Dealmaker helped rescue Disney
RICHARD RAINWATER ( 19 4 4 — 2015)
SEATTLE Richard Rainwater, the Texas investor who helped the Bass family turn a US$50-million oil inheritance into a reputed US$5billion fortune, has died. He was 71.
He died Sept. 27 at his home in Fort Worth, Texas, said a statement from Rainwater Charitable Foundation, the group he founded. In 2009, he was diagnosed with progressive supranuclear palsy, a degenerative brain disease.
Rainwater’s net worth was estimated at US$3.5 billion by Forbes magazine in 2007. That was the year he sold Crescent Real Estate Equities Co., owner of office buildings in Texas, and Canyon Ranch spas in Arizona and Massachusetts, to Morgan Stanley for US$4.43 billion. This month Forbes estimated his net worth at US$3 billion.
A gregarious man who enjoyed golf and drag racing, Rainwater looked for industries that were out of favour and sought out partners he could back to form companies to bet on a recovery.
His best-known investment while working for the Bass family from 1970 to 1986 was Walt Disney Co., where he endorsed the hiring of Michael Eisner to turn around the movie studio and theme-park operator. Rainwater later helped former president George W. Bush earn about US$16 million through an investment in the Texas Rangers baseball team while Bush was governor of Texas.
“He was able to see around corners,” said John Goff, his former investment partner, in a 2011 Bloomberg interview.
Rainwater spotted value in the consolidation of the U.S. hospital industry and formed what became the biggest hospital chain at the time to profit from it.
He bought Texas office buildings in the early 1990s after the oil-price decline and savings and loan crisis depressed property values in the state. The five-building Crescent office complex in downtown Dallas, formed the basis of the real estate investment trust that Rainwater took public in 1994 and was later acquired by Morgan Stanley.
At least twice — after the oil bust of the late 1980s and before the commodities boom of the 2000s, he made large and profitable bets on a surge in crude prices.
Rainwater was born on June 15, 1944, in Fort Worth, the second of two sons in a Lebanese-American family. His father owned a wholesale business and his mother was a sales clerk at J.C. Penney.
He majored in mathematics at the University of Texas, then attended Stanford University’s Graduate School of Business, where he met Sid Bass, the oldest of the four Bass brothers whose great-uncle Sid Williams Richardson had made millions drilling for oil and gas.
Bass helped start Rainwater’s career. In 1969, at the age of 27, Sid Bass was given charge of the family fortune and, a year later, invited Rainwater to join him. Bass eventually put Rainwater in charge of managing the family’s investments.
The two sank about US$20 million into various investments and “all the early deals lost money,” wrote John Train in his 2000 book Money Masters of Our Time. To develop his investment skills, Rainwater sought the advice of inves- tors such as Warren Buffett.
Rainwater and Bass bought shares of Marathon Oil Co. in 1981 and made a US$160 million profit, doubling their investment, when the company was later sold, according to the 2009 book The Big Rich by Bryan Burrough.
When Texaco Inc. became the object of takeover speculation in 1984, Bass and Rainwater accumulated a stake of almost 10 per cent and ended up selling it back to the company for a profit of about US$400 million.
Next Rainwater and Bass turned their attention to Disney. To thwart corporate raider Saul Steinberg and get its stock into friendly hands, Disney bought a Florida real estate developer that Rainwater had purchased, Arvida Corp., for 2.9 million shares of Disney stock in May 1984. Bass and Rainwater increased their Disney stake to almost 25 per cent. By 1986, the Bass- es had a paper profit of US$850 million on their Disney stake.
“Richard was a great partner,” Sid Bass said. “We learned together and we invented as we went along. It was always fun and exciting.”
Rainwater often spent summers in Nantucket, Mass., and was part owner of the Pebble Beach golf course and resort near Carmel, Calif. In 1986, with an estimated net worth of about US$100 million, he started his own investment firm, Rainwater Inc.
Rainwater’s first marriage to Karen, with whom he had three children, ended in divorce in 1991 after 25 years. Two months later, he married Darla Dee Moore, a banker whom he had met in 1990 while separated from Karen.
His survivors include his wife, three children from his first marriage, Courtney Rainwater, Todd Rainwater and Matthew Rainwater; and brother Walter Rainwater.