2/6/2014 History of Berjaya Group Bhd. – FundingUniverse

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Address:

11th Fl. Menara Berjaya, KL Plz.

Kuala Lumpur

50250

Malaysia

Telephone: 60 3 2935 8888

Fax: 60 3 2935 8043

Website: www.berjaya.com.my

Public Company

Incorporated: 1990

Employees: 24,000

Sales: MYR 7.7 billion ($1.9 billion) (2003)

Stock Exchanges: Kuala Lumpur

NAIC: 551112 Offices of Other Holding Companies; 517212

Cellular and Other Wireless Telecommunications; 622110

General Medical and Surgical Hospitals; 713990 All Other

Amusement and Recreation Industries; 721110 Hotels (Except

Casino Hotels) and Motels

1981:

1985:

1990:

1992:

1993:

1994:

1995:

1998:

2001:

2003:

2004:

Berjaya Group Bhd. History

Company Perspectives:

Mission: To generate consistently profitable returns for our shareholders from investments in core business activities: by providing

direction, financial resources and management support for each operating unit; through establishing a major market presence of

each activity; through dynamic and innovative management, teamwork and a commitment to excellence.

Key Dates:

Vincent Tan gains a franchise to open McDonald's restaurants in Malaysia.

The Malaysian government privatizes Sports Toto, the state lottery, and sells 70 percent to Tan.

Tan acquires full control of Sports Toto, and launches a new holding company, Berjaya Group.

The company acquires Unza Malaysia and Manufacturing Services Sendirian Berhard (MSSB), establishing personal care

products and other consumer products sales.

The company acquires Roasters Grill Inc. in the United States.

The company acquires Dunham-Bush, manufacturer of refrigeration and air conditioning systems.

Tan launches construction of the Berjaya Times Square complex; the company joins in the launch of the Mutiara Swisscom

mobile telephone service (later DiGi).

The company acquires the Malaysian franchise for the Starbucks coffee shop operations.

Berjaya restructures, and takes over 24 percent of DiGi.

Berjaya acquires the Hyundai concession in Malaysia.

Berjaya acquires 70 percent of organic food stores Country Farms; Tan joins in the launch of MiTV pay-television service.

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2/6/2014 History of Berjaya Group Bhd. – FundingUniverse

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Company History:

Berjaya Group Bhd. is a major Malaysian conglomerate with holdings ranging from lottery and casino operations; hotel, resort

development, and time-share development and management; mobile telephone services, through its holding in DiGi, the country's

third largest; food and beverages, notably through its McDonald's, Starbucks, Roasters, 7-Eleven, and other franchises; motor

vehicle sales through its Hyundai-Berjaya joint venture; the distribution of consumer goods and brands, including Cosway, Singer,

and others; and the manufacturing and distribution of air conditioning, refrigeration, and related systems through subsidiary

Dunham-Bush Malaysia, among others. The company is also a major real estate developer in Malaysia--the company's most

recently completed project is the massive Berjaya Times Square complex, which, at more than 675,000 square meters of retail,

entertainment, and leisure space, is the largest in the Asia Pacific region. Like many Asian conglomerates, Berjaya reflects the

work of a single person--in Berjaya's case, the company's fortunes have been developed by Tan Sri Dato' Seri Vincent Tan Chee,

who transformed the company from a tiny insurance agency to one of Malaysia's most powerful financial groups. In addition to his

own dealings within the Berjaya Group, Tan also has a range of personal investments, such as his backing of Malaysia's second

pay-TV service, MiTV, launched in October 2004. Berjaya Group is listed on the Kuala Lumpur Stock Exchange. In 2003, the

company posted revenues of MYR 7.7 billion ($1.9 billion).

Deserving a Break in the 1980s

Vincent Tan left school at the age of 16 and began his career as a bank clerk. Yet Tan quickly displayed an ambitious nature, and

by the end of the 1960s had launched a second career selling insurance in the evenings. Tan's ability as a salesman soon won him

a job as an agency supervisor for American International Insurance when he was just 21 years old.

Toward the end of the 1970s, Tan decided to go into business on his own, founding what was to become one of Malaysia's--and the

Asian Pacific region's--wealthiest business empires. Tan's initial business foray kept him close to the insurance industry. In the late

1970s, Tan set up a joint venture with Tokyo Marine & Fire Insurance.

Insurance proved only a means to an end, however. In 1981, Tan scored another noteworthy business victory when he won the

franchise to bring McDonald's fast food restaurants into Malaysia. By mid-decade, Tan had emerged as one of the country's fastest-

rising entrepreneurs. Part of Tan's success came through building a strong relationship with the government, particularly with

longtime leader Mahathir Maohamad. Although this relationship raised questions at times, Tan acknowledged the importance of his

link with Mahathir. As he told Fortune: "It's only prudent for a businessman to be friendly with the government of the day, but I'm not

into politics and our companies are well run."

The next phase in the development of the future Berjaya business empire came in 1985, when Tan convinced the Malaysian

government to privatize the state-run Sports Toto lottery and turn over its operation to Berjaya. The government agreed, and Berjaya

bought up 70 percent of the lottery, which had been founded in 1969 in order to raise funds for sports programs and other cultural

activities. Sports Toto was listed on the Kuala Lumpur Stock Exchange in 1987. In 1990, however, a restructuring of the lottery and

gaming business gave Tan full control of that operation. Sports Toto was then placed into one of many Berjaya holding companies,

Berjaya Land Berhad. At the same time, Tan and Berjaya were able to acquire a number of other Malaysian real estate and leisure

activities. By the mid-1990s, Berjaya had emerged as a strong player in the country's hotel and resort vacation industry, with

holdings including the Bukit Tinggi Resort complex.

During this time, Tan made use of the strong cash flow from Sports Toto to begin building a diversified, and ever changing,

conglomerate. The company entered a wide variety of industries, with holdings ranging from manufacturing to advertising to

distribution and restaurants. An example of this effort was the company acquisition of a 48 percent stake in the Singer Sewing

Machine Company's (SSMC) Malaysian subsidiary, acquired in 1985. Berjaya, which did not wish to limit itself to the Asian Pacific

region, next targeted SSMC itself, launching a takeover bid for the well-known U.S. company. Although that bid failed, Berjaya was

able to gain majority control of the Singer Malaysia operations. That stake was later placed under the holding company Cosway,

established in 1998 as Berjaya's manufacturing and distribution arm.

Malaysian Tycoon in the 1990s

Cosway became one of Berjaya's main operating subsidiaries. In addition to the Singer business, Cosway developed its own

"network-marketing" sales model, based on a multilevel sales model similar to that of Tupperware, Avon, and others. The company

became a major Malaysian distributor of cosmetics, toiletries, and fashion jewelry, among other products. Cosway also distributed

durable consumer goods, and by the beginning of the 2000s had expanded to include the distribution of audiovisual products, both

in the retail and rental markets, including films and children's educational products.

The Cosway holding was further expanded in 1992 with the purchase of the Unza Malaysia and Manufacturing Services Sendirian

Berhard (MSSB), both manufacturers of personal care and household products, with a combined presence in more than 20

countries, including subsidiaries in Singapore, Indonesia, Vietnam, Hong Kong, and China, and manufacturing operations in China

and Vietnam. These operations, expanded with the purchase of Unza International Limited in 2000, were then placed on the Kuala

Lumpur Main Board in 2000. The following year, Unza acquired two more companies, Gervas Corporation Sdn. Bhd. and Formapac

Sdn. Bhd., the latter a contract manufacturer for the former's line of personal care products.

2/6/2014 History of Berjaya Group Bhd. – FundingUniverse

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Cosway also branched out its manufacturing side, acquiring Dunham-Bush Malaysia. Originally set up in 1984, Dunham-Bush

specialized in the production of refrigeration and air conditioning equipment, marketed under brand names including Dunham-Bush,

Anemostat, Polacel, Topaire, and DataAire. Dunham-Bush was taken public in 1994, although majority control rested firmly with

Berjaya Group.

Meanwhile, Tan returned to the restaurant sector in the early 1990s. In 1993, Tan bought up the Roadhouse Grill restaurant

concept, promoted by country singer Kenny Rogers, and began opening restaurants in the United States. That operation quickly

spread, with company-owned restaurants in 11 states and franchise stores added in Brazil, Italy, and Malaysia. The company had

similar success with the acquisition of the 7-Eleven convenience store franchise for the Malaysian market. By the 2000s, the

company had opened nearly 220 7-Eleven stores in Malaysia.

By the mid-1990s, Tan had emerged as one of the most ambitious and most successful of Malaysia's growing class of business

tycoons. In 1995, Tan launched a new project in order to highlight his and Berjaya's success in building a wide range of successful

businesses. That project called for the construction of a massive shopping, entertainment, and leisure center, named Berjaya Times

Square, in Kuala Lumpur.

Work began on the structure that year. The complex at completion was to include more than 900 stores, as well as an amusement

park, hotel rooms, and other leisure and entertainment amenities. Covering more than 675,000 square meters, the complex became

the largest in the Asian region, and one of the largest such sites in the world.

Progress on the complex was slowed by the Asian economic crisis of the late 1990s, and the corresponding property slump, which

was then exacerbated by uncertainty following the September 11, 2001 terrorist attacks on the U.S. Nonetheless, Tan pushed

through with the project--which originally remained a personal project and not included within the Berjaya Group's financial structure-

-and the doors opened at the Times Square Complex in October 2003.

Restructured for the New Century

Yet the difficult economic climate at the beginning of the 2000s, coupled with Berjaya's soaring debt levels, forced Tan to lead the

company through an extensive restructuring effort. The restructuring essentially created a "new" Berjaya Group, transferring most of

the former company's assets into the new vehicle. Investors in the "old" Berjaya were then given one share in the new company for

every four shares they had previously held. Tan sweetened the deal by adding a number of his personal assets, such as part of the

Times Square development.

Another key asset added to the Berjaya group was 24 percent of Tan's 33 percent of mobile telephone service operator DiGi. That

company had originally been established as Mutiara Swisscom in 1995, and was the first in the country to offer a fully digital phone

service. Joining Tan in setting up the company was partner Telenor, of Norway, which also took 33 percent of the company. Mutiara

placed its stock on the Kuala Lumpur Stock Exchange in 1997, then changed its name to DiGi in 2000. By the dawn of the 21st

century it had developed into Malaysia's third largest mobile phone operator, and number one in pre-paid services sales.

Tan and Berjaya continued to look for new expansion opportunities into the next decade. In 1998, the company expanded its

restaurant offerings with the acquisition of the Malaysian license for the Starbucks coffee shop franchise. Through subsidiary

Berjaya Coffee Company, Berjaya opened its first Starbucks in 1998 and had ten stores in operation by 2002. In October 2001, the

company, through another of its holding companies, Matrix International, acquired Nature Avenue Sdn. Bhd., which operated the

Special Cash Sweep Number Forecast Lotteries in Sarawak.

Berjaya entered the automotive market in 2003, buying up Hyundai-Berjaya Sdn. Bhd. That business provided oversight for a

network of some 80 dealers selling Hyundai-branded cars and other vehicles in Malaysia. By 2004, however, Berjaya had begun

reducing its stake in the Hyundai franchise. The company also sold off a number of other holdings, including the Unza Holdings

group and another subsidiary, Taiga Forest Products Bhd.

Instead, Berjaya and Tan were looking in new directions. One of these came in September 2004, when the company bought a 70

percent stake in Country Farms Sdn. Bhd. That company operated two organic food stores in Malaysia. At the same time Tan

continued to build on his personal holdings. In July 2004, Tan moved to acquire more than 28 percent of Informatics Holdings, in an

effort to gain control of the educational products provider. That effort brought Tan head to head with another Malaysian business

tycoon, Oie Hong Leong. Meanwhile, Tan had joined a group of investors preparing the launch of a pay-TV service, MiTV, in October

2004. Tan, and Berjaya, had become firm fixtures at the top of Malaysia's business community in the new century.

Principal Subsidiaries: Berjaya Land Berhad; Berjaya Capital Berhad; Berjaya Sports Toto Berhad; Cosway Corporation Berhad;

Dunham-Bush (Malaysia) Bhd.; Matrix International Berhad; Hyundai-Berjaya Corporation.

Principal Competitors: CCL Industries Inc.; New World Development Company Limited; Sime Darby Berhad.

Further Reading:

Ahmad, Baidura, "Another Feather in Berjaya's Cap," New Straits Time, October 2, 2003.

2/6/2014 History of Berjaya Group Bhd. – FundingUniverse

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"Berjaya Incurs RM27.5m Q1 Loss," Business Times (Malaysia), October 1, 2004.

"Berjaya's Vincent Tan in Battle Royale for Informatics," Bernama, July 5, 2004.

"Berjaya Ventures into Food Distribution," Business Times, September 8, 2004.

Kraar, Louis, "Dedicated to Their Work," Fortune, Fall 1990, p. 81.

Ranawana, Arjuna, "Restructuring or Reshuffling?," Asiaweek, June 22, 2001.

"Tycoon to Launch Malaysia's Second Pay-TV Service in October," Catcha News, June 17, 2004.

Source: International Directory of Company Histories, Vol.67. St. James Press, 2005.

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