Frank Lowy’s succession plan evolves as Australian and overseas assets are split

December 8, 2013 Leave a comment

Andrew Heathcote Rich Lists editor

Frank Lowy’s succession plan evolves as Australian and overseas assets are split

Published 04 December 2013 11:55, Updated 04 December 2013 12:13

Frank Lowy will chair both of the new Westfield companies. Jim Rice

Business owners wanting a practical example about the right way to handle succession could do worse than look at Frank Lowy. This morning, Lowy announced plans to take the Australian and New Zealand shopping centres from Westfield Group and put them into the separately listed Westfield Retail Trust, which will be re-named Scentre.Westfield will keep the international shopping centres and continue to look for new growth opportunities overseas.

The change will substantially boost the size of Westfield Retail Trust, the company the Lowys sold-out of in March. Westfield says the 47 Australian and New Zealand centres under the management of Scentre will be worth $37.9 billion, while the overseas centres, which are staying within Westfield, are worth $27.6 billion.

“Westfield’s international business and its Australian/NZ business have both grown in scale and quality to the stage where they can now stand on their own,” Lowy said in this morning’s ASX-announcement outlining the changes.

“They can each operate more efficiently, and generate greater growth and value for investors, by being independent.”

It is the latest in a long list of changes that are designed to provide the Lowys a relatively smooth exit from a business that started small and led to a $7 billion family fortune.

“The proposal represents the latest in a series of capital restructures that have maintained the success of Westfield since it was first listed in 1960,” Lowy said today.

While Lowy will remain chairman of Westfield and take on the same job at Scentre in the short-term, the re-ordering creates new opportunities for non-family members within the management team.

Lowy’s sons Peter and Steven Lowy will remain joint chief executives of Westfield, before Peter reduces his contribution and assumes a non-executive role within 18 months.

Westfield’s chief financial officer Peter Allen will be appointed Scentre’s chief executive.

While it is not well known, most of the Lowys fortune is already privately held. It became a lot more private in March this year when the family’s private company LGH Holdings sold its $660 million stake in Westfield Retail Trust.

The latest asset split is not entirely clean, but it does mean the Lowys have taken another step in the gradual transition from shopping centre owners to highly diversified billionaires.

The final piece of the puzzle will be a decision by Frank Lowy to relinquish his chairman roles. This will be hard for Lowy but given he is already 83 years old, it may not be far away.

By the time he does step down, his Westfield empire will be split into parts with separate strategies and diverse management teams.

Succession is inordinately difficult for many business owners. While the job is not yet done, the gradual ‘de-Westfielding’ of the Lowy’s fortune provides timely encouragement for others to think about their own strategies.

Filed under Life, Macro Trends

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