The environment at Richemont’s annual assembly in Geneva on Wednesday was tense as billionaire Johann Rupert presided over a vital shareholder vote. Activist hedge fund Bluebell had accused him of performing as a “padre-padrone”, a godfather-like determine, and submitted resolutions to shake up governance on the Swiss luxurious group.
“I hope this meeting will not turn into a football match,” stated the 72-year previous Richemont chair after a heated change with Bluebell’s consultant.
It was a deft statement that lightened the temper and supplied a glimpse of the character of the South African tycoon, described by one buddy as a “resourceful and thick-skinned . . . street fighter”. People who know him effectively say that, whereas he can seem heavy-handed, he values propriety.
“Johann is very straight and very loyal,” stated Patrick Thomas, the previous chief govt of luxurious group Hermès who joined the board of Richemont final yr. “He won’t deal with people he doesn’t trust.”
Thomas added: “He can come across as a little bit rough but he’s actually very subtle and has strong human convictions.”
An investor stated: “You see this bullish, bombastic old-style chair, but there’s another side to him . . . straightforward 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 world economic system that will damp demand for Richemont manufacturers similar 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 top, Rupert simply noticed off the problem 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 intently related to LVMH.
Richemont’s governance construction is a legacy of selections Rupert, a university 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 exterior 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 individuals would hold shopping for tobacco and alcohol by means 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 finished fewer main offers, preferring as an alternative to speculate to develop the manufacturers Richemont already has. One of his largest bets proved worth damaging — the group booked a €2.7bn non-cash write down final month after promoting a majority stake in its unprofitable ecommerce operation Yoox Net-a-Porter.
Rupert has cultivated a worldwide community of billionaires, financiers and sports activities stars from whom he seeks perception and recommendation. “He’s the only person I’ve met who listens by talking the whole time,” stated the investor. “He talks, dominates and takes it all in.”
He has three kids together with his spouse Gaynor, one in all 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 family was a big critic of apartheid, especially Johann,” recalled Lord Robin Renwick, a former Richemont board member. “Not many other senior businessmen were prepared to stand up and criticise apartheid at that time.”
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 turned mates, Renwick added.
“In South Africa, Johann is like a Warren Buffett figure”, celebrated for his philanthropy, conservation and job creation, stated Renwick. He can be a favorite bogeyman of South Africa’s populist Economic Freedom Fighters celebration.
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 happen to the country, but I don’t hate him,” Rupert stated in 2018.
Looking forward, he faces far larger 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.
Eventually he should hand over the reins to a brand new chief, whereas additionally looking for to protect Richemont’s independence. The firm stated it has a succession plan however has not shared it. The investor places it bluntly: “He’s got a succession issue.”