Investor's faith in friend pays huge dividend

PUBLISHED : Tuesday, 20 November, 2007, 12:00am
UPDATED : Tuesday, 20 November, 2007, 12:00am

Liu Yuansheng, a Hong Kong businessman who helped set up the mainland's biggest property firm in the late 1980s, was crowned the most successful retail investor in the mainland.

Mr Liu bought 3.6 million shares from China Vanke in 1988 with about HK$4 million and held on to his stake even after his shares became tradable at the end of last year.

He increased his holding to more than 82 million shares following China Vanke's share sale earlier this year.

Estimated at 32.93 yuan a share by the end of yesterday's trading, Mr Liu's stake in the Shenzhen-listed China Vanke is worth about 2.7 billion yuan, an investment to return ratio of about 675.

Even stock guru Warren Buffett has only managed returns of 128 times the initial investment on his most celebrated purchase - a stake bought 30 years ago in the Washington Post.

Labelled by the media as 'China's most successful investor ever', little is known about Mr Liu's life.

Published records list Mr Liu as one of China Vanke's original 11 board members, who also include Wang Shi, the developer's founder and president.

A book titled Questioning Vanke, which describes Vanke's growth from a tiny trade business to the largest property developer in the mainland, says Mr Liu befriended Mr Wang before China Vanke's establishment in 1988.

At the time, Mr Wang was still a vendor importing video-cassette recorders from Hong Kong to the mainland.

Mr Liu was quoted in the book as saying that when Mr Wang visited him in Hong Kong, he was not interested in sightseeing but always asked to buy business books in local bookstores. 'I feel like he is a very capable and ambitious man and I have great belief in him,' Mr Liu says.

So when Mr Wang asked him for financial assistance in 1988 as foreign investors backing China Vanke suddenly pulled out, Mr Liu immediately jumped in and agreed to buy 3.6 million shares in the venture.

Mr Liu saw his shares increase following Vanke's improbable expansion in the following two decades.

The Shenzhen Economic Daily said Mr Liu had since emigrated to Canada but still talked to Mr Wang occasionally on important business decisions.

Mr Liu also appears to be the registered owner of Beijing Renda International Information Engineering, which sells Canada, Japan and United States-made projection machines in the mainland.

Renda also owns stock in about half a dozen mainland companies, ranging from property, information technology to the service sector.

No company official was available for comment.

Mr Liu seems capable of continuing to keep a low profile as long as he keeps his China Vanke stake in his pocket.

A friend in need

China Vanke's success is due in no small measure to a low-key investor

From an investment of HK$4 million, Mr Liu's stake is now worth, in yuan: 2.7b yuan