in Hong Kong?

Forget about it. If they even have that thought, they'll likely be met with a brutal beating.

At that moment, Standard Chartered Bank backed down.

After the press conference ended, Li Ka-shing hurriedly left the Connaught Building and returned to the Chinese Building.

Facing Lin Haoran, he was a loser, constantly thinking about how he had been utterly defeated by him.

Therefore, he was unwilling to stay here for even a moment longer.

Inside the conference hall, the reporters left the scene satisfied, carrying their equipment with them.

Today, they have obtained enough interview material.

Therefore, the most important thing next is to get back to the company as soon as possible, find the best writers in the company, and write the most brilliant articles!
Ma Shimin and Lin Haoran walked out of the conference hall side by side and took the elevator back to their office.

“Boss, we should head over to the Hutchison Whampoa Building!” Ma Shimin suddenly said after they sat down.

Lin Haoran nodded. After Cheung Kong Holdings transferred 40% of its shares to Galaxy Securities, he actually held as much as 86.9% of the shares.

This is an extremely alarming shareholding ratio, meaning that if he goes any further, he could initiate a forced privatization of Hutchison Whampoa.

However, he did not allow Galaxy Securities to continue increasing its stake in Hutchison Whampoa today.

Besides the fact that Hutchison Whampoa's current share price is at a high level and not suitable for further share purchases, there is another more important reason: he is considering whether to completely privatize Hutchison Whampoa.

Unlike Hongkong Land, before Lin Haoran acquired Hongkong Land, Hongkong Land's biggest assets were various expensive commercial buildings in the core areas of Hong Kong.

These properties are mostly located in the core business districts of Hong Kong, such as Central, Sheung Wan, Causeway Bay, Wan Chai, and Tsim Sha Tsui.

The annual rent alone is enough for Hongkong Land Group to maintain a stable cash flow and considerable profits.

Therefore, privatizing Jardine Matheson would prevent its high-quality assets from being exposed to the public eye, making it easier for Lam Ho-yin to carry out longer-term, and perhaps more discreet, asset integration and operation.

But Hutchison Whampoa was quite different.

Hutchison Whampoa's business is deeply intertwined, spanning many sectors such as ports, retail, real estate, and import/export trade, making it a typical diversified multinational corporation.

Its value lies not only in its existing assets, but also in its vast network, brand reputation, and market position in multiple industries.

Maintaining its listed status, utilizing the capital market for financing and expansion, and leveraging the transparency of its public company to enhance the overall credibility and influence of the Galaxy Strategic Development Committee may be more strategic than complete privatization.

Most importantly, it is indeed a bit excessive to completely privatize all the acquired companies.

"Is the boss considering Hutchison Whampoa's future positioning?" Ma Shimin keenly noticed Lin Haoran's thoughtfulness and asked softly.

"Hmm, tell me, should I privatize Hutchison Whampoa? Or should I keep it a listed company?" Lin Haoran countered.

He's so rich now that it would be very easy for him to privatize Hutchison Whampoa.

Moreover, its subsidiary Galaxy Securities now holds a whopping 86.9% stake, so privatization is just a matter of time.

“Boss, as a professional manager, I suggest that Hutchison Whampoa retaining its status as a listed company is the best option,” Ma Shimin replied without hesitation.

"Oh? Why is that?" Lin Haoran looked at Ma Shimin, his eyes filled with a sense of testing.

He already had a decision in mind, but he was eager to hear the specific insights of this future chairman of the "Galaxy Strategic Development Committee".

Ma Shimin briefly organized his thoughts and began to explain clearly and logically, his tone filled with professional prudence and foresight:
"Boss, I think there are three reasons."

"First, there is the financing platform and its credit endorsement."

Hutchison Whampoa has a highly diversified business portfolio, including ports, retail, and real estate, all of which are capital-intensive industries. Whether it expands or makes acquisitions in the future, it will require substantial financial support.

Maintaining its listed status is equivalent to having a powerful and sustainable financing platform. We can obtain the funds needed for development at low cost through various means such as issuing new shares and bonds.

At the same time, as a strictly regulated and financially transparent listed company, it is a golden brand in itself, which is crucial for us to conduct business in the international market, obtain bank credit and the trust of partners.

Privatizing it would give us absolute control, but it would also mean that we would bear all capital expenditures alone and lose the opportunity to leverage public capital, which would be a losing proposition.

Although you, boss, have no shortage of funds, investing all the funds yourself is not the way to maximize profits; on the contrary, it may limit the speed and scale of the company's development.

After all, the power of the capital market is boundless. By leveraging the platform of listed companies, we can access resources far exceeding our own capabilities and achieve more rapid expansion.” Ma Shimin analyzed clearly and logically.

Lin Haoran nodded slightly, signaling him to continue.

Encouraged, Ma Shimin continued, "Secondly, is market influence and strategic layout."

As a well-known company listed on the Hong Kong Stock Exchange, Hutchison Whampoa's stock performance and market dynamics are constantly watched by global investors.

This attention itself is an intangible asset that can bring us many strategic opportunities.

For example, by interacting with various investors, we can better understand market trends and industry dynamics, and adjust the company's strategic direction in a timely manner.

Moreover, being a listed company helps us enhance our international reputation and brand recognition, attracting more outstanding talent and partners.

When expanding our overseas business, local governments and regulatory agencies often prefer to cooperate with listed companies that have a good reputation and transparency, which undoubtedly removes many obstacles to our globalization strategy.

If privatization is chosen, Hutchison Whampoa will gradually fade from public view, and its market influence will decline accordingly.

In today's fiercely competitive business world, losing market attention means losing many potential opportunities, which is extremely detrimental to our long-term goal of building a global business empire.

Lin Haoran fell into deep thought, his fingers tapping lightly on the table as he weighed the pros and cons in his mind.

Seeing this, Ma Shimin paused briefly before continuing to explain the third reason: "The third is risk diversification and stability. Listed companies are required to follow strict financial reporting and information disclosure systems, which makes the company's operations more transparent and easier to gain investors' trust."

For diversified companies like Hutchison Whampoa, this transparency helps mitigate risk.

Different business segments may perform differently in different market environments. Through the platform of a listed company, investors can value and invest in different businesses based on their own judgment, thereby diversifying the overall risk of the company to a certain extent.

Once privatized, the company's internal decision-making and operations will become more closed. While this may improve decision-making efficiency, it can also easily breed internal management and financial risks.

The lack of external supervision and checks and balances means that any decision-making errors or management loopholes could lead to huge losses for the company.

Boss, we're pursuing long-term, stable development; we can't let a momentary desire for control cause us to ignore potential risks.

After listening to Ma Shimin's analysis, Lin Haoran leaned back in his chair and let out a long sigh of relief.

He had to admit that Ma Shimin's insights were very unique and comprehensive, taking into account all the key aspects of the company's development.

As an ambitious business leader, he craved control, and the complete privatization of Hutchison Whampoa would undoubtedly satisfy his pursuit of absolute control.

However, from the perspective of the company's long-term strategic development, retaining its status as a listed company seems to be a wiser choice.

In addition, of all that Ma Shimin said, there was one point he highly agreed with, which also made him reflect deeply.

Previously, as a time traveler, he had foreseen many major events in advance thanks to his precognitive abilities, such as the turbulent battle for Wharf Holdings, the surging oil crisis, and the soaring price of gold.

Relying on this crucial information he knew in advance, he made every move with perfect accuracy, earning a fortune.

As a result, the wealth he accumulated was beyond imagination.

He had so much money that he felt he didn't need external financing to expand his business, so he might as well privatize the company, since he had plenty of cash on hand.

However, as Ma Shimin said, although corporate privatization has certain advantages, in the long run, the disadvantages outweigh the advantages.

Listed companies have their own unique advantages, which is why business tycoons choose to put their companies on the capital market.

Do those big shots really need money?
of course not!

They do this because they believe that the company they lead, being a listed company, will have a greater advantage and a broader prospect in terms of resource integration, brand influence enhancement, and long-term development!

Come to think of it, he has already privatized quite a few companies.

On the Hong Kong side alone, there are companies such as Qingzhou Yingni, Wan On Properties, Hongkong Land Group, Hong Kong Grand Hotel, Heng Sheng Bank, and Bank of East Asia.

It's fair to say that he privatized far too many companies, and it was indeed excessive.

Of course, there are also quite a few companies that retain their listed status.

For example, Hong Kong Electric Holdings Limited, Hong Kong and China Gas Company Limited, Kowloon Motor Bus Company, Hong Kong Telephone Company Limited, etc.

These companies are actually listed companies primarily because of their status as public utilities, which involve basic public welfare and have a significant social impact. Forcibly privatizing them could attract unnecessary regulatory attention and public pressure, which is why Lin Haoran allowed them to remain listed companies.

However, the strategic value of a purely commercial empire like Hutchison Whampoa far surpasses that of a public utility company.

Seeing Lin Haoran deep in thought, Ma Shimin added at the opportune moment: "Boss, there is one more crucial point. The authority and influence of our soon-to-be-established 'Galaxy Strategic Development Committee' require the support of heavyweight listed companies under its umbrella."

As a benchmark conglomerate in Hong Kong and even Asia, Hutchison Whampoa's listing status is itself the best endorsement of the committee's governance capabilities and strategic vision.

If even Hutchison Whampoa is privatized, outsiders might question whether our ecosystem truly has the ability to empower public companies, or is merely a closed tool for capital operations.

These words truly touched Lin Haoran.

His ambition in building the "Galaxy" system goes far beyond simply accumulating wealth; it's about creating a globally influential business ecosystem.

Simply put, he wants to build a global behemoth conglomerate!

Now that everything has been privatized, how can we bring in other powerful conglomerates to cooperate?
Going it alone is fine on your own turf, but if you offend local financial groups in places like the United States or Europe, they can use political tools or other means to deal with you in no time.

Therefore, it is indeed appropriate to retain some benchmark listed companies.

The listed companies he currently controls, whether they are Hong Kong Electric Holdings, Hong Kong and China Gas, Kowloon Motor Bus, or Hong Kong Telephone, are actually mostly regional companies. They have reached their development bottlenecks and it is difficult for them to achieve leapfrog global expansion.

Their value lies in providing stable cash flow and local influence, but they cannot shoulder the heavy responsibility of being the global flagship of "Galaxy".

After all, in most countries and regions, public utility enterprises, which are related to people's livelihoods and interests, are mostly controlled by local governments or local business tycoons, making it difficult for outside companies to break into the market.

Hutchison Whampoa, on the other hand, is completely different.

It is inherently international, with multiple ports, retail networks, and trade channels.

Retaining its listed status is not only for financing and reputation, but also for building an open cooperation platform.

In the future, if Galaxy wants to expand its territory globally, it will inevitably need to establish alliances with capital, enterprises, and even governments in various regions.

A transparent Hutchison Whampoa with fair market value is the best "stepping stone" and "credit collateral".

Potential partners can clearly assess its strength through the capital market, which is much more intuitive and credible than privately presenting a bunch of private company financial statements.

As for Hongkong Land, although it is now much stronger than Hutchison Whampoa, it has ultimately been privatized by him and is destined to be his private property.

While privatization can bring a sense of complete control, it may also label the company as "closed," "mysterious," or even "exclusive," which runs counter to its long-term goals.

Having figured this out, Lin Haoran felt a sense of clarity.

He looked at Simon Murray and said with satisfaction, “Mr. Murray, you are right. Hutchison Whampoa must retain its listed status. It is not only our platform for financing and expansion, but also the banner of ‘Galaxy’ to the capital market and the global business world.”

What we need to do is not to pocket it, but to make this flag fly higher and farther under our guidance!

Changing the subject, Lin Haoran raised a question: "But now we already hold a full 86.9% of the shares. According to the current laws and regulations governing listed companies in Hong Kong, can it continue to maintain its status as a listed company?"

This is a technical issue that touches on the core of listing rules.

An excessively high shareholding ratio can lead to insufficient public shareholding, which may indeed trigger delisting conditions.

Ma Shimin was clearly quite knowledgeable about these matters. He calmly replied, "Boss, you have considered this very thoroughly. According to the listing rules of the Stock Exchange, in order to ensure sufficient market liquidity, listed companies must maintain a minimum public shareholding ratio, which is usually 25%."

He paused for a moment, then continued, "However, rules are rigid, but people are flexible. Our current shareholding ratio of 86.9% does indeed far exceed the red line."

However, privatization is not the only way to solve this problem; we have at least two compliant and common operational solutions.

"Oh? Which two options?" Lin Haoran became interested.

He naturally knew that Ma Shimin was very experienced in capital market operations.

He could guess one of the two options Ma Shimin mentioned, which was to reduce his shareholding.

As expected, Ma Shimin quickly revealed it.

“The first option, and the most direct method, is to reduce our shareholding.” Ma Shimin held up his index finger. “We can offer some of our Hutchison Whampoa shares to the market to reduce our shareholding to 75% or slightly lower, in order to meet the public shareholding requirements.”

This has several advantages: First, we can immediately recover a large sum of cash, which can be used for other investments by 'Galaxy';

Secondly, it sends a clear signal to the market that we have no intention of privatization and are willing to share the benefits with public investors, which can greatly boost market confidence in Hutchison Whampoa.

Finally, a successful placement can revitalize Hutchison Whampoa's stock liquidity and attract more institutional investors.

Lin Haoran nodded. This plan was simple, direct, and a standard procedure. "And what about the second plan?"

“The second option is more flexible and is called ‘whitewash exemption’ and subsequent arrangements,” Ma Shimin explained. “Since our shareholding ratio passively exceeded 75% through a series of acquisitions, we did not intend to circumvent the rules from the beginning.”

We can apply to the Securities and Futures Commission and the stock exchange for a 'cleaning exemption,' which would exempt us from the delisting obligation caused by triggering a general offer.

While obtaining the exemption, we need to submit to the regulator a clear plan to restore the public float to a compliant level within a specific period, such as 12 months.

This plan could include a rights issue like the first option, or it could be implemented at a suitable time in the future by issuing new shares, such as to finance specific M&A projects, to dilute our own shareholding and thus indirectly increase public shareholding.

This approach gives us a longer time window and greater operational flexibility.

Ma Shimin further analyzed: "Boss, I personally prefer the first option, which is to actively reduce holdings through placement."

Because of its transparent and rapid operation, it can quickly dispel market doubts and establish our image of adhering to rules and pursuing open and win-win cooperation.

Moreover, given the current high level of market attention on Hutchison Whampoa and its relatively high share price, the placement could achieve a very desirable price.

This is akin to cashing in on some of our "paper wealth," while simultaneously introducing more strategic investors to solidify Hutchison Whampoa's future development and strengthening its shareholder base.

(End of this chapter)