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Kaisa Group Holdings’ City Plaza development under construction in Shanghai on November 16, 2021. Photo: Bloomberg.

Kaisa loses control of Nam Tai’s board in epic revolt led by activist shareholder IsZo, adding to the indebted developer’s woes

  • Nearly 60 per cent of Nam Tai shareholders voted to eject six Kaisa-appointed directors and replaced them with executives nominated by IsZo Capital Management
  • US billionaire Peter Kellogg, the second largest shareholder with 19 per cent stake, will stay on at Nam Tai, while Mark Waslen will extend his tenure as director
Kaisa Group Holdings has lost control of a New York-listed property affiliate after a shareholders’ revolt, in a boardroom defeat that adds to the developer’s woes amid its asset sales plan to stave off defaults.

Nearly 60 per cent of Nam Tai’s shareholders, most of whom unaffiliated with Kaisa, voted to eject six Kaisa-appointed directors and replaced them with executives nominated by the third-largest shareholder IsZo Capital Management. US billionaire Peter Kellogg, the second largest shareholder with 19 per cent stake, will stay on at Nam Tai, while Mark Waslen will extend his tenure as director, a position he has held since 2003.

“After spending the past 18 months fighting entrenchment manoeuvres and navigating protracted litigation, we are very pleased that Nam Tai’s shareholders finally had their voices heard at today’s special meeting,” IsZo’s founder and managing member Brian Sheehy said in a statement, promising to take steps to unlock the property company’s value. “Today should mark the beginning of a promising new chapter for Nam Tai and all of its stakeholders, including the local communities the company operates within across mainland China.”

The vote ended IsZo’s revolt since May 2020 to oust Kaisa over claims of fiduciary mismanagement and business strategies that hurt shareholders’ interest. The New York-based activist shareholder, owning 15 per cent in the Shenzhen developer, had questioned Nam Tai’s strategy, complaining that its stock price had lost 70 per cent in value while the company’s board was under the control of Kaisa, which owns 24 per cent of Nam Tai.

Kaisa Group Holdings’ chairman and executive director Kwok Ying-shing during a press conference in Hong Kong on 27 March 2017. Photo: Jonathan Wong.

Nam Tai, founded in 1975 by the Hong Kong electronics magnate Koo Ming-kown, started as a manufacturer of calculators and electronic products before venturing into real estate.

Koo, now 77, was among the first batch of Hong Kong manufacturers to set up factories in Shenzhen. He bought land plots around the city before its explosive growth into one of China’s most prosperous cities and the nation’s technology hub, home to such behemoths as Huawei Technologies, Tencent Holdings and the world’s dominant drone maker DJI.

Koo Ming-kown, the founder and former chairman of Nam Tai Property, posing on May 5, 2017 in front of the model for the InnoCity property project in Shenzhen’s Qianhai area, transformed from the company’s former factory. Photo: Enoch Yiu

Koo listed Nam Tai on the Nasdaq in 1988 before transferring its listing to the New York Stock Exchange (NYSE) in 2003. At its peak, Nam Tai had 10,000 employees on payroll. Even when he decided to shut the factories in 2014, the factories still generated a turnover of US$1 billion. Koo could not be reached to comment.

When the septuagenarian retired in August 2017, Koo sold 6.5 million shares of Nam Tai to Kaisa for US$110.57 million to tap the Shenzhen developer’s expertise in turning former factory sites to high-rise office towers and apartment blocks.

Kaisa’s founder Kwok Ying-shing appointed his younger brother Kwok Ying-chi to head Nam Tai. During Kwok’s tenure, Nam Tai paid US$101 million for a plot of land in the Greater Bay Area’s Dongguan city in March 2020. IsZo claimed Nam Tai overpaid, as the purchase used more than 80 per cent of the company’s cash, and more than half of its market value. Kaisa said the purchase was needed for development.
Nam Tai’s founder and former chairman Koo Ming-kown (centre) at the groundbreaking ceremony of the InnoPark development project in Shenzhen’s Qianhai area, flanked by the Cantonese pop stars Joey Yung Cho-yee (fourth right) and Alan Tam Wing-lun (second left) on 5 May 2017. Photo: Enoch Yiu
The Kwok family has been expanding in Hong Kong in recent years. The chairman’s 27-year old daughter Kwok Hiu-ting paid HK$369.83 million (US$47.7 million) in February to buy 28 per cent of Sing Tao News Corporation, which publishes one of Hong Kong’s biggest Chinese-language broadsheet newspapers.
Her brother, 30-year old Kwok Hiu-kwan, is the second largest shareholder of Convoy Global Holdings with a 29.91 per cent stake, and has been engaged in another epic boardroom tussle with the Tsai family of Taiwan’s Fubon Group for control of one of Hong Kong’s largest financial service providers.

A few months after IsZo began its open revolt at Nam Tai, Kwok Ying-chi resigned in September 2020, citing personal reasons.

Artists impression of Nam Tai Property’s InnoPark project in Shenzhen’s Qianhai area. Photo: Ronald Lu & Partners (International) Ltd

The boardroom tussle also involved a court case in the Eastern Caribbean Supreme Court in the British Virgin Islands, where Nam Tai was incorporated. The court in March voided a US$170 million private placement of Nam Tai that will boost the voting right of Kaisa and dilute the shareholding of IsZo and other minority investors. The court also ordered Nam Tai to convene a special shareholder meeting to vote for the reshuffle of the board.

Following the shareholders’ vote, IsZo would revamp Nam Tai to enhance its “corporate governance, establish a credible capital allocation policy and take steps to unlock the significant value within its real estate portfolio,” Sheehy said.

The company’s share price has since recovered from US$3.99 in May 2020 to the peak of US$36.9 in June this year, before falling back to about US$17.91 on Tuesday.

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