As Tan empire transitions, all eyes are on Lucio Tan III
On the plane from the United States back to Manila in late 2019, Lucio “Han” Tan III, the grandson and namesake of the taipan, then 27, already knew he had to fill the huge void left by his father, Lucio “Bong” Tan II in the Tans’ sprawling business conglomerate.
He was summoned back to the Philippines soon after the sudden death of Tan II on Nov. 11, 2019, leaving him not much choice but to say goodbye to his life in the US, including a promising career as a software engineer in the San Francisco Bay Area, home to the finest wines, alluring beaches and the world’s best tech-savvy minds.
Fast forward to three years later and Tan III, now 29, is rising to the occasion, taking his responsibilities to heart and giving his best to whatever task is given to him.
Heir to the throne
The business community sees him as the heir apparent, but Tan III is quick to shrug off such labels – at least for now – stressing that he is simply fulfilling his responsibilities to the best of his abilities.
“I can definitely understand how it seems that way, but it’s really more just increasing responsibilities... One of my principles is to just do my best with the task given to me. As Tanduay president, that’s what I’ve been doing, and now as LTG COO, I’m getting to know the different businesses. That’s currently my operating environment and I try to do what I can,” Tan III told The STAR’s Business Editor Marianne Go and this reporter in an exclusive interview last week.
Tan III, although born and raised in Manila where he spent 12 years of his early education, was already starting a career in the US when his father died. The young Tan finished Electrical Engineering at Stanford University in 2015, graduating with the Frederick Terman Award, an academic accolade given to Stanford seniors who belong to the top five percent of their class, equivalent to summa cum laude. He also has a Master of Science degree in Computer Science and an MBA.
When he returned to the Philippines, he was appointed president and COO of the Tan-owned Tanduay Distillers Inc., a position held by his father Bong.
Since the young Tan took over, the liquor company has been consistently posting net income growth, even during the pandemic – P1.24 billion in 2021 or 11 percent more than in 2020 and P1.12 billion in 2020 or 65 percent higher than 2019. This was a marked improvement from the P676 million for 2019, which was down compared to P909 million in 2018.
Proving his mettle to his grandparents Lucio and wife Carmen Tan, Tan III has since been given even bigger tasks other than Tanduay.
He was recently appointed vice chairman and COO of the LT Group, the listed holding company of the taipan, of which he would also serve as its new president no later than April 2023.
Tan III succeeds his grandmother Carmen as vicechairman of the LT Group, and his uncle Michael Tan as COO and later on, as president.
Prior to his appointment to the LT Group, Tan III was earlier appointed as one of its directors, as well as a director of other Tan-owned companies – namely Philippine National Bank, Philippine Airlines, PAL Holdings Inc. (where he is also vice president), Lufthansa Technik Philippines, Inc., MacroAsia, Eton City and many more.
LT Group president and group COO
His appointment to key positions in the empire is not surprising given his father’s demise, but his appointment to the LT Group as COO, and later on as president – positions not held by his father – is telling.
This, he said, means his grandparents are passing on the baton to the third generation.
“It’s really more of succession planning. At the end of the day, I believe it’s in my grandparents’ interest to transition from one generation to another, so we just want to make sure it’s done as professionally and as peaceful as possible, and make sure all the parties involved are okay with it,” Tan III said when asked about the leadership change in the LT Group.
Market welcomes transition
The market and the business community welcome the transition period in the LT Group leadership, but will be keeping a close watch on how Tan III performs when he fully takes over as the company’s president and COO.
Raymond Neil Franco, head of research at Abacus Securities Corp. who has been following the Tan Group, gave this comment:
“Prior to the pandemic, one of the reasons why (the) LTG traded at a wide discount to its peers (on a P/E basis) was the risk of a succession crisis. Now, with a transition plan in place, there will be greater certainty and it should be positive for the stock. However, with everything else going on such as COVID-19, higher inflation, Fed tightening, etc., this might not matter in the near to medium term.”
The LT Group’s share price closed at P8.10 per share last Friday, down 2.29 percent. Its 52-week high is P14.10, while its 52-week low is P8.02 per share. Its market capitalization is at P89.7 billion.
Tan III said he is working closely with his “Uncle Mike” or Michael Tan, the half brother of his father Bong. Michael and Bong worked together in handling the different businesses under the LT Group.
“I have been working with Uncle Mike these last few months. We have a professional relationship,” Tan III said when asked to comment about the transition.
The young Lucio has, likewise, been learning from other people and has been meeting with key government officials and stakeholders.
With him at the helm of the LT Group, Tan III is expected to turn over the role of president and COO of Tanduay to his younger brother Kyle, now executive director of Eton Philippines. Michael is expected to stay as director of the holding company and president of Asia Brewery.
Tan III’s other uncle, Capt. Stanley Ng is president and COO of Philippine Airlines, while a fellow third generation cousin, Eduardo Luy, is in charge of MacroAsia as president.
Power struggle, consolidation of power Asked about the apparent consolidation of power within the first family, Tan III said “that’s not the message.”
What he is focused on is to run the different businesses in a professional manner and to enable the different companies to reach their full potential. More importantly, he said, he wants to advocate for stability in the group and adopt a forward-looking mindset.
“What I’d like to do is to take it day to day. ‘Power struggle?’ I don’t think much about that because it’s not there, but best to approach it with the idea of unity as a family. That’s what I want to advocate for. At the end of the day, families have disputes and we recognize it as part of the past, but it really shouldn’t influence future decisions,” Tan III said.
“We really should look at what’s best for the family and the conglomerate moving forward rather than continue to focus on past disputes etc. That’s my mindset now,” he said.
Moving the business forward
Thus, he said, the focus now is to keep growing the business, especially after the COVID-19 pandemic and look into exploring synergies among the different companies.
For 2022, the Tan Group expects a better year than 2021 as the economy opens up and as more and more people get vaccinated.
Barring any upsurge in the COVID-19 cases, the opening up of the economy may translate into better purchasing power of consumers that will improve and may benefit its businesses through more demand for the products of PMFTC Inc., Tanduay, and Asia Brewery.
Future plans
Armed with a background as a software engineer, Tan III is also open to injecting new business ideas into the empire later on. These include possibly expanding into other areas such as digital, fintech or energy.
In the decision-making process, the ultimate decision comes from his grandparents, but Tan III said they listen to his ideas and suggestions.
“I definitely voice my opinions and give my perspective, but at the end of the day I’m not the ultimate person deciding. It’s my grandparents, but they do listen to me. So the ultimate decision makers are my grandparents and myself, and my aunts, we talk to them,” he said.
Thrown into the Phl business environment There’s definitely a lot of work to do for Tan III, but his educational background, academic credentials, and engineer’s mind – one that is capable of a unique mode of thinking, one that enjoys solving constraints and understands trade-offs – make him capable, say observers, including executives in the group and other businessmen.
The challenge though is finding his way through the labyrinthine, murky, and dizzying local business setting and how to navigate through the administration of presumptive president Ferdinand Marcos Jr. whose mother once claimed that part of Lucio Tan’s wealth belongs to them, industry sources observed.
Life has definitely made a 180-degree turn for the young Lucio, who now goes around with a driver-bodyguard, unlike his life back in San Francisco where he would just hail a ride through Lyft, a transport company he used to work for.
He enjoyed anonymity in the US, something he no longer has here with his new role. In fact, some members of the country’s high society have their eyes on him, considering him as one of Manila’s most eligible bachelors.
Tan III simply laughs off such labels, focusing instead on his new role, which he isn’t one to define just yet, but may well be described as either a successor, stabilizer, or soldier.
Or perhaps all of the above.