Managing changes through financial engineering and flexibility

Patrick Yeung Kai-cheung, chairman and founder of Asian Capital Holdings, believes that success in the business world all boils down to people, specifically their integrity and abilities. The accountant-turned-corporate doctor, whose record includes helping 29 locally listed companies resume trading after financial restructuring, also thinks many business owners focus too narrowly on their own concerns and seem to forget what is happening in the wider world until it is too late.

Yeung will be a speaker at the CIMA/HKU Space joint forum on “Managing Changes in Corporate Financial Re-engineering” on 10 May, along with Edinburgh Business School Forum Professor Douglas McCulloch, who will lecture on “Evaluating Priority in Change Management at Work”.

Yeung likes to use his own company to illustrate the axiom that change is the only constant in business” and to show how the financial re-engineering process can lead to long-term development and growth.

Founded in 1998, Asian Capital Holdings was listed on the Growth Enterprise Market in 2010. It specialises in providing corporate advisory, underwriting and proprietary trading for small-cap companies.

“Our business is financial engineering, or to help others to do financial engineering,” says Yeung. “And just like other businesses, we operate according to the resources we have.”

Asian Capital is a typical example of how an enterprise can raise funds through listing. Before 2010, it had shareholder funds of only HK$10 million, but the total jumped to HK$130 million, thanks mainly to the HK$60 million raised through the initial public offering and a later HK$24 million placement. This, of course, has made it easier for the company to get through a period of uneven annual profits over the last five years.

Before becoming a corporate doctor, Yeung had a varied career, starting with in an accounting firm which helped restructure the debt for a jewellery business, going on to eight years at Standard Chartered Bank, and then running a business the bank took over after default. Later, Yeung was credited with turning around Macau banking institution Delta Financial in 1996 and, as a recognised insolvency specialist, decided to return to debt restructuring and start his own company, Asian Capital, in 1998.

He says a common pitfall seen in this line of work is companies burning more cash than they earn.

“Sometimes, companies focus too much on their own [plans] and make more capital investments than they can really afford,” Yeung says. “They are not aware of the changing world, and when they realise the problem, it is often too late.”

He adds that success or failure always depends on business operations and the avoidance of basic mistakes. The role of financial re-engineering is only supplementary.

Among the “failures” he has come across, he particularly remembers Smart Union Group, a toy manufacturer with more than 10,000 staff, which encountered problems in 2008 not due to the financial crisis, but because of a flood in Shenzhen. Sited close to a river, the company suffered damage to inventory in its factory and production stopped for a month. Inevitably, this affected cash flow, which led to bankers calling in loans and the municipal government eventually taking control.

“Usually, for a company to fail, you have to commit 10 fatal mistakes,” Yeung says. “But in this case all mistakes came at the same time.”

Yeung also has a special interest in promoting financial education. He is an adjunct professor at his alma mater, the Hong Kong Polytechnic University, and a former treasurer at Lingnan University, which made him an honorary fellow.

In turn, Alick Kitchin, Edinburgh Business School’s business director, believes being flexible is the best way to deal with change. He notes too that the aspect of flexibility is also a key reason for many of the school’s annual intake of more than 3,000 students choosing its programmes.

“Our students are all mature, experienced business professionals,” Kitchin says. “The ability to fit MBA-level study around a busy working life means they can acquire a globally recognised qualification without being diverted from their job responsibilities.”

To make the programme more attractive for Hong Kong students, Edinburgh now offers the flexibility of taking its MBA course in either English or Chinese. With support from HKU Space, the school also offers local classes and tutors for exam preparation and revision, scheduled to be of maximum advantage to students.

“Our MBA programme enables students to study when, where and as intensively as they want,” Kitchin says.

Posted in Organizational Change Management.

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