Aussie billionaire Frank Lowy’s pride dealt a blow in Westfield Group revolt
June 2, 2014 Leave a comment
Frank Lowy’s pride dealt a blow in Westfield Group revolt
May 30, 2014 – 9:50AM
James Thomson
Frank Lowy might have been forced to shelve his plan to restructure his family’s $70 billion property empire after a dramatic series of meetings on Thursday, but the damage will be more to the billionaire’s pride than his fortune.
While the Westfield empire will forever by synonymous with Lowy and his family, a diversification strategy has seen the percentage of their wealth directly related to Westfield’s decline in recent years.
Of the family’s total fortune of $7 billion, less than $2 billion is locked up in shares in the Westfield entities.
As for the rest of the fortune, the bulk is managed through LFG (for Lowy Family Group), which is run by Frank’s son David Lowy.
While Peter and Steven Lowy have a strong public profile as joint CEOs of Westfield Group, David is a more behind-the-scenes player.
But his influence over the family’s fortunes has become greater as the size of the Lowy Private Group has grown.
When the Lowy family sold down its entire stake in Westfield Retail Trust in March 2013 for $664 million, BRW estimated that the value of LFG had swelled to around $3 billion.
Its investments are believed to be many and varied, including investments in overseas equities and businesses, property and other financial asset classes. Its key objectives are to provide diversification and to support a wider variety of family interests.
“I have 10 grandchildren coming up through the ranks and they may want to pursue other opportunities,” Frank Lowy said back in 1998.
Of course, while the size of the Lowy family’s investment in Westfield may have fallen in recent years, their passion for the business is clearly undiminished, as was on display on Thursday.
But by threatening to demerge the Australian and New Zealand operations without going through with the merger of Westfield Group and Westfield Retail Trust that was at the centre of the original process, Frank Lowy has taken one of the boldest steps of his careers.
While he’s had his back to the wall fighting third parties to win control of key assets, he’s never taken on his own shareholders in this manner.
And somewhat ironically, the Lowy family’s strategy to diversify has made that task more difficult. Given the family doesn’t control as much of Westfield as it once did, the Lowys have had to work harder to convince a greater number of shareholders to back their plan.
And that hard work is far from over.
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