Michael Spencer: flamboyant ICAP boss and Tory Treasurer
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Emily Hohler Feb 12, 2010
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Things haven't been going well lately for flamboyant ICAP boss and Conservative Party Treasurer Michael Spencer. The 55-year-old billionaire founder of the City firm already has the threat of what could be Britain's biggest-ever marital settlement hanging over him, after separating from Lorraine, his wife of 25 years, last year. Now it's emerged his private investment vehicle IPGL sold £45m worth of ICAP stock just weeks before the group issued a profit warning. Shareholders were left fuming, while "opponents duly weighed in with calls for inquiries", says Andrew Hill in the FT, although Spencer insists he followed the rules.
But Spencer, who also owns spread-betting firm City Index, is unlikely to lose sleep. His ranking on The Sunday Times' rich list may have slipped a little. But even £80m – the drop in value he saw on his remaining ICAP shares – is small change to a man ranked 62nd in 2008, with an estimated fortune of £1.1bn.
Besides, he's no newcomer to reversals, says Chris Blackhurst in Management Today. Indeed, although "ever since he can remember, he's wanted to make money", his early career in the City was chequered at best. At Simon & Coates, for example, he took a big short position in gold, just before the Russians invaded Afghanistan – the price duly soared from $200 to $800 an ounce. He wasn't fired for getting the bet wrong (he used his own money), but for "spending a disproportionate amount of time" trading for himself. And at Drexel Burnham he lost $110,000 and was sacked for trying to cover it up.
Born to a colonial civil servant in Kuala Lumpur, he spent his formative years in Sudan and Ethiopia. He was sent to boarding school in England at the age of eight and, by the age of 15, the "mathematically gifted" Spencer knew he wanted to be a "wheeler-dealer in the financial world", says Jill Treanor in The Guardian. At Oxford, where he studied physics, he played poker, once losing £10,000 in a night. On another occasion he started a market in the number of lace-up shoes under table at a big City lunch. "By his own admission", gambling was his primary source of income in the 1970s.
It wasn't until 1986 that Spencer finally took a gamble that really was to pay off. Having spotted the gap for a broker that could offer other brokers anonymity in the interest-rate swaps market, he left stockbroker Charles Fulton and set up ICAP with three City friends and seed capital of £50,000. Operating on wafer-thin commissions but huge deal volumes, "Spencer had finally hit the jackpot". As the swaps market took off and the good years began to roll, Spencer threw famously lavish parties and rapidly gained a reputation as one of the City's "more engaging characters", says Alex Brummer in the Daily Mail.
But the ICAP share sale reinforces "a reputation for sailing too close to the wind". Some question his judgement as Tory Treasurer ahead of an election. "If there were a Fabio Capello watching over the affairs of ICAP, or… the Tory Party, Spencer might be out on his ear."
The link between the Tories and the City
In the wake of the financial crisis, David Cameron has tried to put some distance between the party and the City, backing plans to tackle bankers' bonuses and reckless behaviour. But a glance at the man who has been Conservative Party Treasurer since 2006 shows that the party is hardly estranged from the financial sector. Michael Spencer claims the Tories are "very well aware" of the importance of the City and know it "has to be nurtured".
A "book best judged by its cover", is how Jill Treanor described Spencer in The Guardian. A lifelong Tory, his clothes and trademark braces "shout Thatcherism". In recent years he has moved seamlessly into philanthropy and politics, using his expansive City contacts to raise a sizeable war-chest for the Tories.
And while for years Spencer refused to discuss politics, he is now increasingly vocal on the subject, says Andrew Cave in The Daily Telegraph. He declared himself "genuinely offended" by FSA chairman Lord Turner's description of banking as "socially useless". He has also hinted strongly that he'll move ICAP's domicile out of Britain should Labour win the next election.
He is also "hopeful", he tells the FT, that a Tory government will deliver a bigger-than-expected cut to corporation tax cut and axe the 50% top rate of income tax. And just in case Cameron needs reminding who his political friends are, Spencer has reportedly promised, says the FT, to throw a huge celebration dinner "for several hundred guests", at which "first growth Petrus will be served", should the party win the general election.
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