BREAKINGVIEWS-Jardines is remaking itself to sail new China seas

By Ka Sing Chan

HONG KONG, June 9 (Reuters Breakingviews) - 'Hong Kong's most iconic trading house has a new captain. The 193-year-old Jardine Matheson JARD.SI has named private equity firm PAG's Lincoln Pan as its first Chinese-national chief executive officer. The $13 billion conglomerate has also been adding investment experts and Chinese directors to its board as it reinvents itself to become a nimble investor.

Pan will be the third director with a buyout background - and fourth Chinese national - on Jardines' 9-member board. The changing composition reflects a broader strategic overhaul at the Singapore and London-listed giant to become "an engaged investor" - and with an implied sharper focus on the People's Republic. Currently, Jardines' main China exposure is through its Hongkong Land HKLD.SI unit, which accounted 14% of its bottom line last year.

That's a huge departure from its model of controlling and operating assets that range from prime office buildings in Hong Kong to the Mandarin Oriental. Pan's arrival is the latest senior shakeup: Over the past two years, Jardines has installed new bosses at four main units, including the luxury hotel chain.

Jardines has offered scant detail on its transformation so far. But Hongkong Land, which owns the city's high-end Landmark shopping and office complex, offers a hint of what's to come. Late last year, the unit unveiled plans to sell up to $10 billion worth of assets from its own portfolio in the next decade and shift to a fund model. That involves doubling assets under management to $100 billion through a combination of third party capital including real estate investment trusts and limited partnerships.

Shareholders will also be paying attention to Hongkong Land's pledge to double dividends. That might signal its parent too will also improve shareholder returns, which topped just 4% over the past five years on an annualised basis - vastly underperforming its Hong Kong-listed peer Swire Pacific's 0019.HK 20%.

Pan, who will start at Jardines in December, leaves PAG at a time when opportunities in China are rising. The private equity fund, for instance, is in the process of acquiring 48 shopping malls in the mainland from Dalian Wanda at what seems to be a bargain price. Jardines' new boss looks well suited to chart a new course for the conglomerate.

CONTEXT NEWS

Jardine Matheson on May 29 announced that Lincoln Pan, co-head of private equity for Asian investment house PAG, will become its chief executive officer effective in December.

Pan will become the first Chinese national CEO for Jardines. Four of Jardines’ nine board members will be Chinese nationals following Pan’s appointment.