After graduating from Brown University in 1992, Kenneth was recruited by Goldman Sachs and started work at the investment bank’s New York office. A year later, Kenneth was sent by Goldman Sachs to its Hong Kong office as the global investment bank ramped up its Asia and China businesses. In 1995 Kenneth decided to join his father, Anthony T. C. Gaw, at Pioneer Industries when Asia’s stock markets were booming. A vulture fund named Regent Pacific launched an attack on Pioneer in order to break up the company’s holdings in Bangkok Bank. Kennth and his father spent a good part of two years fending off this attack. Then came the Asia Financial Crisis in 1998 and the untimely death of the elder Gaw.
“It was a very tough time for me when my father died. I was only 28 at the time, just had my first child two weeks before losing my dad, and we were in the middle of the Asia Financial Crisis. The banking system in Thailand had collapsed and Bangkok Bank’s survival was in doubt. The shipping industry was also in the doldrums. The only thing doing reasonably well was US real estate, but the bankers and investors in Hong Kong did not care about that… There were lots of turmoil and uncertainty, but I was forced to grow up fast and take charge.”
Kennth then became Managing Director of the company and his mother Rossana became Chairman. Kenneth, together with his family, restructured Pioneer Industries by privatizing its shares in Bangkok Bank and Wah Kwong Shipping, as well as the US real estate business founded by Kenneth’s older brother, Goodwin. The privatized assets were moved into the Gaw family trust with a new name of Pioneer Global Group where its first major deal was the formation of a JV company with the real estate arm of global investment bank Morgan Stanley in early 2000.
Kenneth and his team rolled up their sleeves and went to work, selling under utilized centers in Singapore and the US west coast and repositioned the Hong Kong property into a logistics center. By the time it was sold a few years later, the property was 100% occupied and became one of the largest and most successful logistics buildings in Hong Kong, housing many of the world’s leading logistics operators. With the successful sale of Global Gateway Hong Kong, the JV turned a busted business plan into a profitable venture, earning the trust of its partners at Morgan Stanley.
The first big break for Kennth came in April 2003, right in the midst of the SARS epidemic, where he and his brother partnered up with Morgan Stanley and Pamfleet to acquire Vicwood Plaza in Hong Kong for HK$842 million. In May 2003 Kenneth went to Thailand and bought the 389-room Garden Beach Resort in Pattaya, again for a very distressed price of Baht 870 million. The resort has since been repositioned and rebranded as Pullman Hotel G Pattaya and managed in house by GCP Hospitality Management (an affiliate of Gaw Capital Partners).
“When we bought into Vicwood Plaza, everyone was panicking and nobody wanted to invest in anything here. And when I went to Pattaya, the resort was completely dark and had an occupancy of 8% that week. The truth is when there is panic in the street, it is often the best time to invest.”
With a bit of luck and foresight, both investments would go on to become hugely profitable, and Kenneth never looked back. The Gaw brothers themselves and Pioneer Global Group became active investors in the market.
In addition to running Pioneer Global Group, Kenneth also co-founded real estate private equity firm Gaw Capital Partners with his brother Goodwin in August 2005 and serves as President & Managing Principal of the firm.
Gaw Capital’s first fund was US$200 million, supported by many of the institutions the brothers and Pioneer Group worked with before. The fund was quickly and successfully invested in 10 projects in Hong Kong and China. By 2007, Gaw Capital raised its second, much larger fund of US$800 million, this time attracting support from large endowment funds, pension funds, insurance companies, and sovereign wealth funds globally. Then came Fund 3 in 2011 with capital of US$420 million, and the latest Fund 4 in 2013 with capital of over US$1 billion. Within Asia, Gaw Capital Partners now has over 30 active projects (not including 16 already sold in Funds 1, 2, and 3) across 17 cities in China, Hong Kong, Macau, Taiwan, Japan, and Korea.
In addition to its activities in Asia, Gaw Capital Partners also became active investors in the US and UK after the Global Financial Crisis of 2008, acquiring and managing trophy properties such as 333 Market Street in San Francisco, Three First National Plaza in Chicago, Lloyd’s Building and Waterside House at Paddington in London for its investors. It also launched a US opportunistic club investment vehicle in 2011 which has been fully invested.
Under the leadership of the Gaw brothers, Gaw Capital Partners have experienced extraordinary growth within a short period of 9 years. Since its founding in 2005, US$4 billion in equity has been raised across all of its investment platforms, and the firm now has US$7.9 billion in assets under management. With operating companies in residential development, retail management, and hotel management, the firm now has well over 1000 employees across its projects.
The industry has taken notice, as the firm was named “Asia Firm of the Year 2013” by the Global PERE Awards, and “Best PERE Fund Manager 2014” by REIW Asia.
“I believe the key is to find the right people to handle areas that you are lacking in. In those areas of business where we have the right people, I don’t need to manage them. If I cannot find the right people to run a specific part of our business, it is probably a part of the business we can do without… And once you find the right people, you have to empower them. Good and smart people cannot be motivated by someone breathing over their necks,” Kenneth shares. “As I become more experienced, I have learned to listen to my colleagues. Why rely on one brain when you have ten brains at your disposal? For the right people, giving them a voice is also greatly motivating.”
Why real estate?
“In the real estate business, what we do contributes to the landscape of a city and changes neighborhoods and communities. And this continues for many years even after we have sold the building, because unlike products or services a building will stand there for many years. When done well, we are able to change a failed or under-utilized part of the city into a vibrant and successful one. This makes the job fun and exciting, much more than just the monetary rewards.”
When Kenneth and his brother started Gaw Capital Partners, the goal was first to be the gateway to bring foreign capital to Asia, and then when the time comes, to be the gateway to bring Asian capital to the west. Hence, the firm’s logo is a Chinese gate drawn in calligraphy style, and the firm’s Asia fund series are named “Gateway Funds”. The first goal was well achieved with its four successful Asia funds. The second goal is also being realized since the Global Financial Crisis, as the firm became active acquiring core trophy assets for its Asian institutional investors in major US cities and London.
Because of the growth of Gaw Capital Partners over the past 9 years, Kenneth now spends a good majority of his time at Gaw Capital, but he hasn’t lost his passion for Pioneer Global Group.