Not many people can afford to slap down nearly R6-billion, even if it’s for a stake in South Africa’s biggest company. Larry Yung Chi Kun can. But then, he is China’s third-richest individual, and presumably had some cash to spare.
China Vision Resources, Yung’s investment company, bought 1,13% of Anglo American from E Oppenheimer & Sons, the Oppenheimers’ family company. The sale was announced last week. Although the Oppenheimers did not disclose the purchase price, the market value of the stake was R5,9-billion. This would put Yung in fifth position on the Sunday Times Rich List, which calculates the individual wealth of JSE investors.
Yung, also known as Rong Zhijian, openly admits he enjoys playing for high stakes. “Call me a gambler or call me a fighter. I won’t deny I have an appetite for risk,” Yung told the Financial Times in a 1999 interview. Forbes magazine estimated his net worth at $2-billion and ranked him third on the most recent list of wealthiest Chinese. So, somewhere along the line, his love of risk must have paid off. He chairs Citic Pacific, one of the largest conglomerates in Hong Kong.
“I like gambling, and if I go there [to Macau or Las Vegas] and there is no limit, that’s my weak point, and I know it. So I never go there. I just go for horse racing in Hong Kong. With horse racing, I can limit my money and my losses. If I play cards with my friends, Okay. We make some money but everything is limited. I just do it for excitement,” he confessed to Time magazine some years ago. According to Business Week, a $5-million (R36,3-million) windfall at the tracks was pledged to Stanford University, where his daughter studied.
Fast cars are another indulgence. Yung has been fined for speeding but says that Hong Kong’s mountain roads are perfect for cornering. “When I drive fast, I have no worries. I can do what I like,” Time quoted him as saying. He also loves game fishing, deer stalking, Leica cameras and antique paintings.
The son of former Chinese vice-president Rong Yiren, Yung embraced capitalism with a convert’s zeal. Citic Pacific owns 17% of Cathay Pacific, and has interests in steel manufacturing, property, power generation and telecommunications, to name a few. Further afield, the company owns mining rights for magnetite ore in Western Australia. The former state-owned company is listed in Hong Kong and recorded a HK$3,581-million (R3,33-million) attributable profit for shareholders in 2004, according to its website.
But Yung says there were many times during his business career when he faced ruin. “If something had gone wrong after June 4 1989, when I had bought 20% of Hong Kong Telecom, I would have gone bankrupt. There is always risk,” he told Time. And in 1997, his purchase of a 15% stake in Citic Pacific with borrowed money turned into a $1-billion (R7,3-billion) paper loss as rumours swept the market that banks were ready to dump the shares. Happily, Yung was able to access financial aid from Beijing to rescue his deal, and the company.
He is well known for his political connections. The Financial Times went so far as to call him China’s first “red tycoon” in a recent profile, highlighting the tension between his business ambitions and his need to be loyal to Beijing.
Yung’s family have already fallen foul of the all-powerful Communist Party at least once. During the Cultural Revolution, his father Rong Yiren, a textile tycoon before the party came to power, was denounced. He was later rehabilitated by Deng Xiaopeng and became vice-president of the republic. According to the Danwei blog, he also managed to found state-owned company Citic in 1979, which became the parent of Citic Pacific and China’s first successful flirtation with capitalism. Yung himself credits the Cultural Revolution for his toughness.
Yung’s acquisition of the Anglo stake comes as China makes a concerted effort to woo African governments and African business. Sasol has completed feasibility studies for a synthetic fuels plant in China, and Anglo already has diverse interests in the country. On Tuesday, Bloomberg reported that Anglo was considering a coal project in Shaanxi province. Beer giant SABMiller has also seen opportunity in mainland China.
In fact, Chinese investment in African mining has been picking up speed for some time now. Chinese trade with Africa totalled $39,7-billion (R288-billion) last year, as the world’s fastest-growing economy has an unending appetite for commodities. Last month, Zijin Mining paid R120-million for a 20% stake in Mpumalanga’s Ridge Mining. So, the big question is whether Yung’s share purchase could herald more significant Chinese stakes in future.
Anglo American, one of the largest resources companies in the world, is seen as vulnerable to takeover bids. Rio Tinto, Xstrata and CVRD have been named as possible front- runners in a takeover scenario. However, Yung appears to have bought the stake in his personal capacity, rather than on behalf of Citic Pacific. His motive could appear to be pure diversification. On the other hand, he could be employing a wait-and-see strategy.