GUOCO Group is a Hong Kong-based conglomerate heavily weighted towards financial services, mainly through Hong Kong subsidiary Dao Heng Bank. The two other business areas are property development, through a 53 per cent holding in Singapore-based First Capital Corporation (FCC), and manufacturing and trading. Dao Heng Bank was acquired in March 1982 by Hong Leong Group, a retail and commercial bank operating 50 branches, 34 of which are owned. Its acquisition of Hang Lung Bank and Benchmark Bank propelled it to the middle rank of locally listed banks. Guoco paid $4.45 billion to the Government for the Overseas Trust Bank (OTB) acquisition in October. This purchase has radically changed the group's profile and outlook. The OTB merger created Hong Kong's third-largest local bank branch network in terms of attributable profit, and its fifth largest by total assets. Guoco is a part of the Hong Leong Group, controlled by Malaysian businessman Quek Leng Chan. While the group is a conglomerate in theory, the OTB acquisition and imminent listing of banking operations will make it essentially a financial-services holdingcompany with property and minor manufacturing interests. Securing the OTB acquisition was a notable achievement for Guoco given the strong array of competitors thought to have been bidding. Its previous successful stewardship of Hang Lung Bank must have been a key factor, but offering what was rumoured to have been the highest price must be seen as a good strategy. An integral part of the OTB deal - and a logical step considering the dominance of Guoco's banking operations - is the recently completed listing of the combined Dao Heng/OTB group (DHB). Given the strength of the stock market, and its conversion of the Dao Heng convertible preference shares, Guoco could afford to push the initial public offering price to 14.5 times June 1994 estimated earnings. Brokerage Smith New Court forecasts DHB will post $980 million for 1994, higher than its preliminary estimate, which envisaged that the debt burden for financing the OTB deal would restrict short-term earnings performance. The successful flotation of banking activities might appear to denude Guoco in terms of immediate business focus and impetus, but Guoco is not just a bank. It has always said its intention is to develop as a regional conglomerate along three distinct business lines: financial services, property and manufacturing. The next development phase will focus on fledgling manufacturing activities. With these and excellent track record on acquisitions, they have the potential to grow quickly, with an emphasis on China and ASEAN countries. The link with Hong Leong Group could also be a focus for further corporate and joint-venture activity.