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The ambiance at Richemont’s annual assembly in Geneva on Wednesday was tense as billionaire Johann Rupert presided over an important shareholder vote. Activist hedge fund Bluebell had accused him of appearing as a “padre-padrone”, a godfather-like determine, and submitted resolutions to shake up governance on the Swiss luxurious group.
“I hope this assembly won’t flip right into a soccer match,” stated the 72-year outdated Richemont chair after a heated change with Bluebell’s consultant.
It was a deft remark that lightened the temper and provided a glimpse of the character of the South African tycoon, described by one pal as a “resourceful and thick-skinned . . . avenue fighter”. Individuals who know him effectively say that, whereas he can seem heavy-handed, he values propriety.
“Johann may be very straight and really loyal,” stated Patrick Thomas, the previous chief govt of luxurious group Hermès who joined the board of Richemont final 12 months. “He received’t cope with individuals he doesn’t belief.”
Thomas added: “He can come throughout as slightly bit tough however he’s really very refined and has robust human convictions.”
An investor stated: “You see this bullish, bombastic old-style chair, however there’s one other aspect to him . . . simple and honourable.”
The Bluebell episode propelled Rupert and his household firm into the highlight at a time when they’re additionally grappling with the query of succession and a looming downturn within the international financial system that will damp demand for Richemont manufacturers akin to Cartier and Van Cleef & Arpels. Richemont’s shares have lagged these of rivals Hermès, LVMH and Kering over the previous 5 years.
In the long run, Rupert simply saw off the challenge from Bluebell.
Shareholders overwhelmingly rejected its three resolutions to reconfigure the board, an indication they nonetheless trusted Rupert to guide regardless of the hedge fund’s critique that he makes use of the dual-class construction to disregard minority shareholders. His household holding firm solely owns a 9.1 per cent stake, however its B shares maintain 50 per cent of the voting rights.
Notably, shareholders rejected Bluebell’s nomination of former Bulgari govt Francesco Trapani as a director. Richemont argued he was too carefully related to LVMH.
Richemont’s governance structure is a legacy of selections Rupert, a school dropout and sports activities fanatic who began out in finance, made within the Eighties when he established its headquarters in Switzerland and listed its shares.
The transfer allowed the Rupert household to diversify outdoors apartheid South Africa the place Anton Rupert, Johann’s father, had based a enterprise empire from a £10 funding in cigarette manufacturing within the Forties. A baby of the despair, the elder Rupert realised that folks would maintain shopping for tobacco and alcohol by way of any downturn, and finally amassed investments in business, banking and luxurious that have been later housed within the Rembrandt Group.
Richemont was based when the youthful Rupert spun off Rembrandt’s worldwide property in 1988.
Rupert’s upbringing and household historical past have instilled in him a cautiousness that manifests itself in Richemont’s fortress-like steadiness sheet. Dubbed “Rupert the Bear” in 2006 for predicting a world financial disaster, the South African is seen as extra danger averse than rival controlling patriarch Bernard Arnault. The French billionaire used savvy acquisitions to construct LVMH into the world’s largest luxurious group, with a market capitalisation 5 occasions that of Richemont.
In distinction, Rupert has carried out fewer main offers, preferring as a substitute to take a position to increase the manufacturers Richemont already has. Considered one of his greatest bets proved worth harmful — the group booked a €2.7bn non-cash write down final month after promoting a majority stake in its unprofitable ecommerce operation Yoox Web-a-Porter.
Rupert has cultivated a world community of billionaires, financiers and sports activities stars from whom he seeks perception and recommendation. “He’s the one individual I’ve met who listens by speaking the entire time,” stated the investor. “He talks, dominates and takes all of it in.”
He has three youngsters together with his spouse Gaynor, one among whom is on Richemont’s board, and splits his time between London, Geneva and the household farm within the Stellenbosch wine area.
He has by no means misplaced contact together with his roots in South Africa. “The household was an enormous critic of apartheid, particularly Johann,” recalled Lord Robin Renwick, a former Richemont board member. “Not many different senior businessmen have been ready to face up and criticise apartheid at the moment.”
Renwick, who was then a British diplomat, stated Rupert helped with the marketing campaign to get Nelson Mandela out of jail. After his launch the pair grew to become mates, Renwick added.
“In South Africa, Johann is sort of a Warren Buffett determine”, celebrated for his philanthropy, conservation and job creation, stated Renwick. He’s additionally a favorite bogeyman of South Africa’s populist Financial Freedom Fighters occasion.
A fracas with a small activist fund is small fry for a person who clashed with former South African president Jacob Zuma. “I hate what he allowed to occur to the nation, however I don’t hate him,” Rupert stated in 2018.
Wanting forward, he faces far higher challenges than Bluebell. An financial slowdown dangers hurting luxurious demand. LVMH’s Arnault has lengthy coveted Cartier, and Richemont rejected an unspecified tie-up method from Kering a number of years in the past as a result of Rupert insisted he had no intention of promoting.
Finally he must hand over the reins to a brand new chief, whereas additionally searching for to protect Richemont’s independence. The corporate stated it has a succession plan however has not shared it. The investor places it bluntly: “He’s received a succession subject.”