IT started off as a tiny deposit-taking company 15 years ago, but now First Pacific Co is one of Asia's giants, its fingers in everything from marketing to finance and telecoms to property. In 1981, four Indonesian families - the Salim, Sutanto, Sudwikatmono and Risjad families - put up the capital to establish what they thought would be just an offshore financial services group. They bought into Overseas Union Finance, a deposit-taking company listed on the now-defunct Kowloon Stock Exchange, and injected assets into the firm they renamed First Pacific Finance. It then had a market capitalisation of just HK$12 million. Today, under the control of managing director Manuel Pangalinan, First Pacific's capitalisation has soared to US$3.5 billion and this year joined the Hang Seng Index. The blue chip company's portfolio of subsidiaries has grown to 13, of which six are listed around the region. Of the four families, who together control 53 per cent, the Salim family holds the biggest share, and Lim Siu-long is chairman. But driving the growth overseas and into other areas has been Mr Pangalinan. 'We started off as an intermediary of money, then became an intermediary for goods,' Derek Murphy, vice-president corporate communications, said. 'Those were our first two pillars, but in 1986, we got into property and in 1988, telecoms.' While the group's net earnings for the first half of this year slumped 29.7 per cent to $708.2 million, that was mainly because the group had one-off gains of $462.6 million in the same period last year. Total sales have soared 45 per cent to $24.7 billion. Analysts forecast a full-year net earnings drop of 22 per cent to $1.56 billion, mainly because of the first-half decline. The Hong Kong-based conglomerate's cash cow is marketing and distribution, but it has interests in banking, property and telecommunications in more than 40 countries worldwide. Although it makes most of its revenues from Europe and other countries outside Asia, it is in Asia and high-tech areas like telecoms that First Pacific sees its future. 'We see ourselves as a proxy for Asian growth because we're in a diverse range of Asia-Pacific countries,' Mr Murphy said. The group was listed on the Stock Exchange of Hong Kong in 1988 and made it to the Hang Seng Index last month. At the moment its marketing and distribution businesses make up 88 per cent of its sales. But its telecommunications operations are fast catching up. First Pacific's mobile phone and paging operations accounted for more than a third of earnings in the first half, compared to a quarter last year. Under its telecoms umbrella are Pacific Link in Hong Kong, Smart Communications in the Philippines, IndoLink in Indonesia, Escotel in India and Asia Link in China, all providing mobile phone services. Hong Kong mobile phone operator Pacific Link, taken over in 1988 when it was called Chinatel, now has a subscriber base of 230,000. It is also one of six companies in Hong Kong awarded a licence to operate a personal communications service, to be launched before the end of the third quarter of next year. Mr Murphy said: 'We had phenomenal growth in 1995, so we're expecting some slowdown in subscriber growth in 1996 because it's a competitive market. 'We recognise Pacific Link is in a more competitive market, in fact, we could see some consolidation in the industry. That's why we're looking for other telecommunications opportunities.' That has meant focusing on China, India, Indonesia and the Philippines, countries whose high populations and backward infrastructures equate to a low ratio of phones per capita. Due to be listed before the middle of next year, Smart, which the group controls along with Japan's NTT, already has a paging network and the licence for long-distance calls in the Philippines. Now First Pacific has to build up its infrastructure. 'As required by the licence, we have to instal a fixed-wire network, building up to 700,000 lines according to demand,' Mr Murphy said. 'This year, we contracted with Ericsson to build the first 188,000 lines. In time we believe Smart will be a fully integrated telecommunications company. Expansion is planned in Indonesia - where paging business Tech Pacific is moving into the cellular market - and also in India. The group recently entered into a 49 per cent-owned joint venture with Indian company Escorts to supply mobile phones in west Uttar Pradesh, Haryana and Kerala. Launches will be held in a city in each state in October or November, with the full commercial launch planned for the middle of next year. 'Although this will take time to be profitable, it will be in the long-term, as the country gradually deregulates and the middle-class grows,' Mr Murphy said. The latest telecoms joint venture embarked on by the group was in China. Last month Asia Link, the holding company for the group's telecoms businesses, said it had teamed up with China Merchants Holdings to provide financing and technical advice to Unicom Shenzhen, which would operate the GSM network in Shenzhen. There are plans to carry out similar ventures in Dongguan and Huizhou next year. Now the group has its sights set on Taiwan, which is planning to deregulate its telecommunications market. 'Nothing is confirmed, but we will look into bidding for one of the 12 cellular licences within the next 12 months,' Mr Murphy said. Besides their telecoms operations, property development, through Metro Pacific in the Philippines, is a key area for the business. The group has control of the huge Fort Bonifacio development site in Manila. Mr Murphy said: 'Despite early criticism of overspending to acquire the site, we believe this will bring us large revenue streams over the next 20 to 25 years. We realise that property cycles mean prices will go down as well as up, but over the long-term we are bullish about the Philippines as a target of investment and Fort Bonifacio, which is close to the airport and will have a proper transport system, will be a magnet.' First Pacific Davies is gradually moving out of property development in Hong Kong and into integrated property services, including agency work, sports facilities and the security guard business through its 93-per cent stake in Guardforce. First Pacific Bank, a product of the 1989 merger between Hong Nin Bank, which the group bought in 1987, and the Far East Bank, has built up its branch network, although it has no plans to expand overseas. After years of failing to get on the Hang Seng Index, First Pacific's blue-chip status is the best testament to how far it has come and how much it is bound to raise its profile among investors.
