Robert Tchenguiz: defiant despite £200m Sainsbury's hit
Robert Tchenguiz is a reformed playboy whose wife, a glamorous Harley Street practitioner, is credited with giving him a rigorous lifestyle makeover. He no longer drinks, apparently; but he must have been tempted to knock back a restorative slug of his favourite vintage whisky last week, says The Daily Telegraph.
Having piled into Sainsbury’s (SBRY), aiming to pocket a fortune from the mooted takeover by the Qatari-backed investor Delta Two, he found himself some £200m poorer when talks collapsed at the 11th hour, sending Sainsbury’s shares into freefall.
Tchenguiz is “bruised but unbowed”, reports The Sunday Times. Yet he has little choice but to put on a brave face: his entire portfolio is under pressure. Short-sellers went to town on rumours he would have to sell other investments to cover losses. By the end of the week, pub group Mitchell & Butlers (MAB) and computer games-maker SCi Entertainment (SEG) had taken hits, and the knives were out for Tchenguiz. “Like Icarus, he flies too close to the sun,” said one observer.
That was probably the least of the vitriol. During his 20-year career, this “dealmaker extraordinaire and bidder, seemingly, for anything that moves”, has made plenty of enemies, says Management Today. The mention of his name is enough to turn one captain of industry “apoplectic”. Tchenguiz, he declares, is “a chancer, a number-crunching opportunist, who regards whichever business he happens to be investing in as a mere commodity”.
Tchenguiz’s friends, who include Top Shop supremo Sir Philip Green, insist he’s a wronged man who is dedicated to the businesses he invests in. Part of the problem boils down to image: his jet-set lifestyle (he dated Caprice and is said to have introduced Dodi to Diana) was anathema to the City old guard. He is the victim, says one ally, of snobbishness. “Robbie is seen as this playboy businessman, when the reality is he’s more professional than any aristocratic Oxbridge big-shot.”
In person, Tchenguiz, 47, is certainly no giant ego. Informal and friendly, he’s happiest hanging out in his Mayfair lair doing the sums. His older brother and erstwhile business partner, Vincent, is based just round the corner. Tchenguiz denies reports of a rift. “Vincent has his businesses, I have mine, that’s all,” he says. “We speak all the time.”
The main influence in the brothers’ lives is their father, Victor, an Iraqi Jew who fled the country in 1948, settling in Tehran. He changed his surname to Tchenguiz – Persian for “Genghis” – and swiftly became a member of the Shah’s inner circle: first as royal jeweller, then as head of the Iranian mint. Robert went to university in the US, eventually becoming an oil trader in New York.
When the Shah’s regime fell in 1979, Victor fled to London and within a couple of years both sons had joined him. “Despite the family’s considerable wealth, the brothers (now worth an estimated £850m) lay claim to being self-made,” says The Observer. Victor guaranteed their first property deal – a £50,000 apartment in Marble Arch in 1982 – thereafter they built their property firm, Rotch, alone. It was an extraordinary rise: they started out renting flats to students and tourists but, by the end of the decade, were major players in commercial property. The blue-chip deals soon followed. With that kind of pedigree, it would be unwise to underestimate Tchenguiz. He’s down, but far from out. As for those who get in his way, “they only cross me once”, he told Management Today. The spirit of Genghis, clearly, lives on.
His secret of success: a love of numbers
The “Six Degrees of Separation” theory posits that you can be linked to any other person on earth by a chain of five acquaintances. You can play the same game with Robert Tchenguiz’s deals, says The Observer. The list of firms he has done business with includes BAE, Odeon Cinemas, Somerfield, BT and NCP, but since the split with Vincent in 2003, his R20 investment vehicle has focus on leisure and retail, with pub groups high on the agenda.
Underpinning it all is his focus on property. Tchenguiz is a pioneer of the OpCoPropCo model (unleashing a target’s value by hiving off its property holdings from the operational side of the business). That was the rationale behind his tilts at Sainsbury’s and Mitchell & Butlers. The model attracted a host of heavyweight backers, including Apax Partners, RBS, Barclays Capital and Goldman Sachs.
“People make much of my family and background, but [fail to appreciate] my love and understanding of numbers,” says Tchenguiz. The formula behind his early property deals was nearly always the same: borrow heavily to buy the building, use high rental returns to pay off the loan, and then to finance more deals. He applies the same recipe to his non-property interests. “It’s no coincidence,” says Management Today, “that so many of his deals have come in recent years, while rates have been low and borrowing cheap”.
That model is under threat, but Tchenguiz remains bullish. “Everything we do is interest-rate hedged. We’re able to pick a time when we exit – not have it picked for us”. He won’t be thanking former protégé Paul Taylor of Delta Two for last week’s U-turn. Tchenguiz’s plan for Sainsbury’s now is to continue pushing for a property split. He’s nothing if not stubborn.
