Jardine Matheson, titan of Asian commerce, pivots to developed markets

{"text":[[{"start":9.15,"text":"Jardine Matheson, the 194-year-old group that made its name trading in emerging markets, has said it will focus on building its exposure in developed Asia-Pacific countries to rebalance a portfolio heavily skewed towards south-east Asia."}],[{"start":23.450000000000003,"text":"“There’s no question as you look at our asset base today . . . we are overweight Indonesia in our portfolio,” Lincoln Pan, Jardines’ chief executive, said in an interview with the FT. “How do you balance that off? You balance that with a country [with] . . . an OECD exposure risk, in a place like Australia.”"}],[{"start":41.650000000000006,"text":"Pan was speaking ahead of Jardines’ investor day on Tuesday, where the company laid out its vision until 2030. Founded as an opium trader in 1832 in southern China, Jardines has recently embarked on a shift away from being an owner-operator of Asian businesses spanning engineering, construction, retail and hotels to being an investment manager."}],[{"start":63.900000000000006,"text":"Pan, a former private equity executive at PAG, was hired last year by executive chair Ben Keswick, scion of the company’s controlling family, to lead the transformation."}],[{"start":75.5,"text":"Changes in recent years have included axing the company’s decades-old graduate trainee scheme, selling a number of underperforming assets, simplifying its capital structure and significantly slimming down staff numbers at the holding company."}],[{"start":88.5,"text":"Pan said Jardines was “100 per cent committed to grow Astra”, the Indonesian conglomerate with interests in automotive, heavy equipment and mining that generates nearly half of Jardines’ profits."}],[{"start":100.65,"text":"But he said Jardines’ heavy-industry mix needed to be balanced with companies in developed markets that require less capital."}],[{"start":108.25,"text":"Indonesia was a “tough operating environment”, Pan said. Authorities recently stripped a number of international companies, including an Astra subsidiary, of some mining rights and seized millions of hectares of land, citing environmental damage."}],[{"start":122.75,"text":"Astra’s mining rights were reinstated after the Indonesian company and Jardines engaged in “a significant amount of lobbying”, Pan said."}],[{"start":131.2,"text":"Jardines signalled its investment pivot last month, when it agreed to purchase I-MED, an Australian radiology provider, for $2.4bn from UK private equity firm Permira and other shareholders."}],[{"start":null,"text":"

"}],[{"start":144.64999999999998,"text":"Pan said Jardines aimed to complete about three purchases of a similar size to the I-MED transaction over the next four to five years. The company would review holdings of assets that return less than 7 per cent a year, while looking for returns of at least 11 per cent for new investments, Pan told the FT."}],[{"start":163.2,"text":"Overall, it is aiming for a total shareholder return of 9 per cent a year over the next five years, the company said in a statement. It is seeking to recycle at least $4bn of capital by 2030, excluding commitments from Astra and subsidiary Hongkong Land."}],[{"start":179.04999999999998,"text":"On asset sales, Pan said there were “very few sacred cows” for the company and the Keswick family, pointing to the partial sale of One Causeway Bay, a site James Matheson purchased in Hong Kong’s first-ever land sale in 1841. “They’re open for a conversation about all parts of our business,” he added."}],[{"start":198.24999999999997,"text":"Jardines’ share price has risen 17 per cent over the past 12 months, as it streamlines and refocuses its investments. Recent business turmoil in Indonesia, which this month triggered a complaint from Chinese authorities about operating conditions for its nickel miners, has dented those gains. Shares fell 4 per cent on Tuesday."}],[{"start":219.39999999999998,"text":"Investors have broadly welcomed the transformation, which they say has increased transparency at what was once an opaque family business with a convoluted corporate structure."}],[{"start":229.45,"text":"But others have warned that the company, which built its fortunes seeking deals in developing Asia, risks losing focus as it broadens its portfolio."}],[{"start":237.7,"text":"“I don’t think there’s any love lost for the old Jardine life from a minority shareholder point of view,” said the head of a longtime investor in the company."}],[{"start":245.89999999999998,"text":"They added that while Pan’s private equity experience made him a good candidate to source deals, the high-quality, developed-market businesses Jardines now sought were expensive."}],[{"start":257.2,"text":"It “does create this strange business mix for Jardines”, said the investor. “Who wants Indonesian autos, plus Australian healthcare, plus sort of ageing Hong Kong property?”"}],[{"start":268.3,"text":"Pan stressed that Jardines was primarily using recycled capital, rather than raising new money, to fund deals that he said would bring higher returns."}],[{"start":277.15000000000003,"text":"He noted that Jardines’ purchase of I-MED would significantly lower borrowing costs for the radiology group by taking it out of private equity ownership and pointed to Jardines’ scale, banking relationships and “reputation in Asia” as strengths."}],[{"start":300.75000000000006,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781600034_9374.mp3"}