Fwd: Financial Times today

From: "Philip Levine" <Philip@baron-corp.com>

Date: May 20, 2008 9:58:28 AM EDT

To: "Philip Levine" <Philip@baron-corp.com>

Subject: Financial Times today

Enigma who reaps special rewards

By Lauren Foster

Published: May 20 2008 04:05 | Last updated: May 20 2008 04:05

On a chilly afternoon in New York, just as the lunch crowd was starting to gather, Nicolas Berggruen sat down at his usual table outside Café Boulud, a few blocks away from the Metropolitan Museum of Art. It was business alfresco for the globetrotting investor. He set aside his BlackBerry, gave the menu a cursory glance and settled on the Vermont chicken breast. Then it was back to work: constant phone calls, the interview and greeting other regular patrons.

Such is the life of the scion and heir of the late art collector and donor Heinz Berggruen, whose artworks are considered one of the world’s most important private collections of modern art.

The younger Berggruen, while also a collector, made his money the old fashioned way – by investing in the stock market and industrial buy-outs in the early 1980s.

“I did it on my own,” says the urbane 46-year-old. “My father was old school German philosophy where everybody had to do their own thing and work hard.”

In 1988 he co-founded Alpa Investment Management, a fund of hedge funds, with Julio Mario Santo Domingo Jr, the eldest son of the Colombian tycoon. Six years later they sold it to Safra Bank for an undisclosed amount.

By his own account, Berggruen Holdings, his private holding company, has more than $2bn on its balance sheet. It owns and operates businesses in the US, Europe and Asia and has investments that range from direct private equity and real estate to renewable energy and agriculture.

Artistic philanthropy to form part of lasting legacy

It is one thing to amass vast wealth, another to give it away.

“People who have been lucky to inherit wealth or fortunate enough through their skills to accumulate wealth have a responsibility [to give it away],” says Nicolas Berggruen, an investor whose fortune is estimated in excess of $1bn. “Some may say: ‘I’ve made it, it’s mine and I’ll do anything I want with it.’ But I don’t think that’s the way human nature works. It’s about taking and giving.”

That said, Mr Berggruen admits his philanthropy is in its “early days”.

“I’m still a baby. I’ve spent time making the money and at some point I will shift the scale to spending it [philanthropically],” he says. “I love art and have been collecting art. I intend to give away everything that I have collected and built and will start giving it away during my lifetime.”

Mr Berggruen began collecting in the 1990s, focusing on the work of Andy Warhol, Jean-Michel Basquiat, Jeff Koons and Damien Hirst.

His late father, Heinz Berggruen, was an influential collector and donor whose art is on display in The Metropolitan Museum of Art in New York, The National Gallery in London, the Centre Georges Pompidou and the Musée d’Orsay in Paris, and The Berggruen Museum in Berlin.

For the younger Mr Berggruen, art will play a big part in his philanthropy. His plan is two-fold: he wants to expand his father’s museum by buying more works by the same artists – which include Picasso, Klee, Giacometti and Matisse – and create a new museum in Berlin that will house contemporary artworks.

“Berlin has a fantastic group of museums and this would be a way to continue the very vibrant contemporary art culture.”

For now, though, Mr Berggruen’s art is in storage or on loan to museums as he does not own a home. “That’s why I have to build my own [museum] as I have nothing of my own to hang it in,” he says. “I’m not that interested in material things for myself. I find houses and all that almost more of a burden than anything else, I don’t have a family in the traditional sense so I’m very flexible and I travel quite a lot. I love hotels so I basically live in hotels.”

“I’ve been impressed with Nicolas with all the various activities he has throughout the world,” says Eli Broad, the billionaire art collector and philanthropist. “He is very bright, very polished and has good judgment.” The two met through the New York art world and now sit together on the board of the Los Angeles County Museum of Art.

Yet outside the cliquey worlds of art, finance and Hollywood (he hosts an annual party at Chateau Marmont) Mr Berggruen remains an enigma.

By design, he has kept a low profile while investing in some well-known companies, including GLG Partners, the London hedge fund listed in New York, and Media Capital, the Portuguese media group controlled by Spain’s Prisa.

He is also behind the largest ever flotation of a special purpose acquisition company, or Spac: Liberty Acquisition raised more than $1bn when it went public on the American Stock Exchange in December. Another of his Spacs, Liberty International Acquisition, was listed in February, raising €600m ($935m) on NYSE Euronext’s Amsterdam market.

Mr Berggruen’s first Spac was Freedom Acquisition Holdings, which he co-founded in 2006 with Martin Franklin, chief executive of Jarden, a consumer products company.

In June last year, before the worst of the market volatility brought on by the US credit crisis, Freedom bought GLG. In November it went public on the New York Stock Exchange through a reverse acquisition. GLG was recently in the headlines after its star emerging markets fund manager resigned.

Mr Berggruen, who was born in Paris and educated in France, Switzerland and New York, says he “fell into” Spacs and initially had no idea what they were. While his forays into this market have been successful, he is sceptical about the Spac boom. Last year there were 66 initial public offering for Spacs, raising a total of $12bn.

“Spacs for the sake of it make no sense,” he says. “At the end of the day, who is the management? If you do anything in any business or the money management business, you really are making an investment in people so, if the people at the helm are good, you are hopefully going to yield good results.

“Investors may have invested in too many Spacs indiscriminately and I think too many of them are too small. They shouldn’t be public companies. Above a certain size, it may make sense – half a billion dollars and up – and, at the end of the day, it has to absorb a scale business that deserves to be public.”

While the Spac ventures have been in the news, most of Mr Berggruen’s investments are under the radar but are no less visible: real estate. His strategy is to find investment opportunities where he can involve well-known architects and also have a positive impact on the surroundings.

“Unlike most traditional developers we are using architects such as Kazuyo Sejima, Shigeru Ban, David Adjaye, Richard Meier and David Chipperfield,” Mr Berggruen says. “The idea is to do something economically sustainable but also to make a contribution to the urban environment.”

For example, he is working on a project to revitalise Nachalat Binyamin in downtown Tel Aviv and another to transform downtown Newark, New Jersey. Mr Berggruen also owns a number of historical buildings in Berlin, the birthplace of his father, and has property projects in Turkey and India.

While keen to do more real estate investing in New York and Los Angeles, two cities in which he spends extended periods, he is watching from the sidelines.

“I don’t think conditions are right yet,” Mr Berggruen says. “LA and New York have the advantage that they are bigger, wealthier markets in general and so will be the last ones to suffer and owners on average will not adjust their prices to market right away. It will take some time. I don’t think the market is ripe yet, I’m waiting for opportunities, not only price opportunities but also specific properties.”

He also invests in a range of projects outside of real estate. In March his group announced it would expand its portfolio into international agriculture. The strategy is to acquire large plots of land in countries where it can have ownership or long-term land concessions.

Berggruen Holdings, which has offices in New York, Los Angeles, London, Berlin, Tel Aviv, Istanbul, and Mumbai, also invests in renewable energy, notably Cascade Grain, the largest ethanol project on the west coast of the US, as well as hydro power and wind farms in Turkey.

“The fact I am involved in so many different activities and so many different offices is a bit maddening for one individual who is running his organisation and his capital. It’s a little extreme,” Mr Berggruen says. “Why did it happen? I just couldn’t help myself.”

For Mr Berggruen, who has gone to great lengths to avoid media attention, his interest in public projects may explain his new courtship of the media. “As I’m doing more things I just feel [raising my profile] will be helpful to what I’m doing and the people I work with. It is not for personal glory.”

 

Copyright The Financial Times Limited 2008