The Odd Couple, a 1970s TV show, may see a revival. It is about two divorced journalists who are forced to live together.
Felix Unger, a photographer, was tidy. His neatness bordered on neurosis. He even ironed his socks three times a day.
His roommate James Madison, a sportswriter, was a drunken slob. Madison would wipe his hands on the closest available item. He was given to drinking and gambling, which annoyed the puritanical Unger.
Despite their contrasting character, their pairing was a success. The two got on famously. Even the TV show was a hit, running for 114 episodes.
Most Singaporean investors would not remember the sitcom. But it would help them understand another odd couple. Sea, a company that dominates e-commerce, gaming and payments, seems to be allied to the Kuok Group.
The Kuok Group is a family-controlled giant that has interests in sugar, palm oil, hotels and real estate. Its patriarch is the 97-year-old Robert Kuok, Malaysia’s richest man. His nephew, Kuok Khoon Hong, runs Wilmar International, the world’s largest palm oil processor.
The Sea-Kuok pairing is an alliance between the old and new economies. The old economy is based on the trading of goods. The Kuok Group processes and supplies sugar, for instance.
The new economy is driven by the exchange of information. Yahoo, Amazon and Facebook are examples of new economy companies.
Sugar concessions
Robert Kuok began his working career in 1942 as an office boy with Mitsubishi’s rice trading unit. After the war, Kuok excelled as a rice trader. He cornered the agency for rice supply in British Malaya.
Kuok’s success was based on securing government concessions for commodity supply. In the 1960s, he wanted to get permission from the Indian government to import sugar. India was under the jackboot of the licence raj in those days. Commerce was strictly regulated by the bureaucrats. Many tried to dissuade Kuok from attempting to convince the Indian government.
However, Kuok was determined to get the lucrative licence. He spent six weeks in New Delhi during the boiling Indian summer. His hotel often lacked electricity and running water. He sat outside the bureaucrats’ office for weeks. Eventually, the bureaucrat relented and approved the licence.
Kuok’s persistence took the group to greater heights in China. He was one of the first foreign businessmen to get sugar concessions when Chinese leader Deng Xiaoping liberalised the economy after 1978.
Sea’s founder Forrest Li is a soft-spoken engineer. His rise has been stunning even by the standards of this era’s tech billionaires.
He worked for the Chinese arms of US multinationals — Motorola and Corning. The turning point was when he got into Stanford MBA’s programme, the nursery of tech titans.
He founded Garena (as Sea was then known) in 2009, after following his wife to Singapore. His big break was an investment by the Kuok family. Sea was listed in 2017 with the backing of Tencent. The Kuok family’s investment may be worth US$15 billion ($20.4 billion). Sea may have provided a 30-fold return to the Kuoks’ investment.
The partnership between Li and the Kuoks have been cemented. Li sits on the board of the Shangri-La Group, Kuok’s flagship.
One-third of the Kuok family’s net worth may be from the Sea foray. Sea has seven times the market capitalisation of Wilmar, the Kuoks’ flagship. The Kuok group was founded in 1946, but its best investment may have been in the last decade.
The alliance with an old economy player could benefit Sea. New economy companies like Sea have emerged without cementing links with governments. Their success was built on ingenuity.
In contrast, old economy wealth is built on relationships. The Kuoks’ tight grip on commodity supply has been developed by cultivating governments. Kuok was able to persuade a wide array of leaders from Suharto to Fidel Castro to provide concessions. These relationships may prove vital as regulators are clamping down on tech.
The last few months has shown the vulnerability of tech to regulatory whims. China has assaulted tech companies. In April, Alibaba was fined US$2.8 billion for anti-competitive behaviour. Last month, a cybersecurity investigation was unleashed on Didi. US$1 trillion in stock market value has been wiped out since April.
Sea may fare better with regulators than Chinese tech companies. As The Odd Couple showed, partnership of opposites can work well.
Nirgunan Tiruchelvam is head of consumer sector equity at Tellimer and author of Investing in the Covid Era. He does not hold any position in the stocks mentioned in this column
Photo: Bloomberg
