Chew Gek Khim recalls a day in her early 20s when she was shopping with her maternal grandfather, wealthy Singaporean banker and philanthropist Tan Chin Tuan. They ended up in a jewellery store where she wanted to make a purchase, but he balked and tried to dissuade her. Finally he said, “You know, Khim, diamonds don’t pay dividends.”
“It was a very clever comment,” says Chew, the 52-year-old executive chairman of Straits Trading, one of Singapore’s most venerable companies, whose fortune originates in tin. “It suddenly made me realise that there is a big difference between an item of show and something that generates a return.”
That value continues to resonate as Chew builds on the family’s corporate legacy. Following instructions from her late grandfather—who built up and nurtured some of Singapore’s best-known companies while chairman of Oversea-Chinese Banking Corp (OCBC) in the mid-20th century—Chew wrested control of Straits Trading in 2008 in a high-profile bidding war. She has since launched ambitious reforms to transform the 126-year-old firm, with its hodgepodge of interests, into a dynamic holding company with three core businesses—resources, property and hospitality—and strong cash flow. The past six years have been “phase one,” Chew says, as she diversified holdings to unlock shareholder value.
The incubation period didn’t yield immediate results. Profitability rose and fell as the firm made provisions in line with Chew’s vision. But last year marked the end of that period, says Chew. A series of divestments left the publicly listed firm cashed up, allowing her to clinch key tie-ups in both hospitality and property that should give Straits Trading a significant Asia-Pacific presence and higher returns. The company, which has a market capitalisation of $1.2 billion, is expected to post a net profit for the year ended December 31, following a net loss of $44 million in 2012.
Straits Trading’s roots lie in colonial-era Singapore. Resources were the lifeblood of the region, and a Scotsman and a German saw an opportunity in tin and launched smelting operations in 1887. Straits Trading soon became one of the biggest tin smelters in the world. It survived the Great Depression and two world wars, and was eventually acquired by OCBC in the 1950s under Chew’s grandfather. (Other OCBC investments by Tan at that time included Raffles Hotel, Singapore retailer Robinson & Co and beverage conglomerate Fraser & Neave.)
Chew grew up in her grandfather’s house, a two-story mansion just off Singapore’s tony Orchard Road. “I was very sheltered,” she laughs, recalling her life as a student. “The only job I had was working for my grandfather when he got cross with me for lounging around the home.”
She graduated from the National University of Singapore in 1984 with a bachelor’s degree in law. She went to work for local law firm Drew & Napier, specialising in corporate law and gaining valuable life lessons, she says, in perseverance, hard work and dealing with people. Three years later, she quit to join the family’s investment group, Tecity.
Over the next 20 years, Chew worked with her grandfather and parents at the family-owned entity, which comprised an investment arm and her grandfather’s foundation, eventually joined by her younger sister and brother. In his final years, Chew says, she began to have a lot of conversations with Tan (who passed away in 2005). “Not just about going forward or the family business,” she says, “but also dialogues about money, the foundation, society. It was quite holistic.”
By this time, Singapore was emerging as a world financial hub. Under a programme introduced in 1999 to strengthen the banking sector, local banks were required to divest non-financial businesses. Consequently, OCBC faced unraveling its holdings in the stable of companies Tan had spent his career building. Anticipating this, Tan had a brief for his granddaughter: Buy at least one of my companies. Moves by Chew, now executive chairman of Tecity, in 2005 and 2006 to acquire Raffles Hotel and Robinson, respectively, didn’t pan out. But, in January 2008, she made an offer for Straits Trading, triggering a bidding war with OCBC founders, the wealthy Lee family. (The Lees owned about 7 percent of Straits Trading and controlled about 33 percent through shares in OCBC and its affiliate, insurer Great Eastern Holdings.)
The island nation watched as two of Singapore’s most prominent families seemingly went head to head. The Lees counterbid twice before Tecity issued its final price, which valued the company at about $1.7 billion. The Lee family and other shareholders accepted Tecity’s offer, giving Chew an 89 percent stake in Straits Trading. Chew dismisses any emotive element to the deal. “It was a corporate move,” she says, later adding that the relationship between the two families remains friendly.
Her first moves at Straits Trading were largely to shore up the company. She streamlined its investments into three businesses and strengthened fiscal discipline. She also initiated changes at its tin operations. In 2010, listed subsidiary Malaysia Smelting— one of the largest producers of refined tin in the world—sold its non-tin assets and expanded its focus to mining, a natural extension, Chew says, to create an integrated business.
But the bigger changes lay else-where. In November 2012, Chew restructured its lossmaking hotel division, selling its hospitality- management business to Singapore’s largest property developer, Far East Organization. Under the deal, Straits Trading sold two hotels for $224 million to Far East. At the same time, it entered a joint venture with the developer in which Straits Trading injected three hotel properties and 13 management contracts in exchange for $44 million in cash and a 30 percent stake in the new company, which is now one of the largest hotel operators in Asia, with more than 13,000 rooms under management across 80 properties in eight countries.