A billionaire with the mill: as Francois Pinault, made a fortune on the boards and luxury

One of the richest people Francois Pinault

At the end of April 2016, it became known that the French billionaire françois Pinault has found a place for their own Museum, which will house his collection of paintings, one of the best private collections of the world, which has more than 3 thousand paintings, including works by Pablo Picasso and Piet Mondrian. The Museum will be accommodated in the historic building of the Paris stock exchange in the city centre. “This is an exceptional gift to us, it is very good that the collection will be housed at us,” — said the mayor of Paris Anne Hidalgo.

Opening a private Museum in the centre of Paris looks good in the biography of the man, all business which was based on status and assets. 79-year-old Pinot, one of the richest men of France, controls brands such as Gucci, Alexander McQueen and Yves Saint Laurent, owns the auction house Christie’s, is the owner of Kering — one of two (along with LVMH), the largest conglomerates specializing in luxury items. Condition Pino, who began his career in business with the timber trade, according to the calculations of Forbes magazine, on July 19, 2016 is $11.9 billion In the world Forbes list of billionaires in March this year, he took the 84th place.

The guy with the sawmill

François Pinault was born in 1936 in the small village of Traverten in the region of Brittany in North-Western France. The father of the future billionaire was the owner of the farm is 10 hectares and a small sawmill, which he had inherited from his grandfather. Childhood Pinot I had at the time of the occupation of France by the Nazis. Being quite small, françois together with his father were eating a small group of allied soldiers, who were hiding near the home of the Pinot family. One day when Pino returned home, he was caught by a German patrol. Asking about the location of enemy soldiers, Nazis brutally beat Pino Sr., but neither the father nor the son never said anything, reports this story in The Guardian.

After the occupation of France, Pinot was the only child from his village who went to study at the College of Saint Martin in Rennes.

Subsequently, in an interview with the Financial Times, the businessman recalled that in Rennes he was constantly the object of ridicule because of provincial Breton dialect and scruffy clothes.

In the end, in 15 years, Pino has decided to leave school and return to his village to work on his father’s sawmill. In those years, as recalled employee family sawmill Jean Tessier, the future billionaire “look, what is called, “solid”, it could not be called talkative”.

In 1956, Pino, two and a half years, is leaving to serve as a volunteer in the French army in Algeria, where at that time the local population is fighting a war for independence. There Pinot participated in many operations, has earned praise from his superiors and ended the service with a non-commissioned officer.

Returning to Brittany in December 1958, Pino went to work for his friend’s father Batista Gautier, Rennes owner of a small company “Gauthier Brothers”, specializing in the sale of timber. In 1960, Pinot married the daughter of the owner of the business, and two years later became the head of the company and its sole owner. Since that time, “Gauthier Brothers” are renamed Pinault Company. Father-in-law helped aspiring businessman, giving him 447 thousand francs lifting, as well as acting as a guarantor for the loan to the Credit Lyonnais. Pino with his head immersed in the Affairs of the company, already earning the reputation as a tough and uncompromising businessman. In 1968, Pinot divorces his wife, but retains control of the company, paying loans Gautier.

The raider and the speculator

In the early 1970-ies Pino makes a decision that helped the company to expand, and he himself — rich. At that time a large part of the French wood-processing companies bought the timber from the middlemen-the importers, concentrated in the port of Saint-Malo. Pino enters into an agreement with several other companies in the industry and is beginning to import timber directly from Sweden and Canada. Pino fails to timely buy and sell party the forest and soon significantly increase the volume of deliveries. This allows him to open a subsidiary in Sweden that bought timber directly from suppliers and delivered to France on very favorable terms.

Pino began to buy small companies throughout France. The businessman waited for a particular company there is a cash crunch, and “came to the rescue”, the company’s offering to join his group, but not in the end taking no action until the bankruptcy of the company became inevitable. Pinot got control over companies for a symbolic one franc.

In 1974, thanks to insider information about the upsurge in sugar prices, Pino was able to earn CHF 10 million by investing 300 thousand francs. However, the most successful transaction of the period was the sale in 1973 of its core business — holding company Pinault France. The buyer is the British Venesta, the transaction amounted to 25 million francs, and Pinot remained a minority shareholder with a share of 20%. The deal was done on the eve of the oil crisis, when the market has not fallen. Taking the post of financial Director, Pino ordered large quantities of timber, putting the company in a difficult financial position. When did the energy crisis and the prices for timber fell, the suppliers asked the company to cancel your orders after paying a fine. However, the English shareholders did not have sufficient funds to pay the fines. As a result, in 1975, Pino, the company buys only 5 million francs. “He has a supernatural sense of time. His business acumen is almost poetry,” says Pino, one of his closest advisers, economist Alain Mink.

Think like a strategist and act like a savage”

Successful speculative transactions helped Pino to create a base for further business expansion, which is based on the principle purchase of the company’s financial difficulties. Managing the assets acquired, the businessman was not afraid to pursue a tough policy — so by purchasing the country’s largest manufacturer of wood panels, the company Isoroy, Pinot reduced office staff from 700 to 25 people. Such schemes fit into the business philosophy Pinot, which the businessman describes with the words of French poet rené Globe: “Think like a strategist and act like a savage”.

On hand Pinot played and friendships with some influential politicians. In particular, he was friendly with who served from the late 1970-ies of the mayor of Paris and future French President Jacques Chirac (1981 Pino for one franc bought the failing state woodworking company, then Chirac said that he “saved his life”). In 1988, the Pinot brings the company to IPO (placement took place on the Paris stock exchange), which enabled him to obtain funds for expansion in an entirely new sphere of retail business.

Pino started with in 1991 and purchased from his future rival, the head of the conglomerate LVMH Bernard Arnault, a network of furniture stores Conforama. Held next year, the deal, Pinault — purchase network of Department stores Printemps — finally introduces the entrepreneur to the elite of French business. Pinot took a 66% Printemps by Swiss holding company Maus Freres. For the management of their assets in retail in 1992, Pinault poses holding Artemis (named after the Greek goddess of the hunt Artemis). The holding 74.4 per cent belongs to the family of Pinot, yet 25.6% of Dutch Forest Products International, which the businessman controls through offshore.

In 1994, Pino gained control of France’s biggest network of bookstores and music shops FNA (the amount of the transaction amounted to €450 million loan it gave him Credit Lyonnais). Another deal that he made in the same year, takeover of the service of mail delivery La Redout — brought him to court. The lawsuit against the Pinot was filed by the Association for the protection of minority shareholders, which claimed that Pino offered to shareholders Redoute stake in Printemps, and then Pinot resorted to the “dilution” of equity, reducing the share of minority shareholders in Printemps. The court recognized Pinot innocent. “He’s always on the edge of the cliff because there is a profit to the highest. If he does step back, it will reduce risks but will reduce the profit”, — said about Pino, the legal consultant of the Association for the protection of minority shareholders of Dominik Schmidt.

In 1994 after the purchase of La Redout company Pinot changed its name to Pinault-Printemps-Redout (later abbreviated to PPR). Under this name the company was destined to become one of the two major forces in the global luxury segment.

Pinot vs Arno

First purchase Pinot in the luxury segment was the acquisition in 1993 of one of the most celebrated wineries in France, Chateau Latour, for $131 million (at the time it produced 1,000 bottles of Bordeaux a year). In 1998 was acquired by one of the two main venues for the purchase of luxury goods — Christie’s auction (amount of the transaction amounted to $1.2 billion). However, the main acquisition in this segment was the purchase of Gucci. Especially valuable for Pinot was the fact that in the struggle for Gucci, he managed to fend off his competitor and the business of the antithesis of Bernard Arnault of LVMH. Pinot comes from a peasant community who never finished high school, while Arnaud bourgeois, a graduate of the prestigious Ecole Politechnique. As he wrote Le Monde, if Arno is “a typical product of France”, Pinot on the home to see some sort of pirate. In the situation of Gucci Group, Pinault managed to catch his more respectable rival off guard.

By the beginning of 1999, LVMH had a share in Gucci of 33.4%. As it turned out, LVMH was preparing to buy 100% stake in Gucci — Arnaud estimated the company in $5.1 billion, However, Pino was the first — in early March, he met with the CEO of Gucci, Domenico De sole, making him a favorable impression, was able to negotiate the deal. After a couple of weeks Gucci agreed on the additional issue of its shares, which rose by 61%, and Pinot acquired 42.5% in the company while paying us $2.9 billion, with a slight premium to the market price. The LVMH share in the company has been reduced by half. A few hours later after the incident, LVMH has filed a lawsuit demanding to cancel the transaction. However, the court, like the appellate court in 2001, took the side of Pinot. The dispute between the parties resulted in an agreement in 2001 under which PPR bought almost half owned by LVMH Gucci shares, bringing the stake in the company to 53.2%.

In order to raise funds for the purchase of Gucci, PPR had to sell the assets by several billion dollars (including to sell a woodworking business, where Pino began). In turn, Gucci received from PPR money, able to realize a long-held dream of its Director General De sole became a multi-brand company, purchasing a number of fashionable premium brands (including fashion house Yves Saint Laurent for $1 billion).

The stain in the biography

The largest trial, which was involved in a Pinot, was the scandal around the Bank acquired Credit Lyonnais Californian insurance company Executive Life. In 1991 the Bank, which at that time remained the participation of the state, acquired bankratings of the insurer through its American structure Altus Finance, which was presented as an independent party to the transaction. While under American law, foreign banks could not buy in the American insurance companies share more than 25%. As intermediaries, the Bank has attracted a number of French investors, among which were Pinot. Subsequently, the shares of Credit Lyonnais was bought up on the cheap Pinot. French businessman gained control of the balance belonging to the company “junk” bonds, subsequently exchange them for shares of a number of American companies, including Luggage manufacturer Samsonite and Shoe company Converse. American law enforcement authorities considered that the Bank and Pino had violated the laws of the United States and the state of California and demanded Pinot payments of $1 billion But in the end, in 2004 Pinot escaped with only a fine of $110 million.

Life in art

In 2005 Pinot, who at that time was 69 years, handed over the operational management of the business to his son Francois-Henri, in which PPR changed its name to Kering. Sam Pino, Sr. focused on his collection of art gathered since the 1980-ies. In childhood and adolescence Pinot has not had the opportunity to join the high art. “I saw some art in the churches, but to 30 years never crossed the threshold of the Museum,” says Pinault in conversation with Financial Times.

His first painting of Pino bought at auction in London — it was a painting of the late XIX century, the Breton artist the Field ceruse. “I bought this painting because it depicts the woman reminded me of my grandmother,” says Pino. Later, he buys a lot of works by Picasso, Cubists, Surrealists. Interim purchase, according to Pino, was the purchase in 1990 of the paintings of Piet Mondrian Tableau Losangique II for €8.8 million in the choice of paintings for his collection Pinot follows the advice of prominent curators and art experts, among them former Director of the Louvre and former French culture Minister Jean-Jacques Yagon.

Now in the collection of Pinot more than 3 thousand works. It is stored and partly exhibited in Venice in three palaces — the Palazzo Grassi, a Palace on the Grand canal and Punta de Rohan (the possession of the last building, the businessman got in the fight with the Guggenheim Foundation). Pino decided to put a collection in Venice after 2005 could not achieve from the authorities of the Paris resolution on the construction of the Museum on the island of SEGUIN. After this failure, the cause of which were bureaucratic obstacles, Pino moved the collection to Venice. For several years, he continued to ponder the idea of opening a permanent Museum, which houses a collection among the options it considered the construction of the Museum in new York). However, in the spring of 2016, the businessman finally managed to negotiate with the authorities of Paris that the Museum will be located in the exchange building.

In 2007, in a conversation with Forbes, the businessman has declared that considers fair an estimation of the cost collection of $2 billion.

Business Francois Pinault in numbers

43.8 per cent — the proportion of Pinot to Kering (which owns through a holding company Artemis)

€2.78 billion — the revenue of Kering in the first quarter of 2016

71% — share luxury segment revenue in the first quarter of 2016

€696 million net profit of Kering at the end of 2015

€19.6 billion — the market capitalization Kering

$1 billion — the total assets of Pino in the United States

$2.7 billion — the volume of transactions at auction Christie’s in the first half of 2016