This summer, he climbed a number of peaks, including the 13,524-foot Aiguille Verte in the French Alps. “Now I get the personal pleasure of bringing my (four daughters) along, which changes the dynamic,” he said. “Two years ago, my 17-year-old climbed Mount Kilimanjaro. She crushed it at 15. My 14-year-old and I climbed Gran Paradiso, which is a 4,000-meter peak (in the Italian Alps), this year. And my 11-year-old has done the 65-mile bike ride down to Hove (England) — all my daughters have done it over the years.”
He and his family complement sport with charitable giving. But his philanthropy goes way beyond sports-related events. He's giving injured war veterans work experience at Patron Capital and raising money for the Royal Marines Charitable Trust Fund in various ways. He's helped build schools in Himalayan villages in Nepal, and is looking to provide power, water and Internet service to those remote villages with the help of his climbing partners.
Despite his busy schedule, he's stepped up these secular philanthropic efforts in the past 18 months. He stepped down as chairman of the St. John's Wood Synagogue in London and is doing fewer religious-oriented projects, he said. He's kept his co-chair position on the Global Advisory Board Europe, Middle East and Africa Cabinet at the University of Chicago Booth School of Business, where he earned his MBA.
Why is it important to you to give back? The concept of healing a fractured world is very important to me. I give about 10 hours a week to charitable causes and about 10% of any money I make personally. I fundamentally believe that we are part of a kind of a circle, and when you have the ability to give to change the world, whether it's money or time or effort or whatever, you should do it. And if you don't help others, whatever it might be, it makes you less of a human being and the world is in a worse place.
You also have a code of ethics on your company's website. Is it your religious beliefs driving this and your charitable giving? Yes and no. ... I believe fundamentally that I along with a variety of other people have been put on this world to help change the world. It was cemented in my mind when my father passed away about six years ago. My father never had a lot of money and we had a lot of financial troubles; I grew up poor. But when he passed away about six years ago, it didn't really matter that he had no money. What mattered was how he changed the world around him and how he impacted people. And I saw he did. So that just reinforced in my mind what it is that we're supposed to be doing in the time we have.
Why the Royal Marines — are you ex-military? No. About a year and a half ago, I decided to make an effort to help the British armed forces, particularly those who are disabled from experiences in war, either in Afghanistan or Iraq. What I found at Patron was that none of the British staff had any sense of how many people had died or were injured overseas. Part of that is tied to the government not wanting to publicize it, and also a lack of outward show of patriotism vs. the American culture where you have the opposite. (Through contacts, I came across) the Hasler Company (which is a U.K. military rehabilitation unit) and the Royal Marines Charitable Trust Fund.
You hear a lot about so-called zombie managers in private equity these days — do you have issues with legacy assets? On one hand, from a manager's perspective, in theory, it's a lot easier to lose money and not have to worry about a specific asset because it's gone, and focus your energy on new stuff. On the other hand, that's not what you're supposed to be doing. What you're supposed to be doing is making your money back — in fact, making a return. So if you look at people who had significant positions from 2006 (and) 2007, it's very scary for them.
We do have legacy assets, but the good news is we never really borrow a lot of money. Our average leverage historically has been about 36%, which is nothing — that's how people think of equity. And because of that, a lot of our problem positions don't necessarily have active problems because we haven't borrowed any money. That was by design in most cases — we didn't want to borrow because the assets were too distressed or too complicated.
That hasn't slowed up your
fund-raising abilities? No, we recently closed our fourth fund at e880 million, our largest pool of discretionary assets to date. ... About 55% of the assets came from existing investors — in terms of number of investors, the (percentage) would be much higher. A lot of U.S. investors have less capital to deploy or are deploying less capital by choice, so we had (smaller commitments but from) a larger number of investors.
It seems the avalanche in European distressed assets hasn't happened yet, is that right? It's happening, but in a different way. Everyone expected the avalanche to be $5 (billion) or $10 billion deals, but what actually happened was (banks unloaded assets) by either letting loans mature and putting the assets into foreclosure or selling down individual positions. So, the (firms) who formed large pools of capital to go buy portfolios haven't really seen much.
In which sectors are you finding opportunities? In the leisure space, we bought a bunch of hotels out of bankruptcy from Von Essen, and we bought a bunch more properties for our (Generator Hostels) business. We also bought 48 gas stations in the U.K. ... and on the credit side, we teamed up with TPG and bought this huge (commercial mortgage-backed security) distressed deal.
Have you added staff in these areas? We continued to beef up our teams (adding about six investment staff) in specialty products, which we believe will be the non-core distressed products that banks are going to sell. Accordingly, we built up our leisure team, our nursing home and health-care teams, credit distressed and construction teams. And we added Mark Collins (as senior partner and chairman of U.K. investment) to give us some gravitas in the U.K. market.
Where do you see the market going from here? We think it will be more of the same for the next two or three years; it may or may not accelerate in the next six to 12 months.
This article originally appeared in the September 17, 2012 print issue as, "Worlds of experience".