Johann Rupert, the luxury boss who liquidated a hedge fund in the mood for a fight

The atmosphere at Richemont’s annual meeting in Geneva on Wednesday was tense as billionaire Johann Rupert presided over a crucial shareholder vote. Activist hedge fund Bluebell had accused him of acting as a “padre-padrone”, a godfather-like figure, and submitted resolutions to shake up the governance of the Swiss luxury group.

“I hope this meeting doesn’t turn into a football match,” the 72-year-old Richemont chairman said after a heated exchange with the Bluebell representative.

It was a shrewd observation that lightened the mood and offered insight into the character of the South African tycoon, described by a friend as “smart and thick-skinned. . . street fighter.” People who know him well say that, while he may come across as bossy, he appreciates decorum.

“Johann is very straight and very loyal,” said Patrick Thomas, the former chief executive of luxury group Hermès who joined Richemont’s board of directors last year. “He won’t deal with people he doesn’t trust.”

Thomas added: “He may seem a bit rough, but he is actually very subtle and has strong human convictions.”

One investor said: “You see this bullish, bombastic old-fashioned chair, but there’s another side to it. . . frank and honourable. »

The Bluebell episode thrust Rupert and his family business into the spotlight at a time when they are also grappling with succession issues and an impending downturn in the global economy that could dampen demand for Richemont brands such as Cartier and Van Cleef & Arpels. Richemont’s shares have lagged those of rivals Hermès, LVMH and Kering over the past five years.

In the end, Rupert easily took on Bluebell’s challenge.

Shareholders overwhelmingly rejected his three resolutions to reconfigure the board, a sign they still trusted Rupert to lead despite criticism from the hedge fund that it uses the two-class structure to ignore minority shareholders. His family holding company only has a 9.1% stake, but his B shares hold 50% of the voting rights.

Notably, shareholders rejected Bluebell’s appointment of former Bulgari executive Francesco Trapani as a director. Richemont argued that he was too closely associated with LVMH.

Richemont’s governance structure is a legacy of decisions made by Rupert, a college dropout and sports enthusiast who got his start in finance, in the 1980s when he established his headquarters in Switzerland and listed his shares.

The move allowed the Rupert family to branch out of apartheid South Africa where Anton Rupert, Johann’s father, had founded a business empire from a £10 investment in the manufacture of cigarettes in the 1940s. A child of the Depression, the elder Rupert realized that people would continue to buy tobacco and liquor in a downturn, and eventually amassed investment in the industry, the banking and luxury which were then housed in the Rembrandt group.

Richemont was founded when young Rupert sold Rembrandt’s international assets in 1988.

Rupert’s upbringing and family history instilled in him a caution that is evident in Richemont’s fortress record. Nicknamed “Rupert the Bear” in 2006 for predicting a global economic crisis, the South African is considered more risk averse than his rival, patriarch Bernard Arnault. The French billionaire has used savvy acquisitions to make LVMH the largest luxury group in the world, with a market capitalization five times that of Richemont.

By contrast, Rupert closed fewer major deals, preferring instead to invest in expanding the brands that Richemont already owns. One of its biggest bets has proven to be value-destroying – the group recorded a non-cash writedown of 2.7 billion euros last month after selling a majority stake in its unprofitable Yoox e-commerce operation. Net-a-Porter.

Rupert has cultivated a global network of billionaires, financiers and sports stars from whom he seeks ideas and advice. “He’s the only person I’ve met who listens while talking all the time,” the investor said. “He speaks, dominates and absorbs everything.”

He has three children with his wife Gaynor, one of whom is a board member of Richemont, and divides his time between London, Geneva and the family farm in the Stellenbosch wine region.

He never lost touch with his roots in South Africa. “The family were big critics of apartheid, especially Johann,” recalled Lord Robin Renwick, a former Richemont board member. “Few other senior businessmen were willing to stand up and criticize apartheid at that time.”

Renwick, who was then a British diplomat, said Rupert helped in the campaign to get Nelson Mandela out of prison. After his release, the pair became friends, Renwick added.

“In South Africa, Johann is like a Warren Buffett figure,” celebrated for his philanthropy, conservation and job creation, Renwick said. He is also a favorite bogeyman of South Africa’s populist Economic Freedom Fighters party.

A fracas with a small activist fund is small fry for a man who clashed with former South African President Jacob Zuma. “I hate what he let happen to the country, but I don’t hate him,” Rupert said in 2018.

Looking ahead, he faces far greater challenges than Bluebell. An economic slowdown is likely to hurt the demand for luxury. LVMH’s Arnault has long coveted Cartier, and Richemont rejected an unspecified tie-up approach from Kering a few years ago because Rupert insisted he had no intention of selling.

Eventually, he will have to pass the reins to a new leader, while seeking to preserve the independence of Richemont. The company said it has a succession plan but did not share it. The investor says it bluntly: “He has a succession problem.

About Michael Brafford

Check Also

Another Vail Oktoberfest, Classic Cars, Wine Hikes, Trail Races and More: Tricia’s Weekend Picks 9/16/22

Oktoberfest returns for the third weekend, this time the festivities will take place in Vail …