When people talk about Legend Holdings Corp. (03396.HK), they usually think of Lenovo Group Ltd. (00992.HK), its computer manufacturing flagship and one of China’s most popular international brands.
But Legend, which started trading on the Hong Kong stock exchange on Monday, is more than just being the parent company of Lenovo.
“The ultimate goals of Legend Holdings are to be comparable to Goldman Sachs in the field of investment, and to become the leader in several target industries,” said Liu Chuanzhi, the 71-year-old founder of Legend who spearheaded its HK$15 billion initial public offering.
“Listing on the Hong Kong stock exchange is the very first step of Legend.”
Currently, the IT sector constitutes 94 percent of Legend’s turnover. But the group has embarked on a new strategy to realize its wider goals.
Called “Industry + Investment”, the strategy takes into consideration the great risks corporations face in an era of rapid technological advancement and shifting business models.
“By not putting all our eggs in one basket, this diversified approach gives us more room and time to figure out the best approach when we deal with each individual sector we have invested in,” said Liu.
Lenovo’s acquisition of IBM’s personal computer business in 2004 was seen as a bold move with high risks.
Liu recalls that Yang Yuanqing, current chairman and chief executive of Lenovo Group, was the key person in the deal.
Liu was a cautious person and understood that the possibility of the deal falling through was high. Nonetheless, he acknowledged that if Lenovo did not take the risk, it could end up being taken over by others.
Legend’s strategic investments fall under six categories, namely IT, financial services, modern services, agriculture and food, real estate, chemicals and energy and materials.
Liu said finance and consumption are the core businesses in Legend’s portfolio.
He said China’s rising middle class and the economic restructuring that looks at domestic consumption as a main engine of growth are two factors that favor Legend’s development.
Liu is optimistic about the prospects of China’s consumer market, particularly in the fields of medicine and healthcare, education, culture and even car rentals, which are strongly supported by state policies.
On financial investment, Legend is focusing on the insurance sector. The group is testing the waters in agricultural insurance and medical insurance but have no immediate plans to venture into life insurance.
“Our strength is in investing and so we are a strong competitor in the industry,” Liu said.
Over these years, Liu has faced many ups and downs, but he has never thought of giving up.
In 1996, Legend Hong Kong — the former Lenovo Group Limited — incurred a loss of HK$1.9 billion due to a sharp drop in international chip prices, which wiped out years of earnings.
Using his own strong credit standing, Liu borrowed billions of dollars to save the Hong Kong unit. The following year he merged the Hong Kong unit with Legend Beijing, which eventually shored up the company’s finances.
Rumor has it that Legend Holdings’ IPO would be Liu’s last major act as chairman.
He declined to comment on his retirement plans, saying he would only step down when the business is on a sustainable growth path.
This article appeared in the Hong Kong Economic Journal on June 29.
Translation by Darlie Yiu
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