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Hong Kong property

Hong Kong’s richest woman is still eyeing her biggest purchase – even though her paper wealth has halved

PUBLISHED : Tuesday, 20 March, 2018, 2:28pm
UPDATED : Thursday, 03 May, 2018, 7:19am

One of Hong Kong’s wealthiest women is still shopping for the biggest purchase of her life – a stake in the world’s most expensive office building – even though her wealth on paper has halved.

Pollyanna Chu Lee Yuet-wah, co-founder of Kingston Financial Group, said she is close to completing the financing for her 17 per cent stake in the HK$40.2 billion (US$5.15 billion) purchase of The Center, a 73-storey office tower in Central, from Li Ka-shing’s CK Asset Holdings. 

“This will be the biggest acquisition I have ever made,” Chu said by telephone when contacted by the South China Morning Post.

Chu has had half of her estimated US$12 billion fortune wiped out – on paper at least – since November by a collapse in Kingston’s stock price. Shares of her flagship company fell from a record high of HK$9.62 on November 30 to HK$4.01 on Monday.

Chu, who turns 60 in August, wasn’t perturbed. “I have a bigger private investment portfolio,” she said. “I was not excited when I was crowned as the richest woman” in Hong Kong by Forbes, she said. “For now, I do not feel bad.” 

Hong Kong’s richest woman loses half her fortune – on paper

Born Pollyanna Lee Yuet-wah in Aberdeen in the south of Hong Kong Island, her father Lee Wai Man operated a sub-licensed gambling businesses in Macau. The young Lee moved to the United States during her late teens, where she studied management at Golden Gate University. In San Francisco, she would meet her future husband Nicholas Chu, and took his family name after they married. 

The couple dabbled in California real estate during the late 1980s before moving back to Hong Kong in 1992, where they founded Kingston, named after their son. 

The company provided financing to companies and was involved in initial public offerings (IPOs), a fast track to wealth as most stock debuts – especially those highly sought after – can soar to dizzying heights when they trade for the first time, a business model that earned Chu the sobriquet “Queen of Shell Companies.” She owns a 66 per cent stake in Kingston, according to company filings. 

Chu received a HK$10,000 fine in 1997 for working as an unregistered securities dealer, and was accused of market manipulation by the city’s regulator in 2003. On a non-admission basis, Chu undertook to refrain from any involvement in Kingston’s daily operations for 24 months, according to the SFC’s statement.

Besides financial services, Chu is also chairperson of Sincere Watch, Hong Kong’s largest chain of luxury watch sellers. She is also managing director of Golden Resorts Group, which operates gaming in Macau.

From cassettes, mini buses to the world’s priciest tower: a peek at Hong Kong’s buyers of The Center

The Center, the tallest building in Li’s real estate portfolio, had been on the market for more than a year, as its price tag excluded all but buyers with the deepest pockets. 

In November 2017, a consortium calling itself the C.H.M.T Peaceful Development Asia Property Group emerged as the buyer, agreeing to pay what still stands as the world’s highest price for an office tower.

The biggest shareholder in C.H.M.T was a little-known, state-owned company called China Energy Reserve & Chemicals Group, owning 55 per cent of the consortium, while the remaining 45 per cent was shared by four Hong Kong investors.

By February, China Energy had dropped out of the consortium, snared by the Chinese government’s crackdown on overseas acquisitions and delays in securing approvals to remit funds abroad. Chu and real estate tycoon Hui Wing Mau – also known as Xu Rongmao in his native Fujian province – stepped up to pick up the tab.

The Center is back in Hong Kong hands as mainland firm pulls out of buying world’s costliest tower

China Energy’s 55 per cent stake would be split four ways, Chu said, making her possibly the third-largest stakeholder in the office tower, at 17 per cent. Hui, founder of Shimao Properties, would own 20 per cent. The remaining 18 per cent would go to two of the four Hong Kong investors who already own stakes in the building.

“I was approached by the consortium as early as in March 2017, but I could not enter into further discussions because I had to be involved in the annual legislative meetings in Beijing,” she said. Chu was nominated as a delegate to the Chinese People’s Political Consultative Conference (CPPCC), the legislature’s top advisory body, in 2008.

A 10 per cent deposit has been placed on The Center, according to CK Asset’s press statement announcing the sale. Financing on the purchase will be completed by the end of April, Chu said, in time to meet the May 1 deadline for closing the transaction.

For now, Chu has to contend with the plunging value of her flagship company. On November 30, Kingston’s shares soared 19 per cent to HK$9.62, the highest price since the company went public in 1996. The next day, the stock fell 7 per cent. As many as 340 million shares changed hands in the two days, compared with the daily average transaction of 10 million shares in the last year.

On January 29, Hong Kong’s Securities and Futures Commission (SFC) issued a statement warning that Kingston’s shares were too concentrated among a small number of stockholders. Since then, the stock had halved in value. 

As many as 109 million shares changed hands last Friday, weighing down the stock by 6 per cent. The FTSE Russell Index removed Kingston from its benchmark on Monday, triggering a sell-off in the stock.

“The decline was due to the stock was removed from the (FTSE Russell) index,” said Chu.