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The Fascinating History of Haw Par Corporation – Part 2

I had previously looked at how the Aw brothers – Aw Boon Haw and Aw Boon Par, the main architects behind the origin of Haw Par Corporation (SGX: H02)  – had helped built up the business their father, Aw Chu Kin, had left behind. During their leadership of the company, it had grown into one of the largest companies in the region.

However, like the well-known Chinese saying, “富不过三代” (literally translated as “no amount of wealth can last for more than three generations”), I had also pointed out how Aw Boon Haw’s death in 1954 had marked the beginning of the end of Haw Par Corporation’s business empire.

In here, I’d look at how the Haw brothers’ progeny had basically proven the Chinese saying right.

The beginning of the end

The son of Aw Boon Par, Aw Cheng Chye, took control of the family business and became the Chairman after the death of his uncle, Aw Boon Haw. He listed the family’s business in both Singapore and Malaysia as Haw Par Brothers International, which eventually became the Haw Par Corporation.

With a desire to expand Haw Par, Aw Cheng Chye ended up inviting a British investment company, Slater Walker Securities, to invest in Haw Par. Slater Walker eventually took over control of the company and aggressively expanded Haw Par in just a few short years. At its peak, Haw Par was the fifth largest company in Singapore’s stock exchange.

Unfortunately, Haw Par’s ‘growth’ was built on a castle of sand – It was soon discovered that all that Slater Walker had led Haw Par to achieve had been done through fraudulent activities. The Haw Par empire was destroyed. The company’s former chairman, Richard Tarling, was even sentenced to prison for his involvement in the fraud.

The bail out begins

The government of Singapore had to take control as Haw Par was restructured. At the same time, three companies began fighting for control over Haw Par Corporation. They were the Hong Leong Group, Jack Chia Limited (an investment vehicle for Thai businessman Chiarapurk Jack), and United Overseas Bank (SGX: U11). As the struggle gradually subsided, these companies were left with respective stakes of 7%, 16%, and 17% in Haw Par Corporation. United Overseas Bank had also managed to take control of Chung Khiaw Bank, a bank that was founded by Aw Boon Haw.

By 1981, United Overseas Bank had taken full control of Haw Par Corporation by increasing its ownership stake to more than 30%. Under the  bank, Haw Par Corporation was transformed from a conglomerate into a more focused company. Non-core businesses such as textiles, travel agencies, and electronics retailing were all divested. The company’s main business, like the manufacture and sale of Tiger Balm, was kept. That line of business is still part of Haw Par Corporation even now.

Foolish Summary

Today, Haw Par Corporation is an investment company with most of its assets made up of investments in the shares of United Overseas Bank, UOL Group (SGX: U14) and United Industrial Corp (SGX: U06). The company also has three main operational segments: Healthcare, Leisure, and Properties.

Haw Par Corporation’s famous Tiger Balm brand of products is housed under its first segment. With the second segment, the company owns two oceanariums: the Underwater World Singapore in Sentosa, and Underwater World Pattaya in Thailand. Lastly, the property segment sees Haw Par Corporation own commercial and industrial properties in Singapore, Malaysia, and Hong Kong.

With more than 130 years of history, Haw Par Corporation has certainly come a long way from its origin as a simple medicinal balm maker.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.