Midland feels heat from ousted pair

Management overhaul looms after Apex hires the agency's former executives as consultants

PUBLISHED : Monday, 24 March, 2014, 4:45am
UPDATED : Monday, 24 March, 2014, 4:45am

Two key figures ousted from Midland Holdings in a boardroom power struggle in the late 1990s are returning to the fray as the property broker prepares to unveil this week what may be the biggest loss since its 1995 listing.

The company's third-largest shareholder, Apex Benchmark, has recruited Joseph Ling Kwok-fai, a former executive director of Midland, as the real estate fund's financial consultant. Ling was forced to leave Midland in 1997.

His appointment, expected to be announced today, comes two weeks after the fund invited Billy Fung Yui-sum, a co-founder and former deputy chairman of Midland, to serve as a consultant. Fung was forced to step down in 1998 by the board, controlled by Freddie Wong, who remains the chairman. The board refused to renew his contract despite good results from his team focus on broking commercial properties.

The appointments are expected to pile pressure on the Midland board. Apex, which bought a 7.5 per cent stake last year, has been pushing for an overhaul of Midland's family-style management.

The pair's comeback has sparked speculation that a takeover battle for Hong Kong-listed Midland may unfold, with board critics seizing on the scale of the expected loss for 2013 to be announced on Friday.

"It hurts when I see that the performance and the market share of Midland have been declining rapidly in recent years. The frequent disputes between the existing top management and the employees reflect its mismanagement," said Fung, who set up an investment firm, Bill Fung & Ling International, with Ling after their departure.

He said it was sensible for Apex to invite him to join as a strategic consultant, given that some investors in the fund were former Midland employees.

An Apex spokesman said the property fund would draw on Fung's and Ling's experience in the real estate broking business.

"The two consultants will come up with advice on how to improve Midland's performance and Apex will reflect their views to the listed firm. We hope the management will take our suggestions to enhance the firm's efficiency," the spokesman said.

Ling, who joined Midland in 1990, said Midland and Centaline Property Agency had the same market share 20 years ago but Centaline had in recent years steadily built up a lead.

Shih Wing-ching, the founder of Centaline, said last month that the agency had 30 per cent of the Hong Kong market by transaction number and an even higher mark for commission revenue.

Midland issued a profit warning last month, saying it expected a loss for the second half of last year. It posted a loss of HK$88.73 million for the six months to June, compared with a profit of HK$147.3 million a year earlier.

Apex threatened to sell down its stake a day after 30 property agents marched to Midland's headquarters in protest against the company's move on January 30 to force out the director of its Hong Kong district, Gary Yeung.

"I do not intend to take over the management. People are very important in our industry. Morale will be damaged if employees feel they are being treated unfairly and have no communication channels with the top management," Fung said.