Johann Rupert, the luxury boss who saw off a hedge fund in the mood for a fight


The atmosphere at Richemont’s annual meeting in Geneva on Wednesday was tense as billionaire Johann Rupert presided over a crucial shareholder vote. Activist hedge fund Bluebell had accused him of acting as a “padre-padrone”, a godfather-like figure, and submitted resolutions to shake up governance at the Swiss luxury group.

“I hope this meeting will not turn into a football match,” said the 72-year old Richemont chair after a heated exchange with Bluebell’s representative.

It was a deft observation that lightened the mood and offered a glimpse of the character of the South African tycoon, described by one friend as a “resourceful and thick-skinned . . . street fighter”. People who know him well say that, while he can appear heavy-handed, he values propriety.

“Johann is very straight and very loyal,” said Patrick Thomas, the former chief executive of luxury group Hermès who joined the board of Richemont last year. “He won’t deal with people he doesn’t trust.”

Thomas added: “He can come across as a little bit rough but he’s actually very subtle and has strong human convictions.”

An investor said: “You see this bullish, bombastic old-style chair, but there’s another side to him . . . straightforward and honourable.” 

The Bluebell episode propelled Rupert and his family company into the spotlight at a time when they are also grappling with the question of succession and a looming downturn in the global economy that may damp demand for Richemont brands such as Cartier and Van Cleef & Arpels. Richemont’s shares have lagged those of rivals Hermès, LVMH and Kering over the past five years.

In the end, Rupert easily saw off the challenge from Bluebell.

Shareholders overwhelmingly rejected its three resolutions to reconfigure the board, a sign they still trusted Rupert to lead despite the hedge fund’s critique that he uses the dual-class structure to ignore minority shareholders. His family holding company only owns a 9.1 per cent stake, but its B shares hold 50 per cent of the voting rights.

Notably, shareholders rejected Bluebell’s nomination of former Bulgari executive Francesco Trapani as a director. Richemont argued he was too closely associated with LVMH.

Richemont’s governance structure is a legacy of decisions Rupert, a college dropout and sports fanatic who started out in finance, made in the 1980s when he established its headquarters in Switzerland and listed its shares.

The move allowed the Rupert family to diversify outside apartheid South Africa where Anton Rupert, Johann’s father, had founded a business empire from a £10 investment in cigarette manufacturing in the 1940s. A child of the depression, the elder Rupert realised that people would keep buying tobacco and alcohol through any downturn, and eventually amassed investments in industry, banking and luxury that were later housed in the Rembrandt Group.

Richemont was founded when the younger Rupert spun off Rembrandt’s international assets in 1988.

Rupert’s upbringing and family history have instilled in him a cautiousness that manifests itself in Richemont’s fortress-like balance sheet. Dubbed “Rupert the Bear” in 2006 for predicting a world economic crisis, the South African is seen as more risk averse than rival controlling patriarch Bernard Arnault. The French billionaire used savvy acquisitions to build LVMH into the world’s largest luxury group, with a market capitalisation five times that of Richemont.

In contrast, Rupert has done fewer major deals, preferring instead to invest to expand the brands Richemont already has. One of his biggest bets proved value destructive — the group booked a €2.7bn non-cash write down last month after selling a majority stake in its unprofitable ecommerce operation Yoox Net-a-Porter.

Rupert has cultivated a global network of billionaires, financiers and sports stars from whom he seeks insight and advice. “He’s the only person I’ve met who listens by talking the whole time,” said the investor. “He talks, dominates and takes it all in.”

He has three children with his wife Gaynor, one of whom is on Richemont’s board, and splits his time between London, Geneva and the family farm in the Stellenbosch wine region.

He has never lost touch with his roots in South Africa. “The family was a big critic of apartheid, especially Johann,” recalled Lord Robin Renwick, a former Richemont board member. “Not many other senior businessmen were prepared to stand up and criticise apartheid at that time.” 

Renwick, who was then a British diplomat, said Rupert helped with the campaign to get Nelson Mandela out of prison. After his release the pair became friends, Renwick added.

“In South Africa, Johann is like a Warren Buffett figure”, celebrated for his philanthropy, conservation and job creation, said Renwick. He is also a favourite bogeyman of South Africa’s populist Economic Freedom Fighters party.

A fracas with a small activist fund is small fry for a man who clashed with former South African president Jacob Zuma. “I hate what he allowed to happen to the country, but I don’t hate him,” Rupert said in 2018.

Looking ahead, he faces far greater challenges than Bluebell. An economic slowdown risks hurting luxury demand. LVMH’s Arnault has long coveted Cartier, and Richemont rejected an unspecified tie-up approach from Kering a few years ago because Rupert insisted he had no intention of selling.

Eventually he will have to hand over the reins to a new leader, while also seeking to preserve Richemont’s independence. The company said it has a succession plan but has not shared it. The investor puts it bluntly: “He’s got a succession issue.”



Source link

About the Author

Leave a Reply

Your email address will not be published.

You may also like these