Stakes lodged in gratifying taste for wine
Bill Foley is a major player in the US insurance market and the main shareholder in south Wairarapa luxury lodge Wharekauhau, as well as a string of US and New Zealand wineries. But even billionaires had to start somewhere. He tells Catherine Harris about
WHAT drew you Wharekauhau? ‘‘We came here in 2001 on a tour, a typical US tour with a group of people. We went to Kauri Cliffs and we went to Huka Lodge, and Blanket Bay down in Queenstown. And this was one of the stops.
‘‘When we drove in here I was so taken by the property and I thought, boy, if I could ever someday own this property or be an investor in this property, it would be wonderful.
‘‘And then we came back two years ago. My son was down in Lincoln, he was getting a masters degree in oenology . . . We drove in here and it was being advertised for sale.’’
It seems to me that you like to buy working businesses that also have aesthetic appeal.
‘‘I do. I’m all about quality but I also invest in or try and buy businesses that are operating, that
to are not just a piece of real estate sitting there that nothing’s happening with.
‘‘We now have wineries Te Kairanga over in Martinborough, and Vavasour and Goldwater in the Awatere Valley. And so the whole idea is to tie in food and wine and use the lodge as the base for that.’’
It’s quite a jump from the hard world of finance to wine. What prompted that?
‘‘I started enjoying wine back in the 80s and I got in the wine business in a very small way in the late 90s in Santa Barbara county. I love businesses that you get immediate gratification from, that you sell a bottle of wine and someone enjoys it and they compliment you on the wine. So in that way, the wine business is natural for me.
‘‘I’m also trying to move away from my public companies. Although my title insurance business is low profile, it’s a large busi- ness, and our bank processing is also low profile, but still public companies and the scrutiny – not that anything’s wrong, it’s just I’m a private person and I’m trying to move towards private enterprises.’’
Have you actually retired from the financial world?
‘‘I’m still chairman of FIS, the bank processing business, that’s a Fortune 500 company. And I’m executive chairman of FNF, Fidelity National Financial, the original business we took public in the late 1980s. So I’m still on a salary from FNF but I’m not active in day-to-day business. I’m really more involved in strategic planning, and over the next few years, I’ll be moving away from that too. I’m old!’’
How did you find yourself in the insurance game?
‘‘It was completely accidental. We started out as a very small company back in the mid-80s. I was a real estate lawyer and I remember dealing with title insurance companies and they were really not customer-oriented or focused. And I thought, boy if I could ever get into the title insurance business, I could change the dynamics of the industry. And so we bought a very small company, we did a leveraged buyout, we paid too much for it, I borrowed everything I could to be a majority owner of the business and I remember from 84 to 87, I signed every cheque over $500. I mean we were walking a tightrope.
‘‘We kept on growing the business and we made a bunch of acquisitions and they were well thought through, and we ended up being the largest title insurance company in America, with about a 45 per cent market share.
‘‘We were the only title insurance business that had incentives. So our county managers got 10 per cent of the pre-tax profits from their county operation, our sales representatives got 20 per cent commission, and no one else at that time was paying incentives, and so we created a very flat organisation. No layers of management, that’s one of our guiding principles, minimise bureaucracy. And it was very successful. From the time we went public in 87 to 2007, we returned about a 23 per cent compounded rate of return to our shareholders. Which is why I can afford Wharekauhau.’’
What were the other guiding principles that you used to achieve that kind of success?
I went to Westpoint [military academy], and Westpoint taught us that if you’re going to be responsible for something, you also need to have the authority to change it or to make it better. We have a small staff, we compensate people well, and they are responsible for their actions but they have the authority to change the situation.’’
Surrounding yourself good people is always a strategy.
‘‘I don’t consider myself to be particularly intelligent. I’m a good businessman, an entrepreneur, but I’ve never been afraid of hiring someone who’s much more intelligent than I am and works harder than I do. Some people in with good business, they kind of micromanage and they want to keep everything and make sure no one can make the decisions, and we’re the opposite.’’
How do you feel about the US business environment at the moment?
‘‘Well, it’s not good. Not good at all. Our government is in a mess, we’re overspending revenue, we’re creating large deficits, we’re printing money. And one of the reasons why I chose New Zealand some years ago to start investing in was, I felt New Zealand had a lot of commonalities with America, in terms of the ethnic base for New Zealand is similar. But also New Zealand is a common law system of government. The rule of law prevails. It’s a very stable country in terms of its currency and its monetary and governmental policies. And America, we’re in a bad way right now ... it’s a tough place to do business.’’
Have you looked at investing in any other overseas countries?
‘‘Not personally. When I was growing my wine business back in 2007 and 2008, I decided I needed to have a non-domestic product and so I looked at Chile, Argentina, Italy, Spain, France, Australia and New Zealand. I chose New Zealand because I love the sav blancs and pinot noirs, there was a currency advantage at that time – it’s dissipated a bit – and I felt I could come down here and acquire assets at a reasonable price and make an impact, versus Argentina, which is not maybe a stable system of government, or Chile, always kinda questionable. Also common language was important.’’
You talked about the impact you like to make wherever you go. What sort of impact would you like to have here?
‘‘Well, I’m a conservationist so when I buy a piece of property, whether it’s vineyards or a place like Wharekauhau, I’m a friend of the land. I want to preserve and maintain and talk about ways I can help with conservation.
You’ve got a reputation as a serial acquirer. Are there other opportunities you’re looking at?
‘‘I can’t stop myself. I keep on buying. I don’t know what it is. I start with something small and I keep on acquiring and making it bigger. My ego is satisfied when I can buy something, fix it and grow it. That’s kind of my kick.
‘‘Every time I come down here I look at three or four other opportunities . . . Right now we’re in the Awatere Valley, we don’t have a presence in the Wairau Valley and so that’s going to be a target for me, is to have a complementary set of vineyards and winery operation over on the Blenheim side.’’
Foley adds that he’s less likely to buy a Central Otago vineyard because it is further for him to travel and is a harder climate to grow grapes. His wife Carol is weighing up New Zealand residency and another son is planning to take the oenology course at Lincoln University in Canterbury.