RICHARD KAY: Insatiable greed of the vulture capitalists

Insatiable greed of the vulture capitalists: Private jets, property empires, art collections… and Jagger or McCartney singing at their parties. Private equity fat cats live in luxury while High St brands are stripped to the bone, writes RICHARD KAY

Not long before he acquired a sizeable stake in Debenhams, the former bankruptcy lawyer turned private equity baron David Bonderman decided to do some celebrating.

Nothing too discreet, though. That is not his style.

The financial entrepreneur, who has amassed a £3 billion fortune through his aggressive buyouts of failing or under-performing companies, subscribes to the ‘if you’ve got it, flaunt it’ philosophy of life.

Take his £27 million Gulfstream V jet, perhaps his most treasured possession, on which he logs 2,000 flying hours a year. He has had the monogram ‘DB’ emblazoned on its tail.

Showmen: David Bonderman is pictured above with actor Daniel Craig in 2006. The financial entrepreneur, who has amassed a £3 billion fortune through his aggressive buyouts of failing or under-performing companies, subscribes to the ‘if you’ve got it, flaunt it’ philosophy of life

So he marked the occasion of his 60th birthday with all the flamboyance money can buy. 

The Rolling Stones were hired at a cost of £4 million — that was a cool $1 million for each member of the band — to entertain 300 of his friends in a bash that he modestly dubbed ‘Bonderman rocks Las Vegas’.

First, guests were wined and dined on caviar and champagne at the Bellagio Hotel, the over-the-top resort which was the backdrop for the Hollywood film Ocean’s Eleven, where they were entertained by the actor and comedian Robin Williams, who also pocketed a $1 million fee.

They were then bussed to the Hard Rock Hotel, where rocker John Mellencamp was the warm-up act before Mick Jagger and the Stones played a 17-song, 90-minute set — personally chosen by Bonderman — that included Jumpin’ Jack Flash and Brown Sugar.

Stephen Schwarzman and his second wife Christine are pictured together above

The Los Angeles-born tycoon had thoughtfully installed an enclosed pathway between the hotel’s banqueting suite and The Joint, where the Stones performed, so his guests didn’t have to rub shoulders with hoi polloi.

The party cost Bonderman a small fortune — when the bills were totted up, there wasn’t much change from £7 million — but that, of course, was the point.

Extravagance and showmanship are his calling card, along with an inevitable wisecrack. 

‘I’m not paying for this,’ he said at the time. ‘My kids are.’

Ten years later, Bonderman was back in Vegas for another anniversary party featuring another big-name rock star. 

This time it was former Beatle Paul McCartney providing the music and receiving a reported £3 million fee. Robin Williams was once again booked for the cabaret at the Wynn Hotel and casino.

On that occasion, 700 friends were on the guest list — ten for each year of his life — and the champagne, vintage Krug, was said to have flowed like water. The party rooms were decorated with colourful socks, in a nod to Bonderman’s predilection for mismatched hosiery.

‘It was incredible,’ gushed one partygoer. ‘Very excessive even by Las Vegas standards, which is saying something.’

A business rival is more direct. ‘David likes winning,’ he says, ‘and he always likes people to see how much he has won.’ 

And what better way to do that than to splash out on the most lavish parties, which people are still talking about years later?

The City old guard has always loathed such ostentation — but that has never worried Bonderman, who believes his outstanding results speak for themselves.

Three years after acquiring that share in Debenhams through his Texas Pacific Group — now known as TPG — he and the two other private equity firms that had made the original investment cashed out. 

The company was floated on the market and the three firms made back three times the £600 million of capital they put in.

Rock of ages: Gwen Stefani sang Happy Birthday to Stephen Schwarzman at his lavish 70th bash

Debenhams owed about £100 million when it was taken private. But by the time it returned to the stock market in 2006, that debt had ballooned to more than £1 billion. 

After the retailer’s subsequent poor performance, the deal came to symbolise the worst excesses of the private equity model — and many critics of these ruthless ‘vulture’ funds say there is a direct line between that first investment and the collapse last year of the department store chain, with the loss of 18,500 jobs. 

It had begun trading as a draper’s in the reign of King George III and grew to have 178 outlets nationwide.

Today, all that remains of the venerable brand that helped to shape Britain’s High Streets is an internet presence operated by the online fashion retailer Boohoo. 

Meanwhile, people such as Terry Hyson, a former Debenhams support manager from Folkestone, Kent, have seen their pension pots slashed in the wake of the company capitulating to ruthless private equity funds. He is now rethinking his retirement plans.

‘I’m going to have to reconsider and might not be able to put my feet up as early as I wanted,’ he said. The cut to his pension, he added, ‘will have an impact on me and my family’.

Bonderman, now 78, and his ilk bridle over charges that they are mere asset-strippers, arguing that they are the risk-takers when they invest and there are failures to offset against successes.

But even a cursory glance at the TPG balance sheet suggests that his accomplishments far outweigh any setbacks.

The twice-married father of five, who owns a 500-acre ranch in Colorado and another home in Fort Worth, Texas, first made his mark in Europe when he bought a £9 million stake in Ryanair, transforming it into the leading no-frills carrier. He has also served as a director of Virgin Cinemas, Burger King and Uber.

In 2017, he resigned from the ride-hailing company after making a derogatory remark about how much women talk during a meeting called to address the firm’s sexism problem.

This abrasive style had landed him in trouble before, when he criticised the slow approach of the Japanese to doing deals.

He said: ‘They hate us but that’s OK because we hate them too.’ To compound matters, he then added: ‘Besides, look at the demographics. There will be fewer of them soon.’ 

After the meeting, his partners reportedly banned him from setting foot in Japan. He has also been known to insult the French with equal passion.

If anyone could rival Bonderman for tactlessness and self-indulgent profligacy, it must be Stephen Schwarzman, whose own 60th birthday bash was also quite an event. 

In 2007, the boss of global private equity predators Blackstone, the largest landlord to small businesses in the UK, who has a personal fortune of about £16 billion, paid crooner Rod Stewart £700,000 to serenade 350 guests, including future president Donald Trump and future presidential candidate Michael Bloomberg.

High life: David Bonderman has a £27million Gulfstream jet (as depicted above in a stock image)

Mansions: Schwarzman’s St Tropez villa. He also has homes in Manhattan, Palm Beach and Jamaica

Other guests at the £2 million bash included former Gulf War commander and Secretary of State General Colin Powell.

Within months, the economy had crashed in the financial crisis — and the memory of his lavish party sparked revulsion, turning him into the figure who epitomised Wall Street greed.

Did he care? This, after all, was a man who in one candid moment admitted often spending £2,000 on food at weekends for himself and his wife.

A more pressing matter was to stop staff wearing squeaky rubber-soled shoes in case they disturbed his poolside reverie at his 11,000 sq ft Palm Beach mansion.

It is said they changed to rope-soled footwear, just as sailors used to on board the Royal Yacht Britannia so the peace of royal passengers was not disrupted.

Money has made Schwarzman a connoisseur of many of the finer things in life, particularly property.

The man whose most controversial acquisition was the £162 million purchase of Southern Cross, Britain’s biggest care home provider, has a £22 million home on an eight-acre estate in The Hamptons, New York’s ritziest summer enclave, on Long Island.

He bought it not long after he sold Southern Cross for a £500 million profit, in a deal that crippled the healthcare group with skyrocketing bills it could not meet.

When Southern Cross was floated on the stock market by Blackstone in 2006, it was enthusiastically following a strategy of buying nursing homes, then selling them on to landlords and renting them back, relying on the fees it generated to pay its rents. But this started to unravel when the credit crunch struck and Southern Cross began to be hit by a combination of falling fees, higher operating costs and rising rents.

Schwarzman’s Hamptons mansion, meanwhile, joined a portfolio of homes that included a £20 million 35-room pile on Manhattan’s Park Avenue that is now said to be worth £100 million.

It has all the comforts fitting for a so-called ‘master of the universe’: gym, sauna, steam room, billiards table and servants’ wing. Works by Monet adorn the walls.

Mick Jagger and the Stones played a 17-song, 90-minute set — personally chosen by Bonderman — that included Jumpin’ Jack Flash and Brown Sugar at one of his parties. Ten years later, Bonderman was back in Vegas for another anniversary party featuring another big-name rock star. This time it was former Beatle Paul McCartney providing the music and receiving a reported £3 million fee

Then there is the £30 million Villa Cap Sud, close to the beach in St Tropez, with its manicured lawns and palm trees.

Schwarzman, who flies between his homes in a private jet, also keeps a winter bolthole in Jamaica’s Round Hill resort, once a haven for Hollywood stars Grace Kelly, Elizabeth Taylor and Fred Astaire. More recent owners have included the designer Ralph Lauren.

His most outlandish purchase was the £15 million he lavished in 2003 on a mansion called Four Winds in Palm Beach, Florida. But at 13,000 sq ft it was too small — so he tore it down, which led him to being accused of violating planning laws.

In its place emerged the vast mansion where he hosted his 70th birthday party. The bash was said to have cost £6.5 million: 400 guests were treated to a spectacular 12-minute firework display while, inside a two-storey marquee, acrobats performed daring feats of agility above actors dressed as Mongol warriors.

Singer Gwen Stefani ended the evening by singing Happy Birthday — and taking the birthday boy for a twirl on the dancefloor.

But just like Bonderman, Schwarzman has also made foolish remarks, once likening President Barack Obama’s plan to raise taxes on private equity firms to ‘when Hitler invaded Poland in 1939’. He had the grace, at least, to apologise.

None of this impresses the daughter of a resident who died after suffering abuse at a Southern Cross care home, who accuses private equity firms of using the elderly as ‘cash cows’.

Judith Charlatan, whose mother Doris was among 19 residents who died following years of neglect at Orchid View, near Crawley, labelled Britain’s worst care home, told us: ‘Residents were treated as commodities. It was just a profit-driven organisation and a lot of people suffered as a result.’

Not all the titans of venture capitalism are so high-profile as Bonderman and Schwarzman. Take Marc Meyohas, the French-born boss of Greybull Capital, which snapped up British Steel for a token £1 in 2016.

His company, which he runs with Daniel Goldstein via a limited liability partnership — a complex structure which makes it impossible to establish how much it makes in profits — operates from an anonymous-looking office in the heart of Knightsbridge, not far from Harrods.

Both men are stratospherically rich but don’t flaunt their wealth. Their social media accounts are set to ‘private’ and when they party, they don’t advertise it.

Educated at £37,000-a-year Clifton College, where the comedian John Cleese was once a pupil, Meyohas, 49, and his lawyer wife Fiona live in a London townhouse worth £7 million and spend holidays yachting and skiing in Europe and the U.S.

The father of two has a younger sister, Sarah, an experimental artist based in New York, whose works sell for upwards of $10,000.

He is also close to his brother Nathaniel, who helped to set up Greybull. Nathaniel married into one of the world’s wealthiest families: his wife Michaela is a scion of the Nahmad art-dealing dynasty who are reputed to own more than 3,000 masterpieces, including 300 Picassos stored in a warehouse in Geneva.

A third brother, Olivier, is a multimillionaire London-based banker with U.S. investment firm Blackstone.

The Meyohases have never been short of money. The family fortune was built by their father Nathan, a corporate lawyer who was caught up in the Elf oil affair, a French financial scandal of the 1990s.

Dozens of executives and associates of the state-owned firm were fined or jailed for siphoning vast amounts of money into properties, artworks, jewellery and to pay for the upkeep of mistresses.

Meyohas senior denied any wrongdoing and he was acquitted when the case came to trial.

As you might expect, the second Greybull fat cat, Daniel Goldstein, is similarly privileged. The 42-year-old American, educated at Yale, previously worked for Lehman Brothers and BNP Paribas. He has three children with his socialite wife Deana. The couple moved to London in 2008, spending £5 million on a five-bedroom house in Chelsea. In 2018, after the property had been refurbished, they put it on the market for £8.75 million.

Lavishly furnished and full of modern art and bespoke furniture, it prompted envious friends to say it was more like an interiors catalogue than a family home.

It’s a world away from Scunthorpe, where Nicola Flower was the third generation of her family to work at the town’s famous steelworks — until she was made redundant a year ago when Greybull sold out to the Chinese firm Jingye, ending a link that had lasted six decades.

‘I was so sad. I kept asking, “why was it me?” I felt victimised,’ Nicola said. ‘It completely knocked my confidence. I felt I’d let the family down. Three generations and it ends with me.’ Only a few years earlier, her father Ian had been forced to take early retirement when Greybull acquired the business from Tata Steel.

Steelmaking is a cyclical business and, like other heavy industries, requires long-term investment. Greybull were not in it for the long term.

The secretive company’s modus operandi is to take over businesses that have fallen on hard times, inject some capital and nurse them back to health, then cash out. Critics say the firm is more interested in stripping out assets — thus ensuring that even if an investment turns sour, they emerge with a small profit.

One such failed turnaround was Comet, the UK-based electrical retailer. When it collapsed in 2012, Greybull was among the investors that received £54 million as it was wound up.

A newspaper profile claimed Greybull’s executives were known for their volatility and that ‘they can be very aggressive’.

If there is an unassuming face of this newish kind of capitalism, it is owned by Sir Damon Buffini, 59, an adviser to three of the past four prime ministers, who was brought up by a single mother in a council flat.

But when his knighthood for charity work was announced in 2016, it was condemned as an ‘insult to society’ by the GMB union. The reason? 

He has not been forgiven for how, under the joint ownership of his then private equity firm, Permira, and CVC Capital Partners, the breakdown company AA was lumbered with enormous debts and shed thousands of jobs.

At the height of the controversy, protesters gathered and paraded a camel outside the church in Clapham where Buffini, his wife Deborah and three children worship.

The protest played on the Bible story that it is easier for a camel to go through the eye of a needle than for a rich man to enter Heaven — an unpleasant and personal attack to expose what the union claimed was his hypocrisy.

In a five-year period, Permira was involved in 14 takeovers, each worth more than £500 million. They included the DIY chain Homebase, the now-defunct roadside restaurant business Little Chef, and frozen food firm Birds Eye.

Jayne Wyatt lost her job after 30 years’ service at the AA when she opposed cuts to terms and conditions imposed by private equity bosses who had taken over the roadside service.

She accused the new owners of ‘putting lives and mental health at risk to earn their money’. She herself had been driven, she said, to the brink of suicide.

Enjoying the fruits of such lucrative deals, Sir Damon now lives in some comfort in a £10 million Surrey pile and is thought to be worth about £125 million. 

And despite his rags-to-riches background — he’s a man who enjoys a pint and a weekend game of football — to critics he is an uncaring symbol of a money-grabbing trade that leeches off struggling businesses.

Additional reporting by Arthur Martin, Richard Marsden and Susie Coen

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