Lenovo's chairman takes on new role: Chair of parent firm Legend

Updated Sep. 8, 2009 at 11:10 a.m.

Lenovo's chairman takes on new role: Chair of parent firm Legend

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Research Triangle Park, N.C. — Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – Liu Chuanzhi, Lenovo’s founder 25 years ago, continues to take on a more prominent and important profile in China’s high-tech sector. In February, he reasserted control over the world’s No. 4 PC maker by resuming his role as chairman, a job he had given up to Yang Yuanqing in 2005.

On Tuesday in Beijing, Liu, 65, was elected chairman of Lenovo’s parent firm Legend Holdings. What in the art of business as war is Liu up too?

Interestingly, as all the Legend news was breaking Tuesday, Dow Jones reported that private equity firm TPG Inc. is offering to sell up to $134.3 million of its Lenovo shares. TPG Capital is one of three U.S. stakeholders in Lenovo, owning some 6.6 percent of its shares. Are the U.S. owners selling out so Lenovo shares, currently listed in Hong Kong, can be listed in Shanghai?

Liu also announced that Legend would broaden its reach in the Chinese tech sector by making investments totaling $1.5 billion in such areas as clean energy. Other areas of focus will include financial services, technology and environmental protection.

His elevation to chairman of Legend came a week after media reports surfaced that the Chinese Academy of Sciences had sold 29 percent of its holdings in Legend to private firm China Oceanwide for $404 million.

More changes are coming, too. Liu said the ownership of Legend would continue to change, according to Reuters with the Academy, which is part of the Chinese government, eventually selling enough of its shares to become a minority owner.

So what is Liu’s strategy?

The Academy’s sale of its ownership stake will lessen Legend’s links to the Chinese government. That apparently will give Liu more business freedom.

Liu also wants a broader reach. Diversification into areas beyond computers and Lenovo is certainly crucial, based on the investment announcement.

Plus, Liu plans to list Legend on the Shanghai stock exchange, perhaps using the move if approved by Chinese regulatory authorities to raise more capital.

“Legend is aiming at a stock market listing,” Liu said, according to the Xinhua news agency.

With an ownership structure less holding to the Chinese government and with cash coffers perhaps filled with a stock offering Legend could then evolve into a financial conglomerate.

At least that’s the view of The Wall Street Journal.

“The new plan to become a corporate investment-holding company is modeled in some ways on Investor AB of Sweden,” the Journal reported, citing a source close to Legend.

The Journal described Investor AB as a “a powerhouse in Sweden, holding stakes in major companies in a variety of industries in that country and beyond, including drug maker AstraZeneca PLC and cellphone manufacturer Telefon AB L.M. Ericsson. It also allocates chunks of its portfolio to other direct investments as well as private-equity and venture-capital funds.”

Liu returned to Lenovo and Yang, who has been called China’s version of Bill Gates, replaced William Amelio as Lenovo’s CEO with the company’s losses soaring and market share dwindling. Who would have thought then that in a mere six months Liu would feel comfortable enough to take on a greater role at Legend, turning it into an even more private and bigger enterprise.

What impact all these changes at Legend will have on Lenovo, which is based in Morrisville, will be interesting to watch.

Will Liu take a less active role? If he does, what does that mean for Yang? Does he return to the chairman role?

Will diversification at Legend mean Legend pays less attention to Lenovo?

Or if Legend raises capital and Lenovo achieves a listing of its stock in Shanghai (in addition to Hong Kong), will Lenovo have more money with which to drive global expansion plans?

Interesting times are certainly afoot at Lenovo and Legend. But given what’s happened over the past year, change is hardly a surprise.

Tags: Lenovo, China

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