When Trust Fails and Family Civil War Breaks Out: Great Eagle Holdings Case Study

In 2018, the Lo family of Hong Kong held a combined 68% of Great Eagle Holdings (GEH), a publicly listed and one of the largest real estate conglomerates in Hong Kong, 33.5% through a family trust and the remainder through individual holdings. Only 32.5% of the company was in public hands. The case opened with Dr. LO Kai-shui (KS), chairman and managing director of GEH, musing about a deep and serious split in the family. Trained as a cardiologist, KS helped his father with the family business since 1980 and played a critical role in rescuing the company from near bankruptcy. Between 1984 and 2018, the Net Asset Value (NAV) of GEH expanded by 350 times as Hong Kong property values boomed. KS felt that he could take the credit for the company's success, as his father's right-hand man for most of that time, and chairman for the 12 years since his father's death in 2006, during which he expanded the company's assets, paid off debt, and raised HK$23 billion from capital markets. With the increase in his personal shareholdings to 27%, it raised questions among some of his eight siblings, despite the fact that his personal holdings were a matter of public knowledge. In 2016, KS' mother, Lo To Lee-kwan (Madam Lo), three of his brothers and two sisters challenged his control of the company, in a painful and very public family dispute focusing on the governing structure of the Lo family trust. The challenge not only put family control of GEH in jeopardy; it also raised questions about the ability of trust structures to maintain family unity in an Asian family business, where family unity and harmony, as well as wealth preservation and family values, are top priorities.