Demise of a legend

By Sumi Moonesinghe

I just got the news of the passing of the legendary Singaporean investor S.P. Tao, the founder of the highly-successful Shin Kwan Group, and the Chairman of Overseas Realty Ceylon PLC. S.P. Tao had passed away at the age of 105 in Nanjing, China.

As my heart filled with sorrow at the passing of this grand old man, I sat down and started reminiscing about my association with him and his contribution to Sri Lanka. 

In January 2003 as Chairman of Bank of Ceylon (BOC), I was going through Board papers for the first Board meeting I was going to Chair. As fate would have it an important Board paper was the loan that ORCL — Overseas Realty had taken to construct the World Trade Centre in Colombo Fort District. Tao had pledged his family’s cash assets of $ 6 million placed in a fixed deposit, which was earning a very high interest rate.

The bank structured an instrument called RCCPS – Redeemable Convertible Cumulative Preference Shares, a first for our country, which meant there was no repayment of capital, or interest for the period of this instrument, and on maturity, if the loan was unpaid, BOC would receive preference shares valued on the day of conversion. 

I looked at the share price of ORCL. It was less than Rs. 5! The company owned over 95% of the shares. I asked the General Manager to arrange a meeting for me with Tao, Chairman of ORCL. He flew down from Singapore to meet me and during the meeting I told him the bank did not want shares in his company and in my characteristic forthrightness added, “Our loan has now become a distressed loan technically”.

I then suggested that since they were selling space at the WTC at $ 160 per square feet that we could look at a distress rate value of $ 80 per sqft. and asked him to please transfer eight floors of the building to BOC in lieu of the loan. The amazing thing about great business leaders is they take calculated risks and also know when to cut their losses and cut deals that eventually are win-win. He agreed. BOC immediately rented them to the Board of Investment (BOI). 

Wasting no time, during this same meeting I asked him to come with me and the General Manager of BOC to visit the Wellawatte Spinning and Weaving Mills premises – 17 acres of land in an excellent location, an idle asset unused for over 20 years and not even used as a car park.

Tao was a very successful property developer in Singapore having developed the famous hotel complexes Marina Mandarin and Pan Pacific, and as I had done my homework and knew his potential and strengths, I asked him to consider developing the Wellawatte land into a residential/commercial complex.

He agreed and the result is very visible, when you drive along the High Level Road. It has been one of the most successful reclamations of a dead asset into a vibrant city within a city as they position the residential area. 

I learnt a lot from my discussions with this visionary human being. He had many issues with the subsequent management of BOC, who owned 40% of the company and the project was unduly delayed.

On one occasion he wrote me a letter to say: “Sumi, had you remained Chairperson of BOC, I would have completed the entire project in three years!” Instead it took over a decade. 

An investor with lesser grit would have not stayed but he did though China, Hong Kong and Singapore had so much more to offer in terms of enabling policy and environment. Finally he bought out BOC shares, giving them a huge profit! Today Overseas Realty is one of the most successful and benchmark property development companies our country has known. 

He has left behind two exceptional landmarks in the City of Colombo. It is a testament to the quality of their construction that he weathered a bomb blast at WTC with minimal structural damage to the towers, and had the resilience and grit to stay on in this country and support it with further investment during that dark period.

I am blessed to have met such an individual in my lifetime. He was a man of stature and huge personal achievement. He was also a friend of Sri Lanka who took a gamble on a war ravaged and underperforming country and, despite the many trials and tribulations, he created wealth and iconic real estate value. 

I salute and honour him with these memories.

May God bless him and may his soul rest in peace.

(The writer was a former Chairperson of the Bank of Ceylon.)