$8bn prop­erty boss who re­fuses to fol­low fash­ion

The Jewish Chronicle - - Business - BY CANDICE KRIEGER

ONE OF the UK’s most suc­cess­ful fi­nanciers to­day crit­i­cises the Bank of Eng­land’s de­ci­sion to keep in­ter­est rates un­changed at its monthly meet­ing.

Mer­chant­bankerGuyNag­gar—worth an es­ti­mated £250m, ac­cord­ing to the latest Es­tates Gazette Rich List — tells JC Busi­ness that the bank made a mis­take by fail­ing to lower the rate from 5.75 per cent, warn­ing that the econ­omy will suf­fer as a re­sult.

“I think that keep­ing in­ter­est rates un­changed when the ex­change rate is what it is, is the wrong de­ci­sion,” he says.

“With the ex­change rate of around $2.10 to the pound, it has to hurt the Bri­tish econ­omy — se­ri­ously. Ster­ling is over­val­ued against the dol­lar, and so to be at the high­est rate of in­ter­est is wrong. Com­pa­nies are suf­fer­ing.”

French­man Mr Nag­gar, 67, is chair­man of the Daw­nay, Day group, the prop­erty-cum-fi­nan­cial-ser­vices com­pany and in­vest­ment house he bought as an empty shell from Ja­cob Roth­schild in 1981. To­day, he runs the com­pany in part­ner­ship with Peter Klimt. It is worth an es­ti­mated $1.5bn and con­trols over $8.5bn of as­sets.

He ac­cepts that in­vestor con­fi­dence and prop­erty shares have taken a knock of late. “A year ago, prop­erty shares were the fash­ion. To­day the prop­erty share sec­tor is bombed out be­cause ev­ery­one feels that prop­erty shares should not be held.” But Mr Nag­gar is not overly con­cerned, ob­serv­ing: “We think that some prop­erty shares are ex­tremely cheap and that it is be­gin­ning to look like there are great op­por­tu­ni­ties.

“We are long-term in­vestors in ev­ery­thing we do. If we think there is deep value in a sec­tor, we will be­gin nib­bling at it and then we will con­tinue in­creas­ing. And that’s what we have started to do with prop­erty shares. We go against the trend. Peter and I can’t af­ford to go af­ter fash­ion like the ma­jor in­sti­tu­tions do. So we have to find deep value.”

Mr Nag­gar re­calls that it was only the turn of the cen­tury when re­tail prop­erty was un­fash­ion­able among in­vestors, the be­lief be­ing that, be­cause of the in­ter­net, “peo­ple were not go­ing to go shop­ping any more but sit be­hind their com­puter and do all their or­der­ing on­line. Peter thought this was rather mad.” Daw­nay, Day sub­se­quently bought 16 shop­ping cen­tres in the UK.

“A few years later, peo­ple re­alised that shop­ping was still pop­u­lar and shop­ping cen­tres be­came the flavour of the month.” Now the com­pany does not own a sin­gle UK shop­ping cen­tre. “We like to go for sit­u­a­tions that have been over­looked and are not flavour of the day.”

He cites the re­cent pur­chase of 50 build­ings in Har­lem, New York, as an ex­am­ple of pur­su­ing deep value. “It is won­der­ful find­ing a niche that hasn’t been ex­ploited by other peo­ple,” he says. “There are enor­mous vari­a­tions in value be­cause of fash­ion.” Hav­ing only him­self and Mr Klimt as share­hold­ers is a big ad­van­tage. “We op­er­ate very fast. The de­ci­sion process is very quick.”

Daw­nay, Day be­gan with two prin­ci­pal arms: com­mer­cial prop­erty in­vest­ment, which Mr Klimt runs, and fi­nan­cial ser­vices — led by Mr Nag­gar. Over the past seven years, the com­pany has added a private-eq­uity unit, which has ac­quired stakes in sev­eral pub­lic and private com­pa­nies. There has been a £49m takeover of menswear re­tailer Austin Reed and the pur­chase of chil­dren’s nurs­ery chain Asquith Nurs­eries for a re­ported £95m.

Daw­nay, Day has also broad­ened its op­er­a­tions into fund man­age­ment, launch­ing four prop­erty funds, in­clud­ing the Puma Prop­erty Fund and Daw­nay Shore Ho­tels, to­gether with Howard Shore’s Shore Cap­i­tal.

Head­quar­tered in com­fort­able premises in Vic­to­ria, Cen­tral Lon­don, the com­pany also has of­fices in Europe, the Mid­dle East, the US, Aus­tralia and In­dia. Mr Nag­gar at­tributes the com­pany’s suc­cess to two key prin­ci­ples: back­ing tal­ent, and buy­ing hard as­sets. He also cites a gifted work­force.

What type of em­ployee does Mr Nag­gar look for? “Bright, tal­ented peo­ple, who have been suc­cess­ful in fi­nan­cial ser­vices. You have to have an en­tre­pre­neur­ial spirit. This is fun­da­men­tal. And you have to be con­fi­dent that you could leave a ma­jor bank and set up a busi­ness, which we would back.” Hav­ing trained as a mer­chant banker with Samuel Mon­tagu & Co, Mr Nag­gar cre­ated banks in France and Switzer­land, be­fore be­com­ing deputy chair­man of Char­ter­house Bank in Lon­don and es­tab­lish­ing Daw­nay, Day.

Prop­er­ties in Har­lem, New York, where Guy Nag­gar’s com­pany re­cently bought 50 build­ings

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