Asia's dealmaking Ong brothers join forces again

SINGAPORE/HONG KONG Fri Sep 2, 2011 4:34am EDT

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SINGAPORE/HONG KONG (Reuters) - The Malaysian-born Ong brothers, two of Asia's best-known and experienced dealmakers, have joined forces again, linking up to chase investments in the fast-growing region.

Charles Ong, a senior managing director at Singapore's Temasek Holdings TEM.UL, will join his brother Richard to advise on his $2.3 billion private equity firm RRJ Capital, the Singapore state investor said on its website.

Temasek said the move was a secondment and Charles would remain a senior managing director for special projects at the $160 billion fund.

However, sources said the move also suggested a shifting of power at the top of Temasek, which is headed by Ho Ching, the wife of Singapore's Prime Minister Lee Hsien Loong.

"They have found a home for him," said one banker who has dealt with Charles. "It does show that he is clearly not on the succession list," said the banker, who asked not to be named. "They are giving headroom to the younger lot to grow."

The professional story of the Ongs is one that closely tracks Asia's economic growth, and the rapid development in size and clout of its investment management and banking industries.

It is also reflective of the huge amount of wealth created in Asia in a short period of time, with each brother overseeing billions of dollars.

The last two funds Richard led or co-led raised around $5 billion combined. At a 2 percent management fee -- an industry standard -- that's $100 million in annual fees alone, for two firms with only a few dozen employees.

Prior to setting up RRJ, Richard was a co-founder of Hopu Management, a more than $2 billion China-focused investment firm that wound down its operations this year.

Both brothers studied in the United States. Richard went to Cornell University, while Charles attended Massachussets Institute of Technology.

"These guys are outstanding dealmakers and I think the deals they've worked on shows that," said Chak Wong, professor at the Chinese University of Hong Kong.

"It's rare for both to reach such high positions in dealmaking, and this is about as rare as two brothers competing at the Olympics together or two brothers winning an academic award in university together."

CONTROVERSIAL DEALS

Amid their success as dealmakers, there has been some controversy too.

While Charles has been credited as being the person behind Temasek's profitable investments in Chinese banks before their IPOs, he was also the point man for its contentious investment in Thailand's Shin Corp, a large telecom firm.

In 2006, Temasek led a consortium of investors to buy a controlling stake in Shin from the family of then Thai Prime Minister Thaksin Shinawatra. The sale was widely criticized and contributed to a series of events that led to Thaksin's overthrow by the military that year.

Richard, 45, found himself in an awkward spot shortly after he was promoted to co-head of Goldman's Asia investment bank in 2006. Media reports at the time said Richard failed to be nominated as the CEO of Goldman's China joint venture because he could not pass a qualification exam for senior executives in the securities brokerage industry, conducted in Mandarin.

FAMILY HISTORY

Asia investment bankers and investors watched Hopu with envy as the firm moved quickly with its money, making steep profits on certain bets. The industry was surprised to see Hopu unwind after only one fund.

The Temasek-RRJ arrangement is not the first time the brothers have worked together. In fact, a look at the transactions Richard and Charles have been involved with in the last few years shows the two are linked by a lot more than just blood.

When Richard was at Hopu, the firm and Temasek invested on at least four deals together, including the May 2009 purchase of part of Bank of America's (BAC.N) $7.3 billion stake in China Construction Bank (BAC.N), which they bought along with China Life (2628.HK).

Charles, 42, is considered very close to Ho, two sources said. He was hired in 2002, the same year Ho became executive director of Temasek and began building up a team of dealmakers.

He started his career as an investment banker with Lazard Freres & Co in New York. He also worked for Deutsche Bank AG in Singapore before joining Temasek.

"He's an intellectual," said a fund manager that invests in private equity funds and who has worked with Charles. "But he also very gutsy."

Richard's RRJ Capital, based in Hong Kong and Singapore, is backed by Temasek, which is one of its limited partners.

The private equity firm has to date invested in oilfield services provider Frac Tech Services Inc and North American natural gas fuels provider Clean Energy Fuels Corp (CLNE.O).

He was previously one of Goldman Sachs' top Asia investment bankers before he moved to Hopu, whose top man was Goldman colleague and China rainmaker Fang Fenglei. Richard spent 15 years at Goldman.

At the time of Hopu's launch, mediar reports say Temasek invested $1 billion into Hopu.

Tall with dark, parted hair and glasses, Richard is the consummate deal guy, hungry for acquisitions that look cheap, are ahead of the pack, and carry a long term trend with them.

He is laid back, dresses casually, and is said to be awake at all hours, traveling back and forth lately between the United States and Asia, scouring the two markets for deals.

When Richard left Hopu in June, Charles also initiated a move shortly after. In July, he stepped down as co-CEO of Seatown, a S$4 billion ($3.3 billion) multi-strategy investment firm that had been set up by Temasek.

Temasek has seen a number of changes in the past few months. Francis Rozario, who headed the state investor's Fullerton Financial arm has left and been replaced by Gan Chee Yan, who is also considered close to Ho. Simon Israel retired from Temasek and became chairman of Singapore Telecommunications (STEL.SI).

This happened as Temasek, which managed S$193 billion as at end-March 2011, hired Greg Curl, who was once seen as a CEO candidate for Bank of America (BAC.N), brought in ex-Singapore Exchange (SGXL.SI) CEO Hsieh Fu Hua as executive director and president, and hired former top lawyer Dilhan Pillay Sandrasegara as head of portfolio management last year.

Temasek officials said Charles would remain at Temasek.

"We have been seconding staff over the years to various funds and institutions, in Singapore and elsewhere," said Temasek spokesman Stephen Forshaw.

($1 = 1.204 Singapore dollars)

(Additional reporting by Kevin Lim in SINGAPORE and Kelvin Soh and Maggie Lu Yueyang in HONG KONG; Editing by Lincoln Feast)

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