It was March 1993 when a well-known businessman prince first hooked up with a charming university dropout with a flair for publicity. In the boom days of the mid-1990s, the pair dabbled in everything from manufacturing luxury sports cars to producing rubber gloves to growing fruits and vegetables using large-scale U.S.-style farming machinery in tiny Malaysia. There were plans to buy a petrochemical plant in Tartarstan and to build a dam in Zimbabwe. Backed by the prince’s credentials, banks were all too happy to fund his young partner’s ideas. But most of the businesses never took off or quickly folded, with the most spectacular failures contributing to losses totaling tens of millions of dollars.
After the Asian crisis hit in 1997, Tunku Imran Tuanku Ja’afar, 51 — from the most socially prominent and business-oriented of Malaysia’s nine royal households, the Negeri Sembilan family — retreated to steer his public-listed conglomerate, Antah Holdings Bhd., through tough times. His partner, Vinod Sekhar, dropped out of sight for a couple of years amid talk the two had fallen out.
Now the unlikely duo is back. And just as they rode the big trends of the 1990s Malaysian corporate scene — rapid diversification, conspicuous consumption and grandiose overseas ventures — they’re jumping on the next big thing: the Internet. Under their new flagship Petra group, prince and protege have in recent months signed deals to pay a total of about $40 million for Internet companies in Malaysia, Singapore and the U.S.
The new ventures show not just the resilience of a business partnership and personal friendship that has confounded many observers. They also underscore the fact that even in the New Economy, good old-fashioned connections often still count in Asia.
After all, “who’s a young punk like me?” asks the 31-year-old Datuk Vinod. “At the end of the day, Tunku Imran was there. It gives weight.” (The royal connection has been useful in other ways; the businessman’s title of Datuk — an honorific that opens doors in Malaysia’s status-conscious business circles — was conferred by Tunku Imran’s family five years ago, making him one of the country’s youngest Datuks ever.)
It’s late afternoon in the spacious sun-filled office where Datuk Vinod conjures his cyber strategies. Surrounded by his iMac, mini-golf putting green and views of the Kuala Lumpur skyline, today, the portly businessman, a cartoon fanatic, is wearing Winnie the Pooh socks and a Pocahontas tie. Next to him, in a gray suit and puffing on a Cuban cigar, is the even rounder figure of Tunku Imran, better known to his friends as Pete, a nickname bestowed by his Anglophile grandfather, Malaysia’s first king.
They roll their eyes at the talk of bad blood between them. “Vinod made a lot of mistakes [and] I should have been more cautious, particularly with my experience,” acknowledges Tunku Imran in his clipped British accent. He declines to say exactly how much money he has lost, except to confirm that the venture to manufacture Australian-designed Bufori sports cars swallowed up their investment of 30 million ringgit (US$8 million at current exchange rates; US$12 million at the time).The failed attempt at farming, which the prince says is the one that sank them, cost the duo even more than that. “It was painful,” says Tunku Imran.
So why is the prince putting more money, as well as his personal and professional reputation, on the line? Because the new ventures offer the kind of risky thrills his bread-and-butter job doesn’t and because he can afford it, says Tunku Imran. Then there’s friendship and faith.
“We’re close enough friends to put that all behind us and not blame anyone,” says Tunku Imran. Besides, “I really believe he’s the one person who knows where this IT [information technology] is going to lead,” says the prince. He admits that he himself is a “one-finger typer” who has never surfed the Internet although he does “do my own e-mails.” He adds quickly: “but don’t expect long replies from me.”
Datuk Vinod on the other hand, regards himself a bit of a technophile. As early as 1995, he envisioned building an Asian version of AOL out of one of his many ventures with Tunku Imran, called STI Asia Connect Sdn. Bhd. But that company was sold within a year at a profit over management differences with the chief executive they hired.
In recent months, Petra group, named after Datuk Vinod’s four-year-old daughter Petra, who is in turn named after Pete, has issued a flurry of announcements.
It has bought Mania Holdings Pte. Ltd., a Singapore company that runs an online mall called orchard-road.com , named after the famous Singapore shopping strip, for S$20 million. The plan is to soon set up similar retailing Web sites for Malaysia, the Philippines and Indonesia, and then eventually link these and others up to form a worldhighstreet.com site.
Petra has also teamed up with the Malaysian subsidiary of German sports broadcaster WIGE Media AG to sell tickets for sports, theme parks and other events online. In December, it gained control of Berens Industries Inc., which owns an art auction portal, by selling its own Artmovement.com to Berens in a exchange for Berens shares valued at $15 million. Also in December, Petra bought Dialog Interaktif Sdn. Bhd., an Islamic-lifestyle Web site, for 12 million ringgit. Most of the Web sites are at initial development stage or being tested; none are making money.
Some of Datuk Vinod’s new business partners say that unlike many investors in Southeast Asia, the guy seems to understand the Internet economy. He offers relatively attractive prices for companies, quickly pays out the first installment, and doesn’t interfere with the day-to-day running of the businesses, allowing the founders to carry on with their original plans.
“The Internet is speed. Petra decided quickly. Some other VCs [venture capitalists] dilly-dallied and put up ridiculous terms and conditions,” says Ferhad Ahmad, chief operating officer of Dialog Interaktif. Dialog Interaktif was in dire need of cash to develop its syukur.com Web site. The site aims to build an online community of Muslims by offering services such as local prayer and fasting times, a religious advice columnist, free electronic cards for religious festivals and eventually, sales of religious paraphernalia such as skull caps, prayer robes, books and flowers.
“Our cash flow was depleting,” says Mr. Ferhad. “Datuk Vinod was the one who came up with the best offer.” The lesser offers on the table were from traditional investors more familiar with manufacturing businesses.
Weren’t the former owners of Petra’s acquisitions concerned about the businessman’s track record? As with previous ventures, having Tunku Imran in the equation helped. “If Tunku Imran wasn’t around, I would have spent a much longer time” checking out Datuk Vinod’s background, says the Singaporean founder of Mania Holdings, Rudy Kadjairi. Mr. Kadjairi sold Mania, which he’d spent five years building, to Petra late last year but continues to run the show.
Datuk Vinod first met Tunku Imran as a child; the prince was friends with Datuk Vinod’s father, B.C. Sekhar, a prominent figure in Malaysia’s then-thriving rubber industry. When Datuk Vinod decided to leave his U.S. college a few credits shy of completing a joint degree in molecular biology and political science, he sought out his father’s friend and suggested doing business together. To the surprise of many in Malaysia’s corporate world, the prince said yes to the young man, whose only previous business experience was selling T-shirts with U.S. college crests sewn in a friend’s father’s factory in India.
In 1993, they set up a holding company called Sekhar-Tunku Imran Sdn. Bhd., later changed to STI Corp. Sdn. Bhd. One of their first big ventures was to build Australian-designed Bufori sports cars in Malaysia, to be outfitted with reconditioned Volkswagen engines. The venture initially enjoyed a burst of publicity, not least because it outraged women’s groups with a television commercial featuring a former Miss Malaysia declaring breathlessly to any man who owned a Bufori: “I’m yours.” But the car factory ran into production problems and fewer than 10 Buforis were handed over to customers.
Records at Malaysia’s Registrar of Companies show more than 20 companies registered in the mid-1990s with “STI” in their names; from STI Articulate Home Shopping Sdn. Bhd. to STI Cigar Club Sdn. Bhd. to STI Medical Sdn. Bhd. to STI TechnoRub Sdn. Bhd. Some offer no financial information, some are dormant, and some are in the process of winding down.
Tunku Imran and Datuk Vinod say they have now paid off almost all their debt by selling overseas property and are using the remainder to finance their Internet ventures.
Datuk Vinod says he was ill with a heart condition between 1997 and 1999 and seeking treatment in California, dismissing talk that he was on the run from creditors, or that he had fought with Tunku Imran. Last year, he put his frustrations on stage, writing and starring in a semi-autobiographical play about an overachiever named Vincent Siefer. He is struck by a brain tumor and withdraws from those he loves, only to miraculously recover and make peace with friends and family.
It’s easy to see why Datuk Vinod would want a stab at resurrecting his reputation. But what is the prince’s motivation? Antah Holdings, the family concern that has interests in engineering, infrastructure, health-care and film-making, and which he runs with two brothers and a sister, “is where I earn my salary,” says Tunku Imran. By contrast, Petra is “a walk on the exciting side. “I hope it keeps me young.”