Graeme Hart: the undercover billionaire

Graeme Hart. "He's the ultimate private equity guy. With an emphasis on the private." Illustration / Rod Emmerson

For a man worth more than $11 billion, Graeme Hart keeps a remarkably low profile. Matt Nippert charts the rise of a most private business magnate.

The story of Graeme Hart, the panelbeater who became a billionaire corporate raider, has become New Zealand's version of the journey from log cabin to White House. The tale's power comes partly from his extreme wealth - Forbes magazine values him at $11.6 billion, much richer than his contemporaries on New Zealand's rich lists - but also from his extraordinarily low profile.

Hart's rise from merely super rich - worth hundreds of millions at the start of the millennium - to the first rank of world billionaires, with palatial estates and superyachts in both hemispheres, has taken place in the global boardrooms of niche packaging firms, almost entirely out of the public eye: he's a tycoon in wrapping industries, inside an enigma.

While he talked to the Herald a decade or so ago, Hart hasn't given an interview to the New Zealand press for years, and international media haven't fared much better. He appears to have structured his business, at least in part, to avoid the need for publicity that comes with being listed.

As one prominent Auckland businessman says of Hart: "He's the ultimate private equity guy. With an emphasis on the private."

Calls to the Auckland headquarters of his Rank Group, to request an interview, are met with a suggestion to put the proposal in an email and some friendly encouragement: "I guess you can always hope."

Rank Group is little-known, especially considering that if it were listed it would rank as easily the biggest company on the NZX, and is the seat of Hart's power and wealth.

Although it appears to be going through another 10-year metamorphosis, Rank owns a swathe of global packaging outfits (Evergreen Packaging, Pactiv, Graham Packaging, Closure Systems International), consumer goods firms (Hefty, Presto, Reynolds), a cluster of car parts companies (UCI, Artex, Holts, and many others), and the not-insubstantial remnants of Carter Holt Harvey, including Carters Building Supplies.

He's the ultimate private equity guy. With an emphasis on the private.

Chasing up the request for an audience, the Herald was told after a week that the office had not heard back from Hart, and nor was a response necessarily expected. This shying from the limelight is no surprise. Yellowing clipping files dating from his rise during the 1980s and 90s tell a similar story, with associates and friends declining to talk after requests from Hart to respect his privacy.

The Auckland businessman feels similarly bound, and also isn't keen to cause upset so close to what is possibly Hart's last move in New Zealand - a float of the rump of Carter Holt Harvey, recently put on ice for the time being.

Graeme Hart with daughter Gretchen Hawkesby in 2010. Photo / Norrie Montgomery

The businessman says that as Hart's interests have moved abroad, local knowledge of his plans and his small inner circle has shrunk to almost nothing. "He's become more secretive as time's gone on. Nobody seems to have left him and squealed - which is also strange. I think he's managed to get a very loyal and very secretive workforce."

The cone of silence is also international. He doesn't return calls from the Wall Street Journal. The same newspaper says details of his private jet, a 23-seat Bombardier Global Express, showed up on a leaked copy of the Federal Aviation Administration "blocked list" - an option for jet-setters who wish to remain unlisted.

In the absence of Hart actually talking about growing up, the few details disclosed during his rise have been repeated enough to become myth: born in 1955, we then have him dropping out of Mt Roskill Grammar, followed by stints as a 17-year-old towie, a panelbeater and taxi driver.

His father was a radiographer, but the image of a self-made scrapper took hold. A few details help buttress the story: there were punishing work hours, with half-days off on the weekends considered a luxury; his executives being told to empty their wastebaskets to save on cleaning bills; just the one long-lasting marriage that, despite a half-billion dollar superyacht collection, neutered any suggestion of being a playboy.

Hart's first foray into a self-run business came in 1977, when he bought an offset press and incorporated Hart's Printing & Office Supplies.

He held no sentimentality towards the ink trade - nor any trade, it would seem - as that company would go on to register no fewer than six name changes, switching industries and scale like a snake sheds skin.

By the late 90s it had morphed into Rank Commercial, which, but for the shake of an Australian regulator's head, could have owned half the supermarkets in New Zealand. Instead, the snake dislocated its jaws and, after first having trouble digesting Burns Philp, swallowed whole the much larger Goodman Fielder.

Those companies were floated, and by 2007 Hart's Printing & Office Supplies had become BPC Holdings, a treasure-chest carrying plunder from decades of corporate raids. It wasn't kept around as a keepsake; in late 2011 Hart appointed liquidators.

KordaMentha's report is a painless piece of administration, showing no payments to the administrator. It also records what is probably the largest distribution to shareholders ever recorded by New Zealand liquidators. Hart is shown as being paid out $2,411,123,750. At the end, Hart - or his wholly owned entities - were the sole shareholders.

That multi-billion dollar payout was a far cry from 1987, when Hart was buying marquee and function firms to bundle into Carlton Party Hire. His Rank Group was then listed on the NZX, but it was a decidedly small-cap affair.

According to the Auckland businessman, at that time Hart was a curiosity - a one-man band. "He was the whole bloody kit and caboodle; his wife used to double attendance at AGMs by showing up with their daughter in a pram. No one ever saw then what he was going to be."

Hart survived the 1987 crash by selling Carlton, leaving Rank debt-free. Accountant Peter Hays was a mentor to Hart at this time and joined his Whitcoulls board in the 90s. "He [Hart] had lots of money in the bank and was off doing an MBA at Otago. The company had no borrowings and was not exposed at all."

The quiet times would not last. In 1989, aged 34, Hart successfully bid for the Government Printing Office (GPO), the first deal of many that would see his smaller holding companies astutely take on debt to swallow larger targets.

The price and terms were controversial, but Rank was offering more than larger and more highly rated competitors.

The Auckland businessman is still halfway between impressed and outraged at this deal. "That was unbelievable. They allowed him to pay for it out of earnings, which was a sweet deal if there ever was one." Brierley Investments, a competitor for the GPO, was forced to concede it had missed a trick. As Brierley's chairman, Bruce Hancox, later said: "As it transpired ... it was stolen and I was very disappointed we did not steal it."

They were strange times. The GPO had been sold by the fourth Labour Government, and once National regained the Treasury benches in 1990 they used their majority in select committees to issue a report criticising the deal. But Hart and Rank were away and would never really look back.

He was the whole bloody kit and caboodle; his wife used to double attendance at AGMs by showing up with their daughter in a pram. No one ever saw then what he was going to be.

He repeated the trick of buying big, acquiring Whitcoulls in 1991 for $71 million - financing the purchase with cash from the GPO and a $50 million bank loan. Rank was left with an equity ratio in the mid 20s.

"On paper I know the ratio looks low," Hart said at the time, of numbers that make conservative accountants wince. "But we have very strong cashflow in terms of serving and repaying the debt. We can cope."

In 1992 Hart made his first of many appearances on the National Business Review Rich List, valued at $60 million. The NBR set the mould for the myth to come: "As for the good-looking, smooth-talking Mr Hart, little is known of his personal life. He lives in St Heliers with his wife Robyn and controls 70 per cent of a $100 million company."

Whitcoulls grew rapidly, buying international chains to briefly become the fifth-biggest bookseller in the world. A block of Auckland property was acquired, including the Queen St site that would serve as Whitcoulls' most prominent storefront.

Proving his interest was in business, not any particular industry, Hart tried to snap up the New Zealand properties of Progressive Enterprises, but was rejected by Australia's competition watchdogs. He then changed tack, first taking Whitcoulls private and then selling the business - with a tidy markup - to Blue Star. At the time, Hart said gyrating stock prices made it difficult to line up security for bank funding, but Hays says there was another reason for going private.

"He preferred not to have to be in the public eye having short-term reporting results, when he was seeing the bigger picture and longer term."

Graeme Hart's superyacht Ulysses at the Auckland Viaduct. Photo / Michael Craig

Hart's next venture left many observers thinking his longer-term view was nothing but a failed long shot, after he poured $300 million - almost his entire fortune - into a 15 per cent slice of Australian food company Burns Philp. Within months its share price had slid 90 per cent and Hart's solvency, or lack thereof, became a major talking point.

Behind the scenes, matters were more sanguine. It was later revealed Hart had an unusual put option with his broker, allowing him to sell back the Burns Philp shares for an agreed price. The option was reportedly settled for cash, carving a third off Hart's immediate losses.

He kept the course, steadily building his stake. According to analysts spoken to by the Wall Street Journal when Hart finally quit the business in 2005, after executing first a break-up, then a takeover of Goodman Fielder and a finally a float, Hart had poured a total of A$624 million ($702 million) into the business, to exit with his capital and a profit of A$500 million.

At the time of these deals the WSJ reported that Rank employed just six people. When it ran Whitcoulls the Herald said it was only seven - including a receptionist and secretary.

Hart ran Rank small, but also intentionally unsexy. Hays says his avoidance of the next big thing is part of his secret. "He kept well clear of the digital area ... he kept at things that were needed." He notes that Hart's next foray - into packaging, including tetrapaks and rubbish bags - fitted the same mould. "They may not be exciting, but they're essential".

Hart's next moves occurred well beyond Australasia, buying food packaging firms with footprints in the United States, Europe and South America. He now owns the company producing the United States' most popular rubbish bag brand, Hefty, and has had prominent US politicians writing grovelling letters and promising subsidies to keep factories open.

New York Senator Chuck Schumer, now tipped to lead the Democrats in the Senate, wrote publicly to Hart in 2010 urging him not to close a newly acquired factory.

"The world-class and extremely productive workers in Canandaigua have produced record profits for Pactiv and should have the peace of mind of knowing that their jobs are secure," Schumer said.

(The plant stayed open, but one in five of parent company Reynolds' 11,000 other workers lost their jobs in restructuring.)

Hart's acquisition of Reynolds also led the Philadelphia Inquirer to interview workers at a local foil factory, who said they had to Google their new owner. "We found out that he was notorious for buying things up and selling them, and he wasn't very union friendly," said one worker.

"But he also had a track record for buying things up and turning them around. We just didn't know which track he would pick."

If being the subject of pleas from a senator wasn't enough to cement Hart's status, being one of the world's biggest superyacht consumers makes the boy from Mt Roskill Grammar - who is understood to attend the odd rugby game in gumboots - world famous, but not in New Zealand.

Over 20 years he has probably spent $500 million on boats, starting in 1997 after contracting a New Orleans firm to build the 51m Ulysses, at the time the largest superyacht commissioned in the United States since the Great Depression.

Hart has kept pace even with Russian oligarchs in the big boat stakes, preferring blue-water "expedition vessels" above the ornamental luxury of mere superyachts.
He picked up the 77m Weta before offloading his old Ulysses for a 106m model of the same name, built by a Norwegian shipyard.

And there's more to come, with the new Ulysses builder Kleven Verft under contract to build Hart an even bigger vessel. This 116m craft, as yet unnamed, is to be launched in July next year, and will be almost as long as the navy's flagship Anzac frigates.

Then there are his jets, which seem to have been bought mainly to commute between his $30 million bases in St Heliers, Auckland, and Aspen, Colorado.

First he acquired a Boeing 737 in 2007 - with full-time pilot Stuart Hellyer from Qantas. He offloaded the Boeing for his Bombardier in 2010.

The old plane's destination perhaps gives the best ranking yet of where Hart sits in the global pecking order. That used 737 now serves as Air Force One for the Government of Madagascar.