Yung family finds there is life after Citic

Yung dynastyWith the Yung family's last ties to state-owned conglomerate Citic now severed, princeling Larry Yung is building a new family empire

PUBLISHED : Monday, 20 October, 2014, 5:05am
UPDATED : Monday, 20 October, 2014, 5:45am

With his eldest son resigning from Citic as its non-executive director late last month, the last link of princeling Larry Yung Chi-kin's dynasty to the mainland's largest state-backed conglomerate seems to have been severed.

This is not the end for the Yung's legendary dynasty as 46-year-old Carl Yung Ming-jie may well join his 72-year-old father in a family venture he started in 2009 in which his two younger children and former Citic alumni came aboard to invest in mainland property and other investments.

Carl Yung and three other Citic directors resigned on September 26 while four new directors were appointed the same day. Citic said the reshuffle would "ensure effective and rigorous leadership, oversight and governance" after it bought 227 billion yuan (HK$286.6 billion) worth of assets from its parent to become the largest mainland conglomerate with interests from mining to real estate to financial services.

"Carl Yung may join his father's company. His father always wanted him to rejoin the family business," a source familiar with the situation told the South China Morning Post.

Many brokers had similar reactions as they pointed out Larry Yung loves working with his children, whether it was in Citic or in his new venture Yung's Enterprise Holdings.

Larry Yung set up the new outfit after he stepped down as chairman of Citic in April 2009. His term was marred by news the Securities and Futures Commission filed a HK$1.9 billion lawsuit to seek claims on behalf of 4,500 investors against Larry Yung and four former Citic directors and the company for alleged delays in disclosing HK$15.5 billion in foreign exchange losses in 2008.

The SFC alleged they did not reveal the losses in a September 12 circular but only disclosed it in a profit warning announcement six weeks later. The SFC filed a case against them with the Market Misconduct Tribunal but trial dates have not yet been fixed. If convicted, the tribunal can impose a penalty or ban those concerned from being directors up to 15 years.

Yung was joined by his two younger children Frances Yung Ming-fong and Andy, who became directors in Yung's Enterprise, according to data obtained from the Company Registry.

Known to the public as Prince Yung, Larry and his family are often the target of paparazzi and newspaper reporters due to his background, wealth and love for race horses.

"Mr Larry Yung was among the first generation of mainland entrepreneurs to establish a window company in Hong Kong. He is very friendly, opened minded and is someone who is willing to be part of the Hong Kong business community," said Chim Pui-chung, a former legislator for the financial services sector who knew Yung from the 1990s.

"He speaks Cantonese and is willing to talk and meet with Hong Kong businessmen and brokers. He attends parties, dresses well and drinks wine," added Chim.

Yung was also the first mainland Chinese to become a steward of the Hong Kong Jockey Club.

Under Larry Yung, Citic expanded into a conglomerate with a range of businesses from telecommunications, property, steel making and mining. He was also featured in the press from time to time not only for business but also for his private jet, cars, and foreign mansions. One of his acquisitions in 1993 was the country house of the late British Prime Minister Harold Macmillan.

After stepping down as chairman, Larry Yung pruned his holdings in Citic from 19 per cent in September 2008 to 4.98 per cent in 2012. He also sold down his shareholdings in another listed company Poly (Hong Kong) to raise HK$2.34 billion, according to stock exchange data.

Brokers believe the fund raising is aimed at supporting Yung's Enterprise so it can invest in mainland property and other projects. Besides his two younger children, Larry Yung also hired "Father of the red chips" Francis Leung Pak-to in March 2010 to manage a large project on the mainland for the company before Leung resigned in May, Company Registry records showed. Red chips refers to companies incorporated in Hong Kong but having mainland-backed parents.

There is scant information about Yung's Enterprise because it is not listed and has no website beyond its filing to the Company Registry showing it is a venture of the Yung clan and ex-Citic alumni.

Daughter Frances Yung is three years younger than Carl Yung and joined Citic in 1995. She was listed in the 2007 annual report as "director, group finance" of Citic while she was also the deputy chairman of Citic Pacific Communications and a director of New Hong Kong Tunnel Company, which operates the East Harbour Tunnel.

The youngest son, Andy Yung Ming-tai, worked as a personal assistant to his father - which was what all Larry Yung's children did when they started their careers, according to a source who formerly worked at Citic. According to his Linkedin profile, Andy is now managing director of Yung's Enterprise. He was an analyst at Morgan Stanley before joining Citic in August 2008.

Carl Yung is not yet a director of Yung's Enterprise. The low profile executive joined Citic in 1993 before being promoted to executive director from 2000 and a deputy managing director from 2007 to 2012. He was redesignated a non-executive director from December 2012 until last month.

Even after his father stepped down as chairman, Carl Yung was still active at Citic and was listed in the company's annual report in 2009 and 2010 as "chairman of Shanghai Citic Square Co and Shanghai New Westgate Garden Property Co, director of Citic Pacific China Holdings, and responsible for Hong Kong property business."

Carl and his siblings would be the fourth generation of the Yung family to become prominent in China's business and political sector.

Larry Yung's grandfather, Rong Desheng, established the family business by making flour and cotton gauzes between the first and second world war in Shanghai. The products connected the Rong family with overseas markets. (Rong and Yung are translations of the same Chinese surname).

His late father is China's vice-president Rong Yiren, who was named as the Red Capitalist on the mainland and was appointed by then paramount leader Deng Xiaoping to establish Citic Group in 1978.

The company became the primary vehicle to attract foreign capital into the mainland and facilitate the country's outward investments under reforms in the mainland's opening up to the world. Rong ran the business on the mainland until 1993 when he was named the nation's vice-president.

Born in Shanghai as the only son of Rong with two sisters, Larry Yung attended Tianjin University and took up electronic engineering. He then worked 14 years in the Ministry of Electric Power before he headed south to Hong Kong in the 1980s.

He made his name in Hong Kong by taking over a small locally listed company, Tylfull, in 1990, and injected assets including a 38.3 per cent equity stake in the airline Dragonair and two industrial plazas into the listed firm that became Citic Pacific, now known simply as Citic - becoming the first red chip listed in the city.

The listing of Citic made him a wealthy man.

Forbes ranked him No1 on its list of the 50 richest men in China, with an estimated net worth of US$1.9 billion in 2000. But the foreign exchange losses case in 2008 led him to step down in 2009 after police raided the office of Citic. Forbes has since revised down his personal wealth by 75 per cent to US$750 million in 2009, from US$3 billion in 2008.

After leaving Citic, Larry Yung has not held a directorship of any Hong Kong listed company. However, he is still often seen at the race track in Happy Valley or Sha Tin, where his love for the ponies endured.

Hong Kong Jockey Club data showed he has owned or co-owned 18 race horses over the past few decades, and two of them are still running. Yung is often photographed holding the reins of a winning horse. He became a member of the Hong Kong Jockey Club's board of stewards in 1994 and remained one until 2004.

Apollo Ng, vice-president of the Hong Kong Racehorse Owners Association, described Larry Yung as one of the most successful racehorse owners in the city, who devoted his time and money to promote the sport.

"Mr Yung's horses have won many important races in the city," Ng said. "Mr Yung always trusted his trainers and he was particularly good in partnering with Ivan Allan then. He is a horse owner who is willing to invest in a good horse. He respects the professional and would let the trainers to pick the horse and handle the training for him."

Ng added: "I have met him at many horse racing nights and once he invited me to his box. He can talk about everything from horse racing, charity, property and other business matters. People called him Prince Yung but he is always very friendly and humble and is very nice to everybody."

Additional reporting by Peggy Sito