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Published March 21, 2012
OUTSTANDING CEO OF THE YEAR
Building a 'living company'
ARA Asset Management boss John Lim tells FELDA CHAY that what he wants is a firm that can last for generations - not one that will fade away after he steps down
MOVIE villain Gordon Gekko and his real world Wall Street pals may subscribe to the notion that 'greed is, for the lack of a better word, good', but John Lim, chief executive of real estate fund manager ARA Asset Management, will tell you otherwise.
The man, who in one decade built ARA into a firm that has S$20 billion in assets under management (AUM), says that his focus is to build a 'living company' - one that has values, a shared culture and where the investors' interests are the priority.
'Deep down in my heart I'm looking to build a living company, one that can last for generations, and not one that will fade away after I've stepped down,' explains the 55-year-old.
Since starting ARA in 2002, Mr Lim has focused all his attention on growing the business and establishing its platforms - a process he likens to building a nation. Now that the company has taken off, with a presence in 11 cities across Asia, he believes it's time to focus on the softer bits.
'The challenge for me now is to create the soul and character of the organisation. We need to have strong and common values that can be shared by all the staff of different nationalities, whether it is the Chinese, Indians, Americans, British, Dutch, Malaysians or Singaporeans, to build a cohesive organisation.'
ARA, he says, employs over 800 people of 18 nationalities. So creating a set of values and a culture that would bind everyone is not easy. What Mr Lim has done is put in place a value system that he hopes is shared by every employee of the company.
Called Reit, the term not only refers to the numerous real estate investment trusts that ARA manages, but also to the four key values that Mr Lim hopes to instil in employees: respect, excellence, integrity and teamwork.
Activities for staff
Of course, catchy acronyms alone would not do the work. ARA tries to bond its workers by organising a whole host of activities and training classes for them. From wine-appreciation classes to grooming courses and training to understand human behaviour, ARA has gone for them. Then there are the bowling games and movie nights for staff to let their hair down and relax in each others' company.
'We do a lot of activities so that people can interact with each other and grow to share the same values,' explains Mr Lim.
ARA has also been busy establishing its corporate social responsibility (CSR) programme. The group makes what Mr Lim calls 'modest donations that are nothing to shout about', and since 2008 works with Mr Lim's own philanthropic organisation, the Lim Hoon Foundation, to give out bond-free scholarships to financially strapped students who meet the admissions criteria of universities like the Singapore Management University.
'They are free to come back to work for ARA after graduation if they want to, but if they want to move on to work somewhere else, that is also fine. But throughout the period of their study, we engage them, the students come back and do internships with us. They are invited to attend all our functions, whether it is bowling night or movie night or our annual dinner, we invite all of them to participate.'
The key to running all these initiatives, says Mr Lim, is to implement them in a sustainable manner.
'It doesn't have to be a big event or initiative, but it must be sustainable. To me the key here is not to do these things just once and talk about them. They have to be sustained. It may be compared to spending money eating a good meal every day. Once in a while you have a very expensive meal. But you can't sustain by eating an expensive meal every day.
'We are a small organisation. We are not here to save the world, but we must do our part.'
Mr Lim's vision for the scholarship programme is to one day be able to create an alumni association made up of the scholars that ARA and the Lim Hoon Foundation have helped, and have them contribute to society.
'Hopefully, over the years when the scholars become successful, they can actually come back and contribute to ARA and society, not so much in terms of money but in terms of time,' says Mr Lim.
'This is a long-term programme. As of today we have 10 scholars. I meet them at least once a year for lunch and I'll tell them, if you cannot afford to contribute in monetary terms, you can put in your time.
'Some will help and some will not, but if I successfully get half, or more than half, of the scholars to come back and help out, then that is already very successful.'
Of course, the money stuff matters as well for a company, and Mr Lim knows this. ARA has, in its 10 years, managed to grow its AUM by S$2 billion per year on average, and he expects the company to at least continue growing its AUM at that rate up till 2016.
His dream, however, is to see the assets managed by the group double in value, to hit S$40 billion, in five years.
'In the first 10 years, you are building up your platforms, so you should not take another 10 years to grow another S$20 billion because your platforms are already established. We have set a vision to double our AUM within the next five years. But then again, this is a goal, and you make your team work towards that. Whether we can reach it does not matter. The minimum we should be able to do though is to grow AUM by an average of S$2 billion a year for the next five years.'
Even with the poor global economic climate and measures by governments in China, Hong Kong and Singapore - all of which are key markets for ARA - to cool the residential property market, Mr Lim believes this minimum target is possible.
'Everyone is so worried about the property market, but we are not a property company. We are a fund manager, and in fund management, you can do business at any point of the property cycle. When the market is going down, you buy properties, and at the peak you don't buy properties any more, you do development work.
'When prices are falling, you set up distressed funds, you set up opportunistic funds to take advantage of the market by buying distressed assets. So you see, we are not developers who build and have to sell, for example, residential properties. When you buy a distressed asset in a bad market, you must know how to manage the distressed asset well so that when the market turns around you can sell it for a profit.'
Also, ARA makes its investments on a five- to 10-year horizon, he says. 'We are not short-term investors or speculators. We don't try to buy today and flip tomorrow. We actually buy assets, manage and hold them for a period of time for our investors.'
A simple philosophy
To those who still think that Mr Lim's dream of doubling ARA's AUM is daunting in this climate, rest assured that he will not try to realise that dream by sacrificing the interests of his investors.
'Investors come first, then the company, then ourselves as individuals. This is my philosophy in terms of how we run the business and it has served us very well over the years. And this is something that I talk to every staff about at every opportunity, that it is something they have to remember always.
'It's a very simple philosophy, nothing complicated, but it's hard and takes efforts to put into action. But if the investors don't make money, they won't do business with you any more. And if they don't do business with you, the company won't make money. If the company doesn't make money, how can you reward the staff?
'So first, you must make sure that the investors make money. Then when you get more money to manage, you can also pay your staff much better and give them higher bonuses. It's a virtuous cycle and self-generating.'
To all the Gordon Gekkos in the world, know this: Mr Lim, backed by his philosophy, has grown ARA from a US$1 million set-up into a company which saw its market value exceed S$1 billion for the first time in 2010.
Published March 21, 2012
OUTSTANDING CEO OF THE YEAR
Making a mark in a very tough business
By FELDA CHAY
FEW people at the age of 45, with mortgages to pay off and a family to feed, would quit a job that pays a stable salary to set up a company, risking everything they own.
But support from Hong Kong tycoon Li Ka-shing and a wish to set up a fund, pushed ARA's John Lim into the dark waters. And he has made a splash in the real estate fund management scene.
'What I'm particularly proud of is how the company has grown. The success of this organisation can be seen within the industry. People outside the industry may not know who ARA is, but within the industry we are very, very well known because we have grown from nothing to a company with assets under management of S$20 billion in 10 years.'
Yet, starting out was not easy. Mr Lim decided to set up ARA in 2002, putting in US$700,000 of his own money while Mr Li's Cheung Kong Holdings Ltd pitched in with US$300,000. And then the Sars (Severe Acute Respiratory Syndrome) epidemic hit in 2003.
'Many people thought it was the end of the world with so many having to be quarantined with the outbreak of Sars, and we actually started a business - a fund management business at that. We had to go around to raise money and who was going to give you money to invest in Asia when you had Sars and people were dying?
'Nobody was going to get involved. So actually that was a very tough period. At certain points during that period, I told my wife that if we burn out all our capital, then I would have to find a job again.'
'But we never gave up,' he says. He continued to think of how to develop the company, what sort of strategies to take. When Sars finally ended its run, ARA launched its first product, the Fortune Reit, the first cross-border real estate investment trust in Asia, and the first with a dual primary listing in Hong Kong and Singapore.
'With that Reit we managed to earn some income to bring this company forward. And the rest is history,' he says.
Lest you think the life of a fund manager is easy, Mr Lim has this to say: 'Half the time, I'm not in Singapore. Imagine, you have to cover 11 cities in Asia, and you also have to go and do fund-raising in the United States and Europe. After you've raised the money, you've to make investments and go to all the cities and look at where and what to invest in.
'After you've invested in a property, the challenge is putting together a team to make sure that the property is properly managed, for instance. And when you are done with all that, years have gone by, and soon it's time to sell the property. So it's a full cycle. This is a very tough business.'
A fund manager must also have an intimate knowledge of the ground, Mr Lim points out. 'If you go to Beijing you must know Beijing. You must know the streets and buildings. If you go to Shanghai you must know Shanghai. So it's not easy. You actually have to spend time in these cities, know the ground, the market, the culture. It's not just about reading a book and a map and then saying I'm the expert. You have to spend time doing transactions in these cities.'
Now that ARA has made its mark, Mr Lim says he has many people asking him why a bigwig like Mr Li picked him as a partner years ago. 'I suppose it's because I've been a fund manager for a while. I know Asia and I was working at an MNC and crossed paths with Cheung Kong. So I actually got to know Justin Chiu, executive director at Cheung Kong, and Mr Li's son, Victor Li, through business dealings.
'I believe that the reasons why they picked me was because of the way I deal with the work: being fair and, at the same time, tough. And with integrity. There were plenty of people out there who are more talented than me. So I think it was because I'm fair, and maybe tough in negotiations, that made them consider working with me.'
And for those who are curious to know what ARA stands for - a question Mr Lim says he has been asked many times - it's Asia Realty Advisors.
OUTSTANDING CEO OF THE YEAR
Building a 'living company'
ARA Asset Management boss John Lim tells FELDA CHAY that what he wants is a firm that can last for generations - not one that will fade away after he steps down
MOVIE villain Gordon Gekko and his real world Wall Street pals may subscribe to the notion that 'greed is, for the lack of a better word, good', but John Lim, chief executive of real estate fund manager ARA Asset Management, will tell you otherwise.
The man, who in one decade built ARA into a firm that has S$20 billion in assets under management (AUM), says that his focus is to build a 'living company' - one that has values, a shared culture and where the investors' interests are the priority.
'Deep down in my heart I'm looking to build a living company, one that can last for generations, and not one that will fade away after I've stepped down,' explains the 55-year-old.
Since starting ARA in 2002, Mr Lim has focused all his attention on growing the business and establishing its platforms - a process he likens to building a nation. Now that the company has taken off, with a presence in 11 cities across Asia, he believes it's time to focus on the softer bits.
'The challenge for me now is to create the soul and character of the organisation. We need to have strong and common values that can be shared by all the staff of different nationalities, whether it is the Chinese, Indians, Americans, British, Dutch, Malaysians or Singaporeans, to build a cohesive organisation.'
ARA, he says, employs over 800 people of 18 nationalities. So creating a set of values and a culture that would bind everyone is not easy. What Mr Lim has done is put in place a value system that he hopes is shared by every employee of the company.
Called Reit, the term not only refers to the numerous real estate investment trusts that ARA manages, but also to the four key values that Mr Lim hopes to instil in employees: respect, excellence, integrity and teamwork.
Activities for staff
Of course, catchy acronyms alone would not do the work. ARA tries to bond its workers by organising a whole host of activities and training classes for them. From wine-appreciation classes to grooming courses and training to understand human behaviour, ARA has gone for them. Then there are the bowling games and movie nights for staff to let their hair down and relax in each others' company.
'We do a lot of activities so that people can interact with each other and grow to share the same values,' explains Mr Lim.
ARA has also been busy establishing its corporate social responsibility (CSR) programme. The group makes what Mr Lim calls 'modest donations that are nothing to shout about', and since 2008 works with Mr Lim's own philanthropic organisation, the Lim Hoon Foundation, to give out bond-free scholarships to financially strapped students who meet the admissions criteria of universities like the Singapore Management University.
'They are free to come back to work for ARA after graduation if they want to, but if they want to move on to work somewhere else, that is also fine. But throughout the period of their study, we engage them, the students come back and do internships with us. They are invited to attend all our functions, whether it is bowling night or movie night or our annual dinner, we invite all of them to participate.'
The key to running all these initiatives, says Mr Lim, is to implement them in a sustainable manner.
'It doesn't have to be a big event or initiative, but it must be sustainable. To me the key here is not to do these things just once and talk about them. They have to be sustained. It may be compared to spending money eating a good meal every day. Once in a while you have a very expensive meal. But you can't sustain by eating an expensive meal every day.
'We are a small organisation. We are not here to save the world, but we must do our part.'
Mr Lim's vision for the scholarship programme is to one day be able to create an alumni association made up of the scholars that ARA and the Lim Hoon Foundation have helped, and have them contribute to society.
'Hopefully, over the years when the scholars become successful, they can actually come back and contribute to ARA and society, not so much in terms of money but in terms of time,' says Mr Lim.
'This is a long-term programme. As of today we have 10 scholars. I meet them at least once a year for lunch and I'll tell them, if you cannot afford to contribute in monetary terms, you can put in your time.
'Some will help and some will not, but if I successfully get half, or more than half, of the scholars to come back and help out, then that is already very successful.'
Of course, the money stuff matters as well for a company, and Mr Lim knows this. ARA has, in its 10 years, managed to grow its AUM by S$2 billion per year on average, and he expects the company to at least continue growing its AUM at that rate up till 2016.
His dream, however, is to see the assets managed by the group double in value, to hit S$40 billion, in five years.
'In the first 10 years, you are building up your platforms, so you should not take another 10 years to grow another S$20 billion because your platforms are already established. We have set a vision to double our AUM within the next five years. But then again, this is a goal, and you make your team work towards that. Whether we can reach it does not matter. The minimum we should be able to do though is to grow AUM by an average of S$2 billion a year for the next five years.'
Even with the poor global economic climate and measures by governments in China, Hong Kong and Singapore - all of which are key markets for ARA - to cool the residential property market, Mr Lim believes this minimum target is possible.
'Everyone is so worried about the property market, but we are not a property company. We are a fund manager, and in fund management, you can do business at any point of the property cycle. When the market is going down, you buy properties, and at the peak you don't buy properties any more, you do development work.
'When prices are falling, you set up distressed funds, you set up opportunistic funds to take advantage of the market by buying distressed assets. So you see, we are not developers who build and have to sell, for example, residential properties. When you buy a distressed asset in a bad market, you must know how to manage the distressed asset well so that when the market turns around you can sell it for a profit.'
Also, ARA makes its investments on a five- to 10-year horizon, he says. 'We are not short-term investors or speculators. We don't try to buy today and flip tomorrow. We actually buy assets, manage and hold them for a period of time for our investors.'
A simple philosophy
To those who still think that Mr Lim's dream of doubling ARA's AUM is daunting in this climate, rest assured that he will not try to realise that dream by sacrificing the interests of his investors.
'Investors come first, then the company, then ourselves as individuals. This is my philosophy in terms of how we run the business and it has served us very well over the years. And this is something that I talk to every staff about at every opportunity, that it is something they have to remember always.
'It's a very simple philosophy, nothing complicated, but it's hard and takes efforts to put into action. But if the investors don't make money, they won't do business with you any more. And if they don't do business with you, the company won't make money. If the company doesn't make money, how can you reward the staff?
'So first, you must make sure that the investors make money. Then when you get more money to manage, you can also pay your staff much better and give them higher bonuses. It's a virtuous cycle and self-generating.'
To all the Gordon Gekkos in the world, know this: Mr Lim, backed by his philosophy, has grown ARA from a US$1 million set-up into a company which saw its market value exceed S$1 billion for the first time in 2010.
Published March 21, 2012
OUTSTANDING CEO OF THE YEAR
Making a mark in a very tough business
By FELDA CHAY
FEW people at the age of 45, with mortgages to pay off and a family to feed, would quit a job that pays a stable salary to set up a company, risking everything they own.
But support from Hong Kong tycoon Li Ka-shing and a wish to set up a fund, pushed ARA's John Lim into the dark waters. And he has made a splash in the real estate fund management scene.
'What I'm particularly proud of is how the company has grown. The success of this organisation can be seen within the industry. People outside the industry may not know who ARA is, but within the industry we are very, very well known because we have grown from nothing to a company with assets under management of S$20 billion in 10 years.'
Yet, starting out was not easy. Mr Lim decided to set up ARA in 2002, putting in US$700,000 of his own money while Mr Li's Cheung Kong Holdings Ltd pitched in with US$300,000. And then the Sars (Severe Acute Respiratory Syndrome) epidemic hit in 2003.
'Many people thought it was the end of the world with so many having to be quarantined with the outbreak of Sars, and we actually started a business - a fund management business at that. We had to go around to raise money and who was going to give you money to invest in Asia when you had Sars and people were dying?
'Nobody was going to get involved. So actually that was a very tough period. At certain points during that period, I told my wife that if we burn out all our capital, then I would have to find a job again.'
'But we never gave up,' he says. He continued to think of how to develop the company, what sort of strategies to take. When Sars finally ended its run, ARA launched its first product, the Fortune Reit, the first cross-border real estate investment trust in Asia, and the first with a dual primary listing in Hong Kong and Singapore.
'With that Reit we managed to earn some income to bring this company forward. And the rest is history,' he says.
Lest you think the life of a fund manager is easy, Mr Lim has this to say: 'Half the time, I'm not in Singapore. Imagine, you have to cover 11 cities in Asia, and you also have to go and do fund-raising in the United States and Europe. After you've raised the money, you've to make investments and go to all the cities and look at where and what to invest in.
'After you've invested in a property, the challenge is putting together a team to make sure that the property is properly managed, for instance. And when you are done with all that, years have gone by, and soon it's time to sell the property. So it's a full cycle. This is a very tough business.'
A fund manager must also have an intimate knowledge of the ground, Mr Lim points out. 'If you go to Beijing you must know Beijing. You must know the streets and buildings. If you go to Shanghai you must know Shanghai. So it's not easy. You actually have to spend time in these cities, know the ground, the market, the culture. It's not just about reading a book and a map and then saying I'm the expert. You have to spend time doing transactions in these cities.'
Now that ARA has made its mark, Mr Lim says he has many people asking him why a bigwig like Mr Li picked him as a partner years ago. 'I suppose it's because I've been a fund manager for a while. I know Asia and I was working at an MNC and crossed paths with Cheung Kong. So I actually got to know Justin Chiu, executive director at Cheung Kong, and Mr Li's son, Victor Li, through business dealings.
'I believe that the reasons why they picked me was because of the way I deal with the work: being fair and, at the same time, tough. And with integrity. There were plenty of people out there who are more talented than me. So I think it was because I'm fair, and maybe tough in negotiations, that made them consider working with me.'
And for those who are curious to know what ARA stands for - a question Mr Lim says he has been asked many times - it's Asia Realty Advisors.
