The latest installment of the Raffles Conversation in The Business Times features another Indonesian-Chinese tycoon. This time, it's Stephen Riady of the Lippo group in Indonesia and Singapore.
The piece, though colourful, is very sketchy about the problems faced by the group during the tumultuous years of the regional financial crisis a decade ago. One also doesn't get a good sense of the size of the family's empire and its long-term strategic business plans.
The devout tycoon
Stephen Riady, president of the Lippo conglomerate, talks to CHOW PENN NEE about why faith and business can mix, the prospects for real estate, and the group's future plans
A HUGE signboard for the Lippo development Newton One at the junction of Newton and Dunearn Road is emblazoned with the words 'Fully Sold, Thanks be to God'.
Stephen Riady, president of Indonesian conglomerate, the Lippo Group, is not afraid to wear his faith on his sleeve. Dotted around the island, his group's projects bear testament to his strong beliefs.
'Our development at Sentosa Cove is expected to have very good response too, when the results come out next month. For that one, I'm going to put up a signboard with the phrase 'Praise be to God', he says with delight, his arms gesturing animatedly.
Unapologetic about his enthusiasm for religion, Mr Riady says this is the best way to show one's faith. 'When you proclaim openly, you signify your commitment to Christianity. I become stronger after saying it and I feel I'm strengthening my faith,' says the 46-year-old Mr Riady. Ironically, he was the last in his family to convert - in 1992 as a 31-year-old - after his siblings and parents had taken the plunge.
Apparently, many staff of the Lippo group are also devout and have been fervently praying for the success of the group's projects. 'In fact, they were the ones who suggested I put a phrase thanking God for the developments being fully taken up,' reveals Mr Riady.
Whether or not through divine intervention, Lippo's prominence in the real estate space in Singapore has been growing. It had started snapping up properties on choice parcels of land long before the property-price frenzy took hold. 'When the Singapore government talked about the plans to remake Singapore, lots of people heard it,' he says. 'But we were the ones who believed in it, and took action early.'
This is the hallmark of a wise investor, he explains. 'If you see something that you believe in, that other people have not seen yet, will you just wait there? No. You get so excited you just go out to the market to find friends and brokers and see if there are opportunities.' Fortunately for him, at that time, there were few bidders and plenty of opportunities.
The group started its buying spree with Lippo's head office at Shenton Way at the end of 2004. It was subsequently sold for more than double the $151 million purchase price at $350 million earlier this year. Mr Riady said signs were becoming clearer in 2005 and 2006 that the Singapore economy was in good shape, with more investors streaming in. Then it was full steam ahead for the group, which chalked up a buy every month.
The Lippo name came to the fore with high profile buys from local banks United Overseas Bank (UOB) and OCBC - which had to divest some of their attractive properties in order to comply with regulatory requirements. 'Those were opportunities of a life-time, they were prime assets,' Mr Riady recalls.
Overseas Union Enterprise (OUE) - bought in a joint venture with Malaysian tycoon Ananda Krishnan from UOB - owns Meritus Mandarin hotel, the office building Overseas Union House, and the adjacent Change Alley Aerial Plaza. Lippo also bought retailer Robinsons from OCBC.
The tally in Singapore so far: nine residential developments, five commercial properties and two retail brands, with a total value of $4 billion. Collectively, these assets are a perfect fit for a group which had decided to focus primarily on real estate and retailing after the 1997 Asian financial crisis hit. Before that, its businesses ran the gamut of telecommunications, manufacturing, banking and other sectors.
Mr Riady - who has just been named Ernst & Young Strategic Investment Entrepreneur of the Year - is not about to slow down. He hopes to increase the value of the group's portfolio from US$7 billion in assets at present to US$20 billion within five years.
He does not think property prices here have reached their peak. 'I think not for the next four to five years,' he predicts. Ever the astute businessman, he's already looking for new opportunities. Right now, he's putting his money on properties that are almost completed.
'The developments that are going to be completed in six months to one year's time, there will be a lot of demand for them,' he says, pointing out that people who have sold their homes in en-bloc sales will need places to stay. There's also a dearth of soon-to-be completed projects.
His plan for his next few developments is to keep a few choice blocks for renting out. 'For the launch of Sentosa Cove next month, the plan is to sell half and then keep the other half and rent out,' he says, pointing to the booming demand for service apartments.
But what about the possible fallout from the US sub-prime mortgage crisis? It doesn't seem to faze him; there's still no problem borrowing from banks here, he says, and liquidity is abundant. 'I think the Asian market fundamentals are still strong, governments have accumulated huge foreign exchange reserves and companies in Asia have healthy balance sheets.'
To him, Asia and the US seem worlds apart. 'When I go to the US, people are talking about sub-prime,' he says. 'But in Asia, Hong Kong, China, Singapore, it's business as usual, people are still looking for opportunities to buy.' While transactions might slow in the next six to nine months, activity will return after that, he predicts.
Mr Riady's other core business, retail, is also humming along nicely. In the latest development, Lippo's Auric Pacific Group bought Delifrance - the chain of bakeries and cafes - from Prudential Asset Management Asia for $75.2 million earlier this month. Mr Riady said Delifrance is a 'good, strong brand' which would fit in with the food businesses Auric currently owns.
'Auric is involved in food manufacturing and distribution, but we would like to go direct into food retailing, straight to the consumers,' he said. Some of Auric's brands include Sunshine bread and SCS butter as well as a 29.9 per cent stake in Sesdaq-listed Food Junction Limited which operates a chain of food courts, Food Junction and Food Culture, in Singapore, Malaysia, Indonesia and China.
Delifrance's network of 230 outlets spanning Asia is a good way for Auric to distribute its other food products which do not have access to other markets outside Singapore, Mr Riady explained. 'We can sell SCS butter to Delifrance outlets in Hong Kong, for example, therefore using these overseas outlets to distribute our other food products,' he said.
In terms of clothing and department stores, his vision for the group's retail business is not just confined to Singapore but takes in the whole region, encompassing Indonesia, Hong Kong, China and Thailand. Growth for his retail business will be both organic and via acquisitions.
In China the group wants to grow organically, under the brand name Robbinz. 'We have started from scratch, with two stores in Guangdong. Two more will be opened in Tianjin and Chengdu, with the Tianjin store spanning one million sq ft - the largest single department store in the whole of China.'
'In the next three to five years, we plan to grow retailing from the present turnover of US$2 billion to US$5 billion for whole group.'
China is an important market for the group, but in the next 30-40 years. 'If we want to become the top businessmen in the world, Singapore is a little small, and we cannot ignore China,' says Mr Riady.
He plans to use Shanghai, rather than Hong Kong, as the base for Lippo's China operations in the future. 'If you want to be serious about the country, we have to be in that place, rather than operate from another territory,' he says.
Meanwhile, closer to home, Mr. Riady is determined to shrug off the bad press arising from the ousting of long-time Robinson directors in November last year.
'That episode was unexpected and I feel regretful over what has happened,' he says. But he is resolute in not letting the saga overshadow his plans for the department store. 'That was in the past. We now have better relationships with the current directors. Time will tell if I'm right or wrong. Let's see the results of Robinsons over the next few years.'
As president of Lippo group, Mr. Riady's ambit spans Singapore (where he is now based) plus Hong Kong and China. His attachment to Singapore goes way back; he studied here from the age of 10. In the years ahead, he sees Singapore becoming increasingly important for the group, which has shifted its head office here from Hong Kong. 'We want to make Singapore the regional office, outside Indonesia,' he says.
'The government here has good and far-sighted vision,' he adds. 'Its plan to remake Singapore into a completely different city is very positive for the market. That gives us a lot of confidence.'
In fact, the group will be raising up to $587.4 million with the planned listing in Singapore of a real estate investment trust (Reit) based on its retail properties in Indonesia. The Lippo-Mapletree Indonesia Retail Trust (LMIR) will offer 645.5 million units at 78 to 91 cents a unit, according to the trust's preliminary prospectus which has been lodged with the Monetary Authority of Singapore earlier this week.
Having made his first million in stock market investing while he was still studying for a finance degree at the University of Southern California, Mr. Riady was already subsumed into the family business - set up by his father Dr Mochtar Riady - two years before graduation.
He has since gone from working in various departments to heading the group's business in Singapore and Hong Kong. His brother James takes charge of the Indonesian business. Given his success, it is surprising to hear him say, not without a tinge of regret, 'actually if I had a choice I would have done something else, be a doctor or engineer'.
'My dad didn't say that I had to join the business, but in the early days, you already have the business, so somehow in university you just naturally major in business. You don't think about it.' Every school holiday would see him go back to Jakarta to work in different departments in the group's banking business.
Mr Riady doesn't want to impose the same routine on his children. 'The next generation, let them go, let them choose what they like,' he says amiably. What about succession? It's too early to say who will take over the business, he replies. For now, he is letting his children pursue what they want. Two of them are studying in his alma mater, while the third is 16 years old and studying at the Singapore American School
'It's important that we tell them they don't have to be in the family business. You see many people follow something that is not in their interest. Halfway through, they say that this is not what they want.' He relates how he meets friends of his children and they ask him for advice on a career 'that gives the most money and fame quickly'. But that may not be where their talents or interests lie, he says. 'It's important that you see what areas you like and can serve best. If you can serve it well, then the money will follow.'
Mr Riady's Christian faith has helped inspire his philanthropy. Like most businessmen, making money, friends, entertainment, were top of the list. 'Even family was ranked number 3 or 4, so God was nowhere on this list,' he says. That changed 15 years ago.
Joy of giving
'I have become less self-centred since becoming a Christian. The joy and satisfaction is much greater when you give. He relates his first act of giving, when he was still working in Hong Kong, where he attended a camp organised by a Christian organisation to help recovering drug addicts. 'They only asked for US$3,000 from me, and of course I helped. There was no unwillingness or burden at all on my part, since it was only US$3,000.'
A few months later, they invited him to their Christmas party, and the people who attended the camp were all wearing new T-shirts. 'A few hundred people were able to wear new T-shirts because of my gift. I had never experienced that before.'
Today, the Lippo group gives to a variety of causes, particularly education and religion.
It donated $21 million to NUS Business School in the form of $15 million to support the Mochtar Riady Building, and $6 million to create two distinguished professorships. The group gives to various churches and schools in Indonesia, Hong Kong, China, and Vietnam. 'We set aside millions each year,' he says proudly. 'And every year it is increasing.