FT : Top Richemont investors set to vote against activist’s plan to shake up boa

Top Richemont investors set to vote against activist’s plan to shake up board
Shareholders of Swiss luxury group line up against hedge fund Bluebell’s challenge to chair Johann Rupert

Several top investors in Richemont are planning to vote against proposals by an activist investor to shake up the Swiss luxury group’s board and challenge its controlling shareholder and chair Johann Rupert.

London-based hedge fund Bluebell Capital Partners, which owns a small stake in Richemont, has proposed three resolutions to be voted on at a shareholder meeting next Wednesday, including one that would nominate former Bluebell partner and luxury industry veteran Francesco Trapani to the board.

They contend that Richemont, whose biggest brands are Cartier and Van Cleef & Arpels, has underperformed peers such as LVMH and Hermès and has been hurt by poor governance and strategic choices, such as sticking with money-losing ventures in fashion and ecommerce.

Bluebell, which has been part of successful campaigns at Danone and Hugo Boss, has also called out Rupert for behaving like a “padre-padrone” or godfather-like figure, who makes most decisions at Richemont even though he owns only a minority stake.

But Stephen Paice, head of European equities at Baillie Gifford, which is a top 15 investor in Richemont, said the fund was planning to vote against Bluebell’s resolutions.

“You can see that the composition of the board has changed over the past five years and Richemont has tried to address some of the gaps in the skillset,” said Paice. “I think the direction of travel is positive.”

A second top 15 investor said that changes by Richemont to its board — notably the appointment last year of Patrick Thomas, the former chief executive of luxury rival Hermès — showed that “the company is going in the right direction”.

This person added: “I wouldn’t be overly aggressive in pushing them for change because I think they have made some noticeable progress.”

Rupert, 72, who built Richemont into a powerhouse in jewellery and watches with a market value of about SFr63bn ($65bn), has said shaking up the board is not necessary and has opposed Trapani because of his links to major competitor LVMH, who he worked for until 2016.

Although he owns only a 9.1 per cent stake in Richemont, Rupert has almost total power to set strategy and choose directors because he owns B shares that carry 50 per cent of the voting rights.


Proxy advisory firms Institutional Shareholder Services and Glass Lewis have opposed Trapani joining the board.

Bluebell has proposed Trapani’s nomination as a board member to specifically represent the A shareholders as provided for in the company’s bylaws but never applied by Richemont.

The company has agreed to appoint a representative of the A shareholders but wants to name a current board member Wendy Luhabe to the post.

It also has come out against Bluebell’s other proposals to increase the minimum size of the board and mandate that A and B holders each had equal representation.

Bluebell partner Guiseppe Bivona said he was confident about the vote after having canvassed other shareholders. “We think we have the support of some of the largest shareholders,” he added.

A third top 15 Richemont shareholder said it was voting against all three of Bluebell’s proposals and agreed that Trapani’s appointment to the board was “not advisable”.

It said that Bluebell had not given sufficient detail as to how it intended to improve Richemont’s governance and said that it could not be ruled out that the activist hedge fund was pursuing its own interests, “which are not long term and in the interests of all shareholders”. 

Bluebell’s campaign at Richemont became public in July and since then executives at the Swiss group, including Rupert, have been holding calls with top shareholders. This marks a change in approach for a company that usually restricts its investor communication to its twice-yearly earnings.

Baillie Gifford’s Paice said that the Rupert family’s long-term investment horizon and its patriarch’s influence on strategy had been a big benefit for Richemont.

He pointed to the Chinese government’s crackdown on gift giving to fight corruption, which began about a decade ago and hurt Swiss watch exports to Hong Kong and mainland China.

During this period Richemont bought back inventory from its distributors, which came at a financial cost but protected the brands over the long term.

Paice said: “I think that’s some of the parts of governance which are sometimes overlooked — everyone thinks about the composition of the board . . . many people forget just how long term and how beneficial having a family involved with Richemont has been over the years.”

Richemont declined to comment.

FT : Tencent turns from buyer to seller in investment pivot

Tencent turns from buyer to seller in investment pivot
Chinese internet giant plans $15bn of disposals this year as pressure mounts from investors and regulators

Chinese internet titan Tencent is pivoting from years of aggressive stakebuilding to a focus on divestments as it comes under pressure from investors and Beijing’s recent antipathy towards Big Tech.

As part of an important shift in strategy, the company has outlined a soft target of divesting about Rmb100bn ($14.5bn) of its $88bn listed equity portfolio this year, according to two people familiar with the matter. This would take place depending on market conditions and internal profit targets.

Partial divestments in large Chinese companies such as food delivery service Meituan were in the pipeline, the people said. Meituan was not a top priority for share sales owing to its strong performance, but cutting its stake could help reduce pressure on Tencent from the anti-monopoly regulator, the people said.

A crackdown that began in 2020 has led to nearly 100 deals involving Alibaba and Tencent coming under antitrust scrutiny from Chinese regulators, reversing Beijing’s once laissez-faire approach towards the country’s vast internet sector.

Investors have also pressured the company to divest underperforming assets, a third person with direct knowledge of the matter said, as China’s zero-Covid policies and property crisis batter the economy.

Tencent reported its first decline in quarterly revenues in August, driven by weak advertising and games sales, marking a departure from the days of double-digit growth in its internet businesses that had fuelled the company’s aggressive investment strategy.

Its new approach was not driven by any urgent need for cash, and sale proceeds could be distributed in a variety of ways, including special dividends for shareholders, share buybacks and bonuses for employees, the people said. Two employees who did not wish to be named said they had started receiving stock dividends this year in the form of JD.com shares.

Proceeds in 2022 would contribute to two batches of funds planned by Tencent that will be based on themes espoused by Beijing, including sustainable social values and common prosperity, two of the people said. Tencent promised last year to raise Rmb100bn to support rural revitalisation and help increase earnings for low-income groups in a move that was in step with Beijing’s call for greater corporate social responsibility.

Tencent responded: “We have repeatedly made clear publicly that our Rmb100bn commitment towards our sustainable development initiative is a multiyear initiative that is separate from our investment decisions. There is no timeline for contributions to this fund, which will be made over time, and are not determinative of our investment decisions.”

While Tencent has already begun its divestment drive, one person said the investment team was still deliberating which stakes could be reduced in non-core businesses and at what target price. The Shenzhen-based group owns more than 10 per cent of six large tech companies listed in China and is the biggest investor in Meituan, short-video sharing app Kuaishou and popular question-and-answer site Zhihu.

In January, it offloaded more than $3bn worth of shares in Singaporean internet conglomerate Sea. Last year, Tencent gave out $16.4bn worth of stakes in ecommerce player JD.com to shareholders as a dividend in a surprise move that some saw as the start of the strategy pivot.

Tencent added: “We don’t have any target amounts for divestments. We have always invested with the goal of generating strong returns for our company and shareholders, not according to any arbitrary timeline or target. Nor have we received any external pressure regarding our investment portfolio. In fact, our most recent divestments, JD.com and Sea, were overperforming and generated many multiples on our initial investment. We will continue to make decisions independently and in the best interest of our shareholders over the long term.”

Despite the switch in strategy, Tencent was expected to continue to invest overseas and in strategic growth areas, including enterprise software, video services and the games industry, though more selectively than before, said Fitch Ratings analysts Kelvin Ho and Jia Wen in a report in May.

FT : Kim Kardashian launches private equity firm

Kim Kardashian launches private equity firm
SKKY Partners will target media and consumer sectors

Kim Kardashian is launching a private equity firm to acquire stakes in fast-growing media and consumer companies, aiming to convert her celebrity and influence with 329mn Instagram followers into financial returns.

The new firm, SKKY Partners, is a collaboration between the reality TV star turned business mogul and Jay Sammons, a former Carlyle Group executive who has carved out a niche investing in celebrity-backed ventures.

SKKY announced its arrival in a tweet, stating that its “target sectors include consumer products, digital and ecommerce, consumer media, hospitality and luxury”.

The firm gave few other details and did not immediately respond to a request for comment.

No funds have yet been raised with which to carry out the planned investments, according to the Wall Street Journal, which disclosed that Kardashian’s mother Kris Jenner would also be a partner.

Sammons took Carlyle into the world of show business and reaped standout returns from star-studded deals including an investment in the headphone maker Beats by Dre.

But his 2019 acquisition of a stake in Big Machine Records attracted controversy when one of the label’s biggest stars, Taylor Swift, complained that the deal had handed control of the master recordings of six of her multi-platinum albums to a man she viewed as her nemesis, the music executive Scooter Braun.

His latest venture aligns him with a family that has provided a steady stream of celebrity drama since attaining fame in 2007 with the hit reality TV show Keeping Up with the Kardashians.

Since then, they have proved adept at monetising their ability to add a sheen of celebrity to consumer brands, including shapewear label Skims, and KKW, a make-up brand in which cosmetics maker Coty invested at a $1bn valuation in 2020.

>>> US After Hours Summary: COUP +12.7% up sharply on earnings; PATH -17.1%, CDMO -5.6%, NWL -3.4%, GTLB -3%, GWRE -1% lower on earnings/guidance


After Hours Summary: COUP +12.7% up sharply on earnings; PATH -17.1%, CDMO -5.6%, NWL -3.4%, GTLB -3%, GWRE -1% lower on earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: COUP +12.7% (also authorizes new $100 mln share repurchase program)

Companies trading higher in after hours in reaction to news: TUP +8.1% (recovers a bit after falling -33% during regular session), VAL +4.8% (receives $40 mln payment from its joint venture ARO Drilling), RKLB +3.7% (signs R&D agreement with US Transportation Command), RYTM +1.1% (Imcivree granted marketing authorization by European Commission), DDD +1% (announces first to market CuNi alloy for laser powder bed fusion), AVYA +0.7% (authorizes workforce reduction plan), IOT +0.4% (Warburg Pincus discloses 7.28% stake), MARA +0.3% (reports August bitcoin mining update), NDSN +0.3% (authorizes additional $500 mln share repurchase program), AIG +0.2% (launches IPO of its majority-owned subsidiary, Corebridge Financial), EQT +0.1% (to acquire THQ Appalachia various oil & gas assets for $5.2 bln; doubles share repurchase authorization to $2 bln; raises 2023 debt reduction target to $4 bln)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PATH -17.1%, CDMO -5.6%, NWL -3.4%, GTLB -3%, GWRE -1%, HQY -0.9%

Companies trading lower in after hours in reaction to news: CRGY -5.6% (commences 5 mln share public offering), PYCR -3.4% (files for 93 mln share offering by selling shareholders), FIXX -3.2% (names new CEO), PINC -1.1% (to acquire key assets from TRPN Direct Pay and Devon Health for $177.5 mln), ADCT -0.3% (files for stock offerings by selling shareholders), META -0.1% (Instagram may significantly cut back on shopping features, according to The Information)