Billionaire Brett Blundy is not a household name but the retailers that he’s invested in and supported through many decades are: from jewellery store Lovisa, to footwear groups such as Hype, Platypus and The Athlete’s Foot, and lingerie outfit Bras N Things, or discount clothing retailer Best & Less.
At the helm of the retail groups that Blundy has backed are a team of loyal and talented retailers and executives who have worked and co-invested alongside him for decades, becoming multimillionaires in their own right.
Blundy, whose fortune is estimated at about $3 billion, has previously spoken about not having just one right-hand person, but multiple executives who fit that description. He has described those executives as “outstanding”, and certainly would have viewed some as capable of managing his global investment vehicle BBRC.
Among those executives are Ray Itaoui, who has headed music group Sanity, and now runs Best & Less, and has been a co-investor and manager with Blundy in many businesses including Bras N Things and Honey Birdette.
There is Daniel Agostinelli, the chief executive of Accent Group, which has stores such as Hype, Platypus, The Athlete’s Foot, and Glue. There is also Darren Holland, who for two decades helped run and build the bulky goods retail centre owner Aventus, before it merged with David Di Pilla’s HMC Capital.
So it was surprising this past week when 64-year-old Blundy – who has donated $US10 million ($15 million) to the Xprize that is focused on developing an anti-ageing treatment – went for an outsider to manage his global investment vehicle BBRC.
Mark McInnes, a former chief executive of David Jones and Premier Retail, was announced as the global chief executive of retail and consumer at BBRC, and starts in the role next month. McInnes was previously very successful at running both David Jones and Solomon Lew’s Premier Retail, and also managing his own profile.
However, the question that’s still to be answered is whether McInnes is more talented than those who have been working alongside Blundy for decades. A key difference between McInnes and those who have worked with Blundy is that McInnes has been a chief executive, while the top retailers who have worked with Blundy have been chief executives and owners.
Blundy has always emphasised the importance of executives being owners in a business, not just equity participants. “When there’s real skin in the game, and real dollars invested where this would hurt me, when there’s a shift from being a CEO to an owner, then the effect is subtle but dramatic,” Blundy once told me.
An advantage in hiring McInnes is that he’s more comfortable in the public eye than many of Blundy’s contemporaries who, like Blundy, prefer to stay out of the limelight. That’s not always possible, as Itaoui has unfortunately found. He was supporting his stepdaughter in court this month after she allegedly stabbed her husband in the throat while in the midst of an acute psychotic episode.
Perhaps bringing in McInnes will allow Blundy to do what he does best – scout out potential investments and upcoming entrepreneurs globally, and motivate and mentor them to the next level.
More than a decade ago, Blundy decided to take BBRC global. He moved to Singapore initially and later Monaco. Both are low-tax countries, although Blundy claims it’s not about minimising tax but rather that he made the move to get the rest of his organisation to adjust, shift and follow his lead in thinking globally to survive. Still, he could have moved to New York, Los Angeles or London.
BBRC has helped expand Lovisa globally, and there are investments by BBRC in the US in Hot 8 Yoga and Plant Therapy.
McInnes might also be the right person to manage some of the thornier problems that have emerged recently for BBRC around Lovisa, which Blundy chairs.
Last November, Lovisa shareholders voted against the jewellery chain’s pay report for a third year, after it was announced that Lovisa’s chief executive, Victor Herrero, would receive a controversial $30 million pay packet. Companies on the ASX that have a market capitalisation 100 times that of Lovisa pay their chief executives less.
As well, Lovisa shareholders registered their ire by voting against the re-election of Tracey Blundy, Brett’s sister. However, she remains on the board as BBRC controls 40 per cent of Lovisa’s shares. Tracey Blundy was a founding shareholder in Lovisa, and is a BBRC director.
Blundy’s career spans more than four decades, and he has had failures as well as successes. He has said the failures have been a great way to learn. Those failures include the decade he had a listed company for his retail assets. The public company, known as Brazin, was listed in the late 1990s, but overexpansion and stagnant profits meant the share price languished and, after two attempts, Blundy eventually took it private.
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The appointment of Steven Gregg, a former investment banker and McKinsey partner, to the plum role as Westpac’s chair last December prompted some muttering in investment circles.
Gregg, 62, has been chair of Ampol, Tabcorp, Austock Group and Goodman Fielder and on the board of Challenger Group. He is also a former global head of investment banking at ABN Amro.
However, it’s his time as Tabcorp’s chair that has some investors exercised. Gregg was Tabcorp’s chair in mid-2021, when he led the decision to demerge the company, by splitting it into two publicly listed companies – the lotteries’ division, and the wagering and media arm.
As the lotteries’ division was set to become a separately listed company, Tabcorp’s board was beset with a range of offers to buy its wagering and media division. The offers included bids from British gambling group Entain, and global alternative asset manager Apollo, of $3.5 billion.
Some institutional shareholders, who had been pushing for the demerger, were open to a sale of the wagering and media division rather than it remaining a listed company.
But Tabcorp’s board rejected the offers, stating that selling the wagering and media business could take longer than a year, and there were higher degrees of uncertainty around regulatory approvals.
In Grant Samuel’s independent expert report on the demerger, it noted: “Ultimately, the Tabcorp board preferred the demerger on the basis that it represented the most certain and timely path, with lower regulatory impediments, to maximise value for Tabcorp shareholders.”
Racing NSW boss Peter V’landys and former Victorian premier Jeff Kennett had expressed their concern around a possible sale of the wagering and media businesses.
At the time, Gregg was also quoted as saying the bids for the wagering and media business “were a bit light” and that none of the bids had been “compelling”. Instead, Tabcorp’s board spent up to $275 million of shareholder funds on the demerger.
In May 2022, the two businesses demerged and listed. Tabcorp held the wagering and media business, and Gregg became chair of the listed Lottery Corporation. The lotteries business performed steadily, but its shares are up only 4 per cent today from when it listed.
And what of the wagering and media business that is now Tabcorp? Far from the offers of $3.5 billion made by Entain and Apollo, its market capitalisation is today hovering around $1.7 billion.
Source: Thanks smh.com