Can RRJ Capital repeat its Midas touch with Lai Sun Development?
Richard Ong, chairman of Asian-based private equity fund RRJ Capital, sees himself as the man with the Midas touch. Now he wants to repeat his success with Hong Kong property developer Lai Sun Development.
The former Goldman Sachs banker has made huge gains from two Hong Kong-listed mainland property stocks – CIFI Holdings and Logan Property Holding.
In October 2013, RRJ invested in CIFI, which primarily invests in Shanghai, with an entry price of HK$1.52. The stock closed down 0.7 per cent to HK$4.2 on Tuesday. Two years later, it invested in Shenzhen-based Logan, with an entry price of HK$2.78. That stock closed down 1.5 per cent to HK$7.25 on Tuesday.
Ong said RRJ is only interested in first tier cities. Instead of pouring money into individual projects, it prefers to invest in property companies that focus on these cities.
On August 21, RRJ paid HK$13.05 each for 4.95 per cent stake in Lai Sun Development, a mid-sized developer listed in Hong Kong in 1987. The company, with a market capitalisation of HK$9 billion, is controlled by Lai Sun Garment (International), ultimately controlled by the family of Hong Kong businessman Peter Lam Kin-ngor.
I don’t see why Lai Sun Development can’t grow as a development company like Hang Lung Properties
“The stock is trading at 70 per cent discount [against about 40 per cent among peers]. That is not going to last forever,” said Ong, citing Lai Sun’s 50 per cent stake in CCB Tower in Central and its 10 per cent stake in the adjacent building, AIA Central, both seen as quality assets.
