Freedom founder takes artistic route(3)

Nicolas Berggruen, the ex-private equity executive behind the vehicle that will take hedge fund GLG Partners public, has followed an unusual route to success.

GLG Partners, Europe’s largest hedge fund manager, hit the headlines last week when it revealed plans to list on the New York Stock Exchange. But amid the speculation about the huge windfall pending for GLG’s founders, the colourful history of the former buyout specialist behind Freedom Acquisition Group, the special purpose acquisition company that will engineer the listing, received relatively little attention.

Nicolas Berggruen, the investor behind Freedom, is not the first ex-private equity executives to found a SPAC – others include Tom Hicks, of Hicks Muse Tate & Furst fame, and Michael Gross of Apollo Management. However, Berggruen is almost certainly the only one who established his first investment firm to manage a fortune amassed from art-dealing.

Born in Paris and educated in Switzerland, Berggruen graduated from New York University with a Bachelor of Science in finance and international business. Early in his career he held positions at Jacobson & Co., a leveraged buyout company, and within the real estate division of the Texas billionaire Bass brothers’ family firm. Before the Bass brothers went their separate ways, this firm was a breeding ground for many of today’s leading figures in private equity – its alumni include David Bonderman, founding partner of Texas Pacific Group, Texas-based investor and entrepreneur Richard Rainwater, and Tom Barrack, founder of the real estate investment group Colony Capital.

In 1984 Berggruen started his own firm, Berggruen Holdings, which was focused on managing his family’s art-related wealth. His father Heinz was a German-born Jewish art dealer who fled Hitler’s Germany and ended up in post-war Paris, where he amassed a fortune – as well as a sizeable personal collection of works by Picasso (a personal friend of his), Georges Braque, Paul Klee, and Alberto Giacometti, among others. The art is now on display in the Berggruen Museum in Berlin, while the family fortune of more than $1 billion passed to Nicholas’s investment vehicle.

Berggruen Holdings, which now has offices in the US, Europe and Asia, makes direct control investments in businesses, maintains an in-house managed public securities portfolio, invests in hedge funds and co-invests with private equity funds. The firm claims to be “industry agnostic” – companies in its portfolio include FGX International, a producer and marketer of sunglasses and jewelry, Bonded Services, a storage provider and inventory manager for the film and media industries, and Celloglass, a UK print finishing company.

In 1988, Nicholas himself went on to found Alpha Investment Management, a multi-billion dollar hedge fund that initially managed money for the Berggruen family and Berggruen’s South American partner, Julio Mario Santo Domingo. It later expanded its business to create and maintain custom portfolios for high net worth and institutional investors. Alpha was sold to New York-based Safra National Bank in 2004, at which time it had $1.4 billion in assets under management.

Freedom Acquisition, Berggruen’s latest venture, was set up last year in Delaware. Rather than courting investors to raise a fund, it chose to list on the American Stock Exchange, raising $480 million from its initial public offering. The vehicle primarily targets industrial and real estate investments, though its first transaction will be the deal to take GLG public, via a reverse merger. Afterwards, Freedom Acquisition’s listing will move from the American Stock Exchange to the New York Stock Exchange, where its investors will own 28 percent of the resulting company.