Bold moves at the helm of a Malaysian Giant

From the age of 16, Francis Yeoh supervised projects and made decisions, preparing him for a career at YTL. (Palani Mohan/Bloomberg News)

Francis Yeoh, chairman of Malaysian conglomerate YTL
By Sonia Kolesnikov-Jessop Published: March 14, 2008


SINGAPORE: To the untrained eye, Francis Yeoh, chairman of the Malaysian conglomerate YTL, has had a charmed life in business. But appearances, Yeoh will tell you, can be deceiving.

"People think it's very easy," Yeoh said recently during a business trip to Singapore. "My God, it's so far from the truth. I've been like Sisyphus - every time rolling a stone up the hill and the next morning it rolls down again." After a brief pause, he added, laughing, "Well today, I still feel like Sisyphus but at least some stones are now staying up there."

YTL, controlled by Yeoh's family, is one of the largest Malaysian conglomerates, with a market capitalization of 12.3 billion ringgit, or $3.86 billion, and a significant presence in property development, cement manufacturing, power generation and information technology. The group recently posted a net profit of 189.33 million ringgit for the quarter through Dec. 31, up 24 percent from a year earlier, on 7 percent growth in revenue, to 1.52 billion ringgit.

The forerunner of the YTL group was a small construction company founded by Yeoh's father, Yeoh Tiong Lay, in 1955, a year after Francis was born. However, when the 24-year-old joined his father's business in 1978 as executive director, he was not handed a business on a silver tray: The company had ran into financial difficulties during the 1970s oil crisis and his father had had to scrape together enough money to send his eldest son to study in Britain.

"My father absolutely insisted on me studying," Yeoh, 53, recalled. "He realized the vagaries of his industry. He knew things were changing."

Because Yeoh had not spent his teenage years in malls or amusement parks, but on construction sites, where from the age of 16 he had supervised projects and made decisions - "really moonlighting as a student" - he felt ready to take over when the time came.

"My father trusted me," Yeoh said. "And when I joined he was happy to surrender. He'd worked out hard already, he was still quite young, but he understood that the industry was moving on."

His first major decision, one that would change the company's future, was to invest in engineers and equipment. "My father was looking at it as a risk, worrying about the next contract," Yeoh explained. "But I felt you will never get the contracts if you don't invest in people."

Yeoh established YTL's reputation in the 1980s by using the latest technologies, which allowed it to build high-rise properties faster than its competitors. "We came up with a technique using slim-form where we could build a floor every seven days," he said.

The young businessman impressed the then prime minister, Mahathir bin Mohamad, and YTL was given government contracts to build 12 district hospitals throughout the country.

Moving into owning property was a natural progression from being a contractor, and YTL started acquiring huge land banks. Today it has 122 million square feet, or 11.3 million square meters, of land in the capital city, as well as prime beach real estate in Malaysia. It also has holdings in Thailand, Indonesia and Singapore.

But probably Yeoh's boldest move was to venture into power generation in 1994, when the Malaysian government started to privatize the sector. Because he could not get his plans financed in ringgit by foreign banks, which wanted deals only in U.S. dollars, he persuaded the government to raise funds through a 15-year ringgit-denominated bond.

With smaller foreign currency exposure than other Asia-based companies, YTL emerged from the Asian financial crisis at the end of the 1990s in better shape to expand abroad. YTL bought British utility company Wessex Water for £1.2 billion, or $2.4 billion at the current exchange rate, in 2002 and owns power investments in Indonesia and Australia. Today, Yeoh pointed out, 70 percent of the company's revenue comes from abroad.

"YTL Power is one of the few companies that has demonstrated a steady yield and commendable growth for regulated assets," said June Ng, an analyst from Hwang DBS Vickers Research, in a recent report.

His next move will be into coastal development. Yeoh, who is an avid art collector and flies his own helicopter, has been accumulating coastal land in Southeast Asia.

"Just like there was wealth in Europe and property prices on the coast went up 1,500 percent over 25 years, I think the same thing will happen to coastal properties in Southeast Asia," he said. "But here it will take a maximum 15 years, and we've already been in this curve for seven years."