Scottish entrepreneur, Sir Tom Hunter, has made a fortune from retailing.
Sir Tom Hunter, the famous Scottish entrepreneur and philanthropist has been hit hard by the credit crunch. Given his track record though, I fully expect him to bounce back.
Background
On graduating from Strathclyde University in 1984 he started a business selling trainers from the back of a van, which eventually grew to become Sports Division. He built this firm into one of the UK's biggest retailers, with some 250 stores, before selling it to JJB Sports (LSE: JJB) in 1998 for £290m. His own stake was estimated at around £260m.
Hunter was reputed to be Scotland's first home-grown billionaire, but since the credit crunch is estimated to have lost around £250m in property. These losses have somewhat slowed his philanthropic work but he still intends to make good on a promise he made three years ago to give £1bn to charity during his lifetime.
West Coast Capital
His main investment vehicle is West Coast Capital, a private equity partnership founded in March 2001. Since then it has concluded in excess of £4bn of deals. It has been involved in a takeover battle for Selfridges, court battles with Tesco (LSE: TSCO) over garden centre Dobbies Garden Centres and numerous retail ventures.
Currently, West Coast includes his investment in shoe-seller Office, fashion retailer USC and stakes in House of Fraser (10%) and Bhs. It also encompasses his various property investments and joint ventures.
It reported an £83m loss before tax in the year to March 2009, compared with a £190m loss for the previous twelve months. However, it recently announced that is now considering acquisitions.
Hunter also uses two other investment vehicles that you may come across in the press or in RNS announcements -- Dundonald Holdings and TBH Investments.
In a recent interview, he stressed the importance of people management in running a successful business. "In business life, the best business decisions I've ever made have been about people and the worst business decisions I've ever made have been about people."
Recent losses
Two particular deals have caused heavy losses in the last couple of years:
- McCarthy & Stone, the retirement house builder, was taken private by a consortium of HBOS, Sir Tom and the Reuben brothers for £1.1bn in 2007. However, come the crash, the debts couldn't be serviced and it was eventually was taken over by the banks in a debt-for-equity swap. Hunter is said to have lost some £30m.
- Crest Nicholson, the housebuilder, was also bought in 2007, again in a consortium with HBOS. In early 2009, it was involved in a debt-for-equity swap, with Hunter's loss estimated at £35m.
In one sense, it is instructive to realise that even the canniest of investors can come unstuck. Perhaps, by straying away from retailing and into housebuilding, Hunter got caught out in an industry he didn't understand quite as well.
Current holdings
I've only been able to find a couple of holdings in quoted companies:
- Sigma Capital Group (LSE: SGM) -- owns 18.5% via West Coast Capital. Sigma Capital Group plc is an AIM-listed UK-based specialist asset management group whose principal business is investing in companies developing technologies relating to clean energy and energy efficiency.
- Flying Brands (LSE: FBDU) -- owns 27% via West Coast Capital. It has been reported in the Daily Mail that Hunter originally bought a 29.9% stake in Flying Brands, the Flying Flowers delivery-to-Gardening Direct mail order group, at 312.5p a share back in November 2006.
Certainly, when it comes to retail, Sir Tom Hunter knows more than most. I'll definitely be watching any future moves he makes regarding listed high street chains.
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