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Keswick Scores Another Coup in Latest Deal

October 01, 1987|MICHAEL A. HILTZIK | Times Staff Writer

NEW YORK — Nothing became the title of taipan as much as the manner in which Simon Keswick seized it.

It was 1983, and Keswick and his clan had been watching with mounting distaste as a rival family led Jardine Matheson & Co., the giant Hong Kong institution of which the two clans shared ownership, into multimillion-dollar writeoffs and seas of red ink.

Over a period of months, Keswick stole a march on the sitting chairman of Jardines, David K. Newbigging, by exacting the resignation of a key Newbigging ally, installing his own man in a top job and selling off one of Newbigging's favorite subsidiaries. In the end, Newbigging resigned his post to Keswick months ahead of schedule.

"A taipan needs respect," a Hong Kong banker remarked at the time, "and the only way to command respect in Hong Kong is by being tough."

Since then, Keswick has preserved this respect by overseeing the rebuilding of the trading company whose founding, which goes back to 1832 and the East Asian opium trade, has been fictionalized in James Clavell's novels "Noble House" and "Tai-Pan."

Question of Long-Term

He has divested much of Jardines' interest in Hongkong Land Co., a Newbigging investment that lost $292 million in 1982, precipitating the war in the throne room. He refocused the firm's business program to emphasize financial services, hotels, and engineering and construction. Among other projects, Jardines last year paid $62 million for Los Angeles-based Emett & Chandler, the nation's 12th-largest insurance brokerage. Keswick slashed Jardines' heavy long-term debt, which at one point came to 81% of equity, in half.

After remarking that Jardines was aiming to reduce the share of its business derived from Hong Kong to 50% from 75%, Keswick--who is the fifth member of his family to serve as taipan , or chairman--jolted the British colony in 1984 by reorganizing his firm as a Bermuda company. The goal, he said, was to reduce its identification with Hong Kong, which is to be transferred to Chinese control in 1997.

"It is undoubtedly a disadvantage to have to deal with questions regarding the long-term future of Hong Kong," he said at the time.

Keswick's latest investment is in 20% of the stock of Bear, Stearns & Co., which during the past two years has been one of the most consistently profitable securities firms on Wall Street. Bear Stearns' return on equity of more than 20% is exceeded only by Morgan Stanley & Co. among publicly traded full-service securities firms.

Bear Stearns may also provide a good fit with Jardines' expanding financial operations, although executives of both companies say no discussion of specific synergies was part of the purchase negotiations. Jardines owns a leading East Asian securities house with a seat on the Tokyo Stock Exchange; its holdings in Japan as well as Hong Kong provide Bear Stearns executives with alluring notions of access to Pacific markets through joint ventures with the Hong Kong institution.

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