Robert Tchenguiz
From Taighde
| Robert Tchenguiz | |
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| Robert Tchenguiz | |
| Company: | R2O |
| Current Position: | Manager
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| Last Company: | Rotch Property Group
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| Nationality: | Iranian/English
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| Date of Birth: | 9 September 1960
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Robert Tchenguiz is CEO of R2O. In the British investment community, the name Tchenguiz carries a lot of weight. Over the past two decades, the Tchenguiz brothers, Robert and Vincent, have built a name for themselves as aggressive – and highly successful – investors. In the process, they have made themselves two of the richest men in Britain. According to the Sunday Times, with their combined wealth of £850 million they rank 78th on the list of richest people in the UK.
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Background
Robert Tchenguiz was born on 9 September 1960 in Tehran, Iran.
Family
His father was born Victor Kedourie Molaaem, an Iraqi Jew who fled his home country in 1948 amid increasing persecution. Victor fled to Iran and changed his last name to Tchenguiz, the Persian for Genghis Khan. Victor married Violet, who came from a wealthy background. Together they had Vincent, Robert, and daughter Lisa.
Victor made a name for himself buying and selling property, and also managed to become a member of the Shah of Iran's inner circle despite being a foreigner; Victor eventually became the Royal Jeweler and head of the national mint. When the Shah fell in 1979, Victor moved his family to London. Interestingly, where most lost their fortunes, Victor managed to bring his to London with him.
Over the course of their business dealings, and especially since the split of Rotch Property Group into R2O and Consensus, there have been rumors of a rift between brothers Robert and Vincent; both deny this vigorously. The brothers keep offices near each other, and say they see each other and talk every day. They have much in common, including their playboy lifestyles and penchants for expensive cars and boats.
Personal
Robert himself has been described as a "playboy." He dated Wonderbra model Caprice, and gained notoriety when he was mugged in her company in 1997.
He was even linked to Princess Diana before being rumored to have introduced her to Dodi Fayed at a New Year's party. He later married Heather Bird.
'My one regret is that I didn't have children earlier. I've got a baby who is 10 months and I'm 46 - I wish I'd had children earlier.'
Robert is known for his taste for expensive cars and whiskey. His Kensington mansion is so large that for his 40th birthday he threw a Louis XIV-themed party, complete with period costumes, acrobats, and an orchestra -- all in his living room.
Education
Robert was educated at the International Community School in Tehran, and studied at Pepperdine University in California.
Business Character
Robert is regarded as "snobbish" and as "someone who wants to take companies private, who eschews public ownership and snubs the main stock market." One industry insider said that he "regards whichever business he happens to be investing in as a mere commodity."
His formula when it comes to property deals rarely varies much: he borrows heavily in order to buy the property, and then uses high rental returns to pay off the loan. Robert has transfered this formula to some of his non-real estate deals, as well, borrowing at the outset and then using the resulting cashflow to pay off the debt. Robert and his brother Vincent also use devices such as securitisation - borrowing against a property's future earnings - in order to squeez out more money from their investments.
A January 2007 interview in Management Today[1] highlighted "Four Challenges Facing Tchenguiz." They are:
1. To prove that Somerfield is more than a property play
2. To show that he's as much a manager as he is a financial opportunist
3. To make himself and R20 better understood
4. To reach a point where managements' first reaction is to be pleased he wants to take them over
Timeline of Robert Tchenguiz's Investments
Early Investments
1982: Robert entered the New York trading world, buying and selling heating oil out of offices in the World Trade Center.
1983: Closed his first property deal in the UK, a £50,000 apartment in Marble Arch, with the help of a bank guarantee from his father. He maintains that that is the only help his father ever gave him in the business world. Robert then formed Rotch Property Group with his older brother Vincent. Numerous property deals followed.
1987: Completed development of 400 flats at Windsor Plaza in Earls Court, London.
1990s: Number of properties grew, though there were a few non-successes; the brothers bought South Quay Plaza in London's Docklands, but then could not find tenants.
2001: Robert and Vincent split their Rotch Property Group business into two separate entities, R2O Limited and Consensus Business Group. Robert operates R20 Limited.
2006: Business partner Paul Taylor left the Rotch Property Group, Consensus, and R2O to start his own firm, Three Delta.
Shell Mex House
2002: Rotch bought Shell Mex House, an Art-Deco landmark on the Thames, for £350 million. The purchase was backed by 'Black' Jack Dellal, a veteran Iranian real estate tycoon. The Shell-Mex House is co-owned with David and Simon Reuben, brothers who made their fortune in the Russian metals trade.
Selfridges
2003: A potential bid from Tchenguiz (through a bid vehicle he set up called Aletheia Partners[2]) of £600 million for Selfridges department store attracted attention from the FSA. The FSA made inquiries into contracts for difference involved with his bid, but Tchenguiz himself was not a target of any investigation.[3]
There were rumors that trades by his father Victor were among those under inquiry, but they apparently never amounted to anything.[4]
Bernie Ecclestone[5], the famed Formula One boss, was once thought to be an early backer of Robert's Selfridges bid, but his interest didn't hold.
Odeon Cinemas
2003: Rotch bought Odeon Cinemas in a consortium that included The Entertainment Group and WestLB (Robert appears to have a good professional relationship with former WestLB Head of Principal Finance Robin Saunders, who has since struck out on her own).
2004: In September the consortium sold Odeon to the private equity firm Terra Firma.
Laurel Pub Company
2004: In November Robert Tchenguiz made a bid to take the Yates Group of pub properties private, but lost out to £155 million bid by a US private equity firm named GI Partners.
2004: In December the Tchenguiz Family Trust bought the Laurel Pub Company and its 157 locations for £153 million.
2005: In May Laurel, led by Tchenguiz, bought the Yates Group for £202 million, bringing in 158 new pub and restaurant locations.
2005: In June Laurel bought 98 pubs out of administration for £80 million from the struggling SFI group, including the Slug and Lettuce brand.
2007: In March Robert's R20 vehicle launched a bidding war on behalf of Laurel for the La Tasca Spanish tapas restaurant chain. R20 offered a £98.6 million bid over competitor Tragus Holdings' £96 million offer. When Tragus revised their bid to £99.7 million, R20 countered and won with a £104.2 million offer. When the deal was completed in May, the total was £123 million, including debt. The acquisition brings 73 new locations under the Laurel fold.
Today the Laurel holdings include approximately 460 outlets and the following brands: Slug and Lettuce, Ha! Ha! Bar & Canteen, La Tasca, La Vina, Hog's Head, Forno Vivo, Santa Fe, Bar Med, Casa, RSVP, and Fiesta Havana.
Spirit Pub Group
2004: In December Spirit sold 364 pubs to Robert Tchenguiz’s Globe Pub Company for £345 million. They were managed as tenancies by Scottish & Newcastle Pub Enterprises.
2005: In December, Robert lost out to Punch Taverns in a £2.7 billion bidding war for the Spirit Pub Group. Robert already controlled more than 850 pubs by this point, and was looking to expand his holdings.
Mitchells & Butlers
2007: In May Robert began to plan a joint venture with Mitchells & Butlers, a pub group that owns the All Bar One chain, Harvester restaurants, and Hollywood Bowl bowling alleys, but was "rebuffed" when they said he was not offering enough.
The plan called for M&B to sell Robert Tchenguiz a 50% share in 1300 pubs with attached rents of £240 million a year. The deal would have involved most of M&B's total estate, and would have required both parties contributing roughly £300 million of equity against £4 billion of debt. After the venture, estimated at about £4.5 billion, collapsed, Tchenguiz increased his holdings in the company by 4% to roughly 20% in a mixture of shares and derivatives. Some speculate that this increased stake will put added pressure on M&B management to follow through with any similar deals in the future. Indeed, discussions were continuing between M&B and Robert's R2O firm.
In the meantime, M&B is considering adopting real estate investment trust (Reit) status, which would make them the first UK pub group to do so. This step has the enthusiastic support of Robert Tchenguiz, and in fact was one of the reasons driving Tchenguiz to do the deal in the first place. Reit status is seen as way of unlocking value from M&B’s property portfolio; something Tchenguiz has long advocated; observers think such a move might be a way to placate Tchenguiz after the collapse of the property deal, which would have seen 1,300 of 2,000 pubs and restaurants placed in a new company with rents of £240m a year. An update is expected to come with M&B’s preliminary results on November 29.
Related to the collapse of the deal, M&B has incurred losses of £140m from a hedging contract set up to protect the deal against interest rate and inflation increases. The Reit will absorb the group’s debt of £2.5bn, and an operating company will manage the pub and restaurant estate.
There are rumors, which Robert has denied, that he will be forced to sell of his stake in M&B in order to cover his losses in the Sainsbury deal.[6]
Welcome Break
2007: Very soon after the Mitchells & Butlers deal collapsed, Robert was dealt another setback when a sale of eight Welcome Break service stations had to be scrapped when the last two potential bidders withdrew their offers. Sellers Tchenguiz and RBS were asking for £375 million in the sale, but the final bid were said to be about £15 million lower than that. After the bids were withdrawn, the property agent handling the sale, DTZ, dropped its asking price to £340 million in hopes of attracting new bids, but was not successful.
Robert and RBS bought Welcome Break in June 2004 for £270 million. The current market situation makes it unlikely that a new buyer will emerge.[7]
Somerfield
2005: In December the Tchenguiz Family Trust acquired the Somerfield chain as part of a consortium including Apax Partners Worldwide LLP and Barclays Capital. The deal was estimated at around £1.1 - £1.5 billion.
2007: Coming on the heels of his failed Mitchells & Butlers and Welcome Break deals, Robert Tchenguiz was forced to shelve the refinancing of the Somerfield supermarket chain, the UK's fifth largest. Tchenguiz thinks the deal can be worked out in the winter or spring once the markets stabilize. Some in the property investment community think that this setback, along with his other recent woes, may hurt Robert's overall credibility and reputation, though everyone agrees that he'll find a way to bounce back financially. [8]
Sainsbury's
View the main article on the collapsed takeover bid by Three Delta : Sainsbury
2007: Robert Tchenguiz owns a 10% stake in Sainsbury's. He has lobbied vigorously for Sainsbury's to spin off its property portfolio - estimated to be worth £8.6 billion - into a tax-efficient real estate investment trust (Reit).
Robert began building his stake before talk of a takeover began, and quickly increased his share as rumors grew stronger and contenders emerged. There were whispers that he and former colleague Paul Taylor were working together (Taylor's firm Three Delta is managing the bid from Qatari investors), a charge that all parties denied. His efforts to convince the board of his real estate proposal failed, but since the collapse of the Three Delta bid he has renewed his pressure [9]; observers believe that the board will be more receptive to his proposal now that a takeover seems unlikely.
It is unclear exactly how much Robert lost in the failed Three Delta takeover, but most estimates place it around £200 million. Coming on the heels of failed transactions involving Mitchells & Butlers and Somerfield, this is widely viewed as a major hit to Tchenguiz's reputation, and he took the unusual (for him) step of publicly stating[10] his commitment to his R20 holdings in Sainsbury's and M&B.
Other Investments
Robert owns a whiskey firm named Whyte & Mackay with his brother-in-law, Vivian Imerman.
His other investments have included the Pubmaster chain; a company building masts for 3G networks; health and fitness clubs; and more than 800 commercial buildings owned together with his brother Vincent.
There has been talk of him planning to develop a new British sports car. He has said, "I'm car mad, it's true - but no, I wouldn't do that."
Articles
Persian playboy goes shopping by Conal Walsh in the May 25, 2003, Guardian Unlimited. [11]
The MT Interview: Robert Tchenguiz by Chris Blackhurst for Management Today on 11-Jan-07.[12]
M&B considers adopting Reit status by Neil Hume and Roger Blitz for FT.com on November 9, 2007.[13]
