Cheng family’s succession plans raise questions about who will take over the business | Insurance Business Asia
Cheng family’s succession plans raise questions about who will take over the business
Henry Cheng is still looking for who is best fitted for the leading the family business
Henry Cheng, a billionaire in Hong Kong who has a net worth of $21.6 billion, had said that his family business was yet to name a successor, which raised questions about the long-held idea that his eldest son, Adrian Cheng, will be taking over the business, according to a report by Bloomberg.
Henry said that he was still looking into who will be best fit to lead the business and he may also consider hiring someone outside of the family. However, he also said that it was not necessary to have a single leader as the family had businesses in multiple industries.
Adrian is the current chief executive officer of New World Development Co. (NWD), which is one of the largest real estate companies in Hong Kong. His sister, Sonia Cheng, is in charge of the Rosewood Hotel Group.
“While Adrian Cheng is the de facto leader of NWD for now, we think there is likelihood for Henry to select external professionals to take the helm,” said Jeff Zhang, an analyst at Morningstar in Hong Kong.
“Investors may remain unimpressed with NWD’s high gearing ratio and subdued profitability compared to Hong Kong developer peers,” he added.
Under Adrian’s leadership, NWD had grown with some of its investments including a mega mall-office complex next to the city’s airport as well as various projects in mainland China. However, its high leverage coupled with rising interest rates and the effect of a property slump in mainland China had fostered concerns among its investors.
NWD shares had risen to 1.1% in Hong Kong trading on Monday, but the stock had dropped by 30% this year which was more than the Hang Seng Index benchmark which was a 10% loss.
Its net debt to shareholders’ equity was at 93.5% by the end of June, as recorded by Bloomberg Intelligence. However, analysts from Bloomberg Intelligence found that the ratio could rise to 122.3% if the value of the firm’s investment properties and the operating profit from property sales and rental income saw a decline.
Henry’s father, the late Cheng Yu-tong, built the family business from jewellery and real estate. Henry’s net worth is currently $21.6 billion, which makes him the third-richest person in Hong Kong, according to the Bloomberg Billionaires Index.
Henry had also stated that he wanted to spin off different businesses so that they could be listed at an appropriate time and environment in order to boost transparency.
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