Wong Kok Siew’s hero is Jack Welch. He has several biographies of the former General Electric CEO in his office bookcase. That may not make him different from many another CEO, but Wong happens to run a conglomerate -- Singapore’s SembCorp -- that rivals GE in complexity and corporate sprawl: It has been involved in everything from the Internet to croissants.
Now Wong, 55, is trying to impose GE-style discipline on government-owned SembCorp’s hodgepodge of businesses by narrowing the company’s panoramic focus. “We aim to grow SembCorp into a focused conglomerate with key divisions like infrastructure, marine engineering and logistics,” he says. And, sounding a lot like Welch, Wong declares that he intends for each division to be dominant in its market and for SembCorp to become truly global.
Out the window have gone not only the croissants but also real estate, shipping and retailing. Next Wong wants to dispose of a grab bag of other enterprises, including hotels, industrial parks and computer and Internet services.
The motive is not merely to concentrate on core businesses, in keeping with the latest fashion in corporate strategy. SembCorp needs the dough: It’s as much as $1.4 billion in hock. So far the asset hive-offs have brought in nearly $600 million, and the next round of sales should chip in $500 million.
But it’s unlikely that all this cash will go to paying down debt: SembCorp is sure to be a spirited bidder in the government’s impending auction of power plants. And soon, say local bankers, the company will merge with another government conglomerate -- Keppel Corp., which also does ship repairs.
Wong has doubled SembCorp’s return on equity, to 12 percent, in his three years running the company. His aim: to increase ROE to 20 percent in four years. But that would still mean he has a ways to go to catch up to his hero: During Welch’s regime GE consistently achieved an ROE of 25 percent.
