charles d'alberto elevator13 -

Private equity // Luxury // PhiLanthroPy

Peterson’s $1bn LegacyPeterson’s $1bn Legacy

exclusive interview:

PerLa grouPMiddle eastern turnkey service provider will launch the region's first taxi jet service

Blackstone's founder takes on new challenges

PuLLing the triggerare investors getting Back into the gaMe?

What Works in a recession?

exploring Businesses that thrive while others fail

also inside this edition

getaway of getaways where life goes on

toys for the affluentwatch industry outlook

wealth ManageMentsolar energyonline gaMing

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issue xiii - suMMer 2009CHF 12.00 • eur 7.50 • gbp 6.00

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S P O T L I G H TS P O T L I G H T

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First in business worldwide

Business fromthe front line.

Dear Readers,s always, let me thank you for your continued interest in The Elevator.

Your feedback has helped the team and me to constantly improve the magazine over the years. I’m confident that all of those who have followed the evolution of our title for the last three years and twelve issues can appreciate the changes we’ve made and the new blend of content we provide. To all new readers: welcome! I hope you enjoy this issue and the ones to come. I’m also glad to share that our growth is attracting more and more writers of the highest grade, which in this issue resulted in an exclusive exposé on Peter G. Peterson, the founder of the Blackstone Group. The Elevator team and I have spent the last three months working at a fast pace, planning and building for the time when the global economy picks up again and we see that the citizens of this world are turning the psychological page and get on our way to the biggest growth cycle in modern history. As our team and the

HEPT Media Ltd. Phone +41 21 944 11 80Fax: +41 21 944 11 83www.hept-media.ch

Editor in Chief Mr. Patrick Gruhn [email protected]

Publishing Director Mr. Daniel Sharp [email protected]

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USA: Luxium AssociatesMrs. Carly Cappello [email protected]

Mr. David Johansson [email protected]

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ISSN: 1662-8640The Elevator magazine is a product of HEPT Media. For any enquiries regarding content, photography or licencing, contact the editor

Contributors: Justine Doody, Madeline Thomas, Ian McInnes, Esmé Deprez, Henry Ball, Daniel Sharp, Patrick Gruhn, Simon Spiess, David Johansson, Carly Cappello

With thanks to: Charles D’Alberto, Stephen Pearson, Morris Shirazi, Sherry Cannon, André Rigedahl, Anna Lipowska, Sara Johansson, Emilie Gruhn, Ricardo Jimenez, Laura Stimpson, Steve York, Darren Brown, Francois Candolfi, Asa Johansson, Alain Sauser, Mikkel Thorup, Arnaud Bertrand, Nicholas Wrigley, Thierry Martin, Paul Cok.

number of our contributors is growing with every new issue, we are planning to increase the frequency of The Elevator as of 2010 to go from quarterly to bi-monthly. It is the year of Charles Darwin’s 200th anniversary, the man who questioned every previously accepted evolutionary assumption and suggested that the main principle of life is the “survival of the fittest”. What could actually describe the current times better as the global economy cleanses itself from all of those who merely think they can be achievers? “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” – Charles DarwinI would like to lead by example and not waste any time on pondering and complaining about the state of the economy but instead be productive and make change happen! I think now more than ever we have the tools necessary to build sustainable prosperity for ourselves and those dear to us. It is time to get creative; it is time to see the light at the end of the tunnel and to work towards change (not just wait for better days to come along like so many amongst us seem to do these days). I think that the turn-around will come sooner than most old school economist predict. I believe that by the end of the year 2009 the world will take the exit of the route to recovery and on to prosperity highway once again. Shouldn’t you be prepared for when that day comes? We are on a quest for the silver lining...

I believe that by the end of the

year 2009 the world will take

the exit of the route to recovery

and on to prosperity highway

From what I have seen lately, the activity of investors is starting to spike again as there are literally billions of investable funds on the sidelines, waiting for opportunities to come along. As prices are tumbling we may see an increasing activity in deals in the second half of 2009 as businesses consolidate and mergers are announced or concluded. A major novelty from our end is that The Elevator has been licensed for the U.S. market and should be available in major business hotspots such as New York, Chicago, Miami and L.A. as of this fall. You may already see copies showing up in selected places over the summer also.On a more personal note I’d like to state the observation that people, despite trying financial times, are giving more to those in desperate need. I very much commend such action and hope that everyone takes the time to reflect a little on those less fortunate and decides not just walks by in ignorance. I personally enjoy giving, because I know that if my achievements can ease someone’s suffering for a little while I’ve done what I set out to do… As always I look forward to your comments, thoughts and ideas so that our magazine may continue to reflect what you wish to read. Please don’t hesitate to write or call me when inspiration strikes!I wish you all a very pleasant and productive summer.

Best Regards,Patrick Gruhn

contributers

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54 12

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34

16

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The GeTaway of GeTways PAGE 12

Quest for the ultimate urban retreat.

spoTliGhT PAGE 4

What works in a recession?

perla Group PAGE 20

Venturing into the Taxi-Jet market in the Middle East.

player24seven PAGE 26

Harnessing the power of sports and gaming.

winch enerGy PAGE 30

A new player in the energy market.

houseTrip PAGE 32

A new portal for rental homes.

volna waTches PAGE 34

Uniting Swiss manufacture with Russian iconography.

exclusive inTerview wiTh PAGE 44

Peter Peterson’s Billion Dollar Legacy

wealTh manaGemenT PAGE 36

Market Regulations - Friend or Foe?

aero Toy sTore PAGE 54

Where the affluent buy their toys

inTerview wiTh PAGE 42

Alain Sauser: Where’s the Watch Industry Heading?

aLSo in thiS iSSue: Juice uP your Life; the emPire StrikeS Back; mac attack


july09july09contents

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disclaimer

dis

clA

imer The material in this magazine does not intend

or purport to address the specific investment objectives, financial situation, or particular needs of any reader. It is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or financial instruments. Responsibility for compliance with the securities and consumer protection laws and regulations of authorities having jurisdiction lies with the principals and participants in the transactions described. Identification of, references, and comments on third parties and transactions are based on information obtained from sources believed to be reliable but are not guaranteed as being accurate. Readers should rely solely on diligent independent research and their own judgment and that of their own professional advisers. Every prospective investor should consult his/her own legal counsel, accountant or other professional advisor concerning the legal, tax and economic considerations relating to any investment. Any statement, comment or information in this magazine is subject to change without notice and HEPT Media Ltd. is not under any obligation to update or keep current the information contained herein. HEPT Media and its respective officers, associates or clients may have an interest in the securities or derivatives of any entities referred to in this material. HEPT Media makes no warranties and accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This document serves an informative purpose only and does not represent any recommendation or suggestion for any kind of investment. Unit valuations of any kind of investment and any income generated therefrom can increase as well as decrease and are not guaranteed in any way. Past performance, whether actual or back tested, is not necessarily indicative of future performance. This document is intended for distribution exclusively to qualified investors and is not intended for publication or distribution in the United Kingdom or the United States of America.

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fort knoxfor your car

The world is full of controversy, but that is nothing new. On the same day, amongst many others, I received two emails that couldn’t be more different in nature. One was about a homeless mother of two who needed $1000 to get a roof over her head and the other was about a new real estate development in South Florida that is offering a fully catered facility to store man’s most prized possession – cars. As soon as I had taken care of the donation for the homeless family I swiftly went to check out this new concept for car lovers. One of the managers of the project, Mr Kevin Buckley, took me on a tour of the facility and explained that they had thought of everything down to the very last detail to make car owners happy. Essentially the client buys a glorified garage for a price between roughly $150’000 to over $400’000, some big enough to store more than ten cars in one open space, fitted with telephone, wireless internet

and complete bathrooms (including a shower) and some units have the possibility to include an office in an open space gallery overlooking the cars. He told me that the service is mostly aimed at foreign clients who, amongst a home and a yacht also have a car collection in the Miami area. The Park Place Car Condo offers everything from maintenance to window tinting, car concierge including airport pickup and

ExTErIOr vIEw Of THE rEcEnTLy cOmPLETEd

facILITIES. HIGHLy SEcurEd TO kEEP man’S GrEaTEST

TrEaSurES SafE.

2009 is the year of Charles Darwin, British Scientist born in 1809. Darwin is considered the father of the theory of evolution (although this theory dates back the Greek philosopher Anaximander in the 6th century BC) and is the author of the origin of species, a theory which opposes the theological assumption that mankind and all of earth’s creatures for that matter were created by a higher power. In July, the University of Cambridge is holding a festival in his honor. In certain ways, economists have applied Darwin’s theories, the most famous perhaps would eventually become known as Survival of The Fittest in modern

car delivery – basically everything that will make the life of a car enthusiast yet another bit better. Built with the latest technology and safest materials, there is also a rational side to this concept – when a hurricane hits Florida, your boat may sink or your house may lose its roof but whatever happens, your cars will be safe and sounds for your pleasant cruise along the sunny coast of the sunshine state.

capitalism or simply the free global market. It is striking how such a theory was only developed some 200 years ago since it seems so obvious, then again it was probably better for Darwin that he lived in the 19th century otherwise he would have been burned or nailed to the cross by the people of the church for his blasphemy and witchcraft (another interesting note: the holy church only acknowledged in 1992 that the earth is a moving object). In his own words: “Ignorance more frequently begets confidence than does knowledge: it is those who know little, and not those who know much, who so positively assert that this or that problem will never be solved by science.”

survival of the fittestwhat worksin a recession In every recession there are businesses that illustrate that they are not doing the right thing. But for every business that fails in a recession there is another that thrives.

words: Madeline thoMas

arE yOu POSITIOnEd rIGHT In THIS EcOnOmy? THErE IS fOr ExamPLE a GrOwInG dEmand fOr EnvIrOnmEnTaL cOnSuLTanTS!

The old banking model does not appear to be recession -proof. Yet banks serve to illustrate the point that for every business that fails in a recession, there is another that thrives.In the case of the banks, the flipside is provided by the banking lawyers – who have probably not ventured far from their desks in at least six months. Similarly, employment lawyers are hard at it, advising those soon-to-be-redundant workers on the terms of their severance. Litigators are also busy as worker bees –more people sue each other in times of economic hardship: the lure of any financial outcome being worth the pain of the legal proceedings. The world would be a dismal place indeed if the only souls to make any money out of a recession were lawyers. Thankfully, that’s not the case.Broadly speaking, staple products can provide stable businesses in recession times. This is easily illustrated by the most staple of products: food. We all need to eat, whether in a recession or not. What changes is the type of food we choose when times are tough. So, restaurants suffer but dial-out pizza businesses boom because people seek cheaper alternatives to their regular treats.Female grooming is another example. It is no coincidence that hairstyles get longer in recessionary times – they require less maintenance. Hairdressers therefore see a downturn in business but there is usually a surge in sales of

home dye kits and other DIY grooming products. People don’t do without, they simply do it differently.This concept can be extrapolated to make it relevant for big business.In recession, businesses need to show they can do something more efficiently and cheaper than their rivals. Failing that, they need to show value – something that can be demonstrated in many ways and, increasingly, in environmental terms. There are now many financial incentives available for businesses making environmental changes to their working practises. Loans from ethical banks and government grants can persuade some of the most recalcitrant businesses to undergo change. Little wonder there is a growing demand for environmental consultants. Advising companies on how to reduce their environmental impact can save them money and help them to grow market share out of an increasingly ethical consumer base – provided, of course, that can be done whilst maintaining a competitive pricing structure. For similar reasons, waste management is increasingly important. Any business that can either provide viable alternative energy solutions or that can place recycling at its core (or enable its clients to do so) has hit a future-proof jackpot. Perhaps the most vibrant area in this recession is the start-up pool. The concept that “if I can make it in tough times I can really make it” is a powerful one for entrepreneurs and the market is abuzz with start-up talk. In business life-cycle terms this is the ideal time to start afresh. Willing a new initiative through start-up uncertainty to viable fledgling without bank backing is what provides the economy with its growth potential ready for when the tough times are over - as they will be, eventually.



the elevatorthe elevator

visit www.the-elevator.net for more information on how to subscribe

subscribejuice upyour lifeAs today’s world is taking a big toll on our bodies due to work, stress and other factors, it is a good idea to counter the extra stress with extra nutrition. The Floridian raw food chef Asa Johansson gave us the latest trend:

is feeding the body nutrient dense live food juices, but still giving it a break in digestion so it can concentrate on rehydrating, cleansing and rebuilding.Freshly squeezed juices are full of vitamins, minerals, antioxidants, enzymes, and other nutrients that are wonderful for our health. Raw juices naturally contain the purest water. It is nutrition in its whole natural state. They taste great and will, especially in the long run, make you feel and look great too. They increase energy, improve immunity and enhance overall health. Remember, beauty starts on the inside.

Homemade juices are free from harmful ingredients like artificial flavors and colors, preservatives, sweeteners and other additives. Since they have not been pasteurized, (heated), all the enzymes which are naturally found in the vegetable or the fruit, are still present in the juice. Like the fruits and veggies which start losing some of their nutrients once they are picked, a freshly squeezed juice should be consumed right away, within minutes. Raw juice when taken on an empty stomach will reach the blood stream in 15 minutes. Sip it slowly for an optimal digestion. To drink juices is an easy way to get our five (or ideally more like nine!) daily servings of fresh fruits and vegetables. Green juices contain the most minerals. The ultimate green juice is wheatgrass juice. It is very cleansing and offers the highest concentration of chlorophyll of any plant. It contains 92 of the 102 trace elements that are available to plants from the soil. Chlorophyll is almost identical to the hemoglobin molecule and acts as “liquid oxygen” suppressing bacterial growth and enhancing detoxification. Wheatgrass is also rich in enzymes and many vitamins including B17 (laetrile) which has been shown to selectively destroy cancer cells.Fresh OJ in the morning (maybe mixed with a little lemon or pomegranate juice), a wheat grass shot in midday and some energizing veggie juice at night and you are on your way to a healthy lifestyle. Get your old juicer out or invest in the latest high-tech model and start juicing today. Or find yourself a juice bar and order your favorite juice to go. Or why not get yourself a wheatgrass shot to boost your day!

Want an extra boost of vitality? Juice feasting is the new fasting! Juice feasting, as the latest trend is called, is taking a break from eating food, but still getting all the nourishment that raw fruits and vegetables contain in abundance, all without the fiber. When juice is extracted from a vegetable or fruit, it naturally contains lots of their nutrients without the bulk. Raw juice is so easy for the body to assimilate. It is digested rapidly and in the digestion process only a small amount of energy is needed, leaving more energy for other activities, you name them! Juice feasting as opposed to fasting,





life goes

onIt seems as if the whole world is talking about

the recession; talking about how bad things are and what they can’t do because they are too fearful to do anything really. People have lost their money on the stock market, in real estate or in other places. On the other hand I‘ve spoken to quite a number of people who have quite the opposite attitude. They are taking fate into their own hands and refuse to submit to a general opinion. It seems as though the so-called crisis or recession is mostly a thing of perception - you can either fold or raise. In terms of pure economics, the global recession actually started in late 2007 or early 2008 when everybody was still laughing and spending and not worrying about anything, not even oil at 150$ a barrel. Isn’t it funny how only when mass communication tells us that a recession is at hand that we fall into a mild depression and or run around like chickens without their heads, fearing that the world is on the verge of doom. Well, I say life goes on and I think that if you want to be successful in the coming years, now is the very best time to plant your seeds and watch them grow as the economies of this world start to recover one by one.

In many places of the world actually, life does go on – business as usual. Don’t you wonder why that is? I think it is all a matter of attitude so, in my ideological way I’m simply hoping that more people will set aside what they see on TV, what they hear on the radio or read in the newspaper, get on their feet and start moving because the world has never been so full of opportunities on a global scale and its all ours to have at the touch of a button. Remember, it doesn’t matter if you fall down, it only matters that you get up again. Every adversity is a challenge to overcome and every risk usually entails some kind of reward. I’m not one of those people who are big on motivational books and speeches, I usually just do it and keep going until I get the result I want. It has worked for me in the past, it is working in the present and I hope we can all get going and build a better tomorrow. All it takes is a bit of creative thinking. There are industries that are doing very well right now. A little bit of common sense and some entrepreneurial effort and the world is ours. So, go forth and plunder!

the empire strikes back

Are we going to see a substantial change in the Middle East after thirty years of isolating politics?

words: henry Ball

The formerly great and ambitious empire of Persia that brought innovation, evolution and culture to this world (currently known as the Islamic Republic of Iran) may be on the brink of change. Leaders and citizens of the western world have high hopes that a seemingly oppressive regime will come to an end after a so-called democratic election was declared 63% in favor of the acting president after only several hours and major cities erupted in riots. Many Iranians have cried out to the international community for help,

bypassing the state-controlled media and broadcasting over the almighty Internet, as the country seems ready, willing and able to regain its former excellence. Despite the best efforts of its current leader(s) to suppress such ambitions for nearly 30 years – change may be around the corner. Alongside its astounding 5000-year culture, more than 40 million citizens under the ago of 30; and the world’s second largest oil and gas reserves at its disposal, Iran could surely re-emerge to reclaim its place as one of the world’s great nations.

Rick Waker and Tim Geyser are sitting at lunch as Rick says to Tim: “Tim, I’ve got some serious problems with my company. A long chain of wrong decisions has left me deep in the red, I even had to give up my jet! Do you have an idea what I could do?!”. Tim reaches down into his briefcase and says “Here, take this book, the holy bible. It has helped me plenty of times when I needed guidance. Just flip it open randomly and whatever you read on that page you simply do”. Rick is sceptical

but takes the advice without commenting.

Three months later Rick and Tim meet again for lunch; as Rick enters the restaurant, Tim can’t help but notice the upbeat mood that Rick is in and says: “Wow Rick, you look awfully happy – have things turned around for you?” Rick replies “Yeah Tim, I did what you said. I went home that night and flipped it open and read the page. After that, all my problems simply disappeared!”. Tim says: “You see, I told you it would work! What did you read on the page”. Rick replies: “Well my friend, I opened the book and the first thing I read was Chapter 11.”

“eleven”

words: justine doody

wITH bILLIOnS Of dOLLarS SITTInG On THE SIdELInES, wHaT

IS GOInG TO brInG InvESTOrS back TO THE

TabLE?

In this economy, all investors have become more wary about where they put their money. There are plenty of good deals still out there, but in an investment climate that has sent so many onto the rocks, it’s only natural that more people than usual are hesitant when it comes to getting in the water. But while a little fear is a sensible response for any investor, there comes a moment when being reluctant to pull the trigger means passing up a good opportunity. So what’s keeping investors timid, and how can it be overcome?Investors in a difficult climate become more risk-averse than they would be at other times, making them tend to stick with what they know – which is a sensible position, so long as it doesn’t militate against taking any chances at all. One way to leverage the familiar for many investors is to put their capital only into companies where they have personal knowledge of the management team or entrepreneurs involved. Investing only within a network of contacts can help weed out bad deals, but not all good deals will come from within a closed circle. So, many investors make sure to look as closely at management teams as at the opportunities they’re presenting. If

the management team has considerable experience in the relevant industry, and has met with success in its area in the past, investor jitters are more likely to be overcome. If, on the other hand, the entrepreneur has recently been involved in a startup failure, or lost their job at a larger company, fairly or unfairly, investors may feel that it doesn’t bode well for the chances of success this time round. Moreover, investors want to feel that the people they’re sponsoring are fully committed to the business they run. Making sure new business owners aren’t drawing down a massive salary in the early stages of their project can help reassure investors that the business comes first. Having faith in the people behind the opportunity can go a long way towards quieting investor doubts. Another way for investors to boost confidence that’s taken a hit due to the downturn can be for them to get together and share the risks. Investor groups, whether informal networks or formally organised institutions, enable investors to harness the wisdom of the crowd in assessing opportunities, as well as to pool resources, enabling them to diversify investment across several projects

instead of putting all their eggs in one basket. And further, just seeing that others in the group are willing to take the risk can help to shake off any lingering doubts about pulling the trigger.Good people can be reassuring, and a supportive environment can help steady the nerves, but at the end of the day, an investor needs to see potential in the project before she will make the deal – and that means thinking others will see potential in the deal as well. Aside from supplying a product or service that solves a problem or fills a niche, investors more than ever want to see projects with a clear, well thought out exit strategy. Since the likelihood of IPOs as an exit strategy is reduced, investors in startups are focusing on mergers and acquisitions as the best way of seeing returns. So, a project with several potential acquirers in its market may stand a good chance of attracting the investment it needs. The hard times will end, and those investors who are feeling insecure at the moment will grow daring again. But in the meantime, investors and entrepreneurs need to do their homework before anyone pulls the trigger – right now, neither has the luxury of target practice.

pulling the triggerwhy investors are scared





the getawayof getawaysIf you are looking for a place to just kick back for the weekend and to forget the rest of the world - we think we may have found it for you.

words: g. patrick gruhn

My wife and I wanted to get away for a quiet weekend to recharge our batteries so I went on a quest to find a hotel in Switzerland that offers absolute luxury. Pretty soon it became evident that the only choice for this little getaway had to be the Dolder Grand Hotel in Zurich. The Dolder has a long tradition of excellence, going back as far as 1899. It recently re-opened its doors to its élite clientèle after an extensive renovation period of four years. As I toured the hotel with the public relations manager, Mrs. Vanessa Flack, it became evident why it had taken them so long – the Dolder had been transformed into an oasis of well-being; the famous architects, Foster & Partners, turned this very traditional and monumental landmark into a luxury city resort. Sitting on the hills of Zurich, overlooking the lake’s busy shores as well as the Alps, the hotel offers a serene environment of forest walkways whilst, at the same time, it is just minutes from the city where you’ll find everything from the best shops to metropolitan entertainment.

The rooms are spacious, decorated with the finest materials and opulent furniture in a contemporary design, featuring the highest standard of modern day technology (for example every room offers free wireless internet access, as well as clever Bang & Olufsen entertainment units which allow you to control almost all of the room’s luxuries with the touch of a universal remote). After soaking up the view from your private terrace, the hotel has an award winning Spa which stretches over 4000 square metres and includes countless pampering extravagances which will rejuvenate you from head to toe. The Spa was designed by the internationally renowned wellness specialist Ms. Sylvia Sepielli and is open to indulge you 7 days a week from 7am to 10pm. In September 2008, it received the Tatler Award for “the smartest escape”. A temple of relaxation, where only the best is good enough,

with all the amenities and delights that anyone, even the most demanding client, could ask for.

Culinary excitement is provided by the German cook Heiko Nieder who will serve you up some miraculous treats for your taste buds in “The Restaurant”, which has been awarded a Michelin star, as well as 17 Gault Millau points.

EacH Of THE dOLdEr Grand’S fOur Luxury TOP SuITES IS an ExPrES-SIOn Of IndIvIduaL ExTravaGancE. HarmO-nIOuS InTErIOr dESIGnS, EacH dIffErEnT frOm THE OTHEr, crEaTE an ExcLuSIvE ambIEncE In aLL fOur SuITES. fOr mOrE InfOrmaTIOn THEdOLdErGrand.cOm

The quality service and attention to detail in this newly re-opened resort is nothing short of excellent and it makes for the perfect weekend getaway, to clear your head and to soak up the finest, luxurious pleasures.

In April, the Dolder Grand was on the 2009 hotlist of Condé Nast Travelor (UK) as one of the world’s best new hotels.

Rayan Partners LLC was founded as a VIP service company in spring 2005 to cater to the world’s most exigent clients. In the past three years we have grown to become Switzerland’s big-gest network of elite service providers. Today, we humbly offer you the services of over 20 partners, each one of them with the highest standards of excellence and quality.

Компания Rayan Partners была основана весной 2005 с целью предоставить услуги класса «де люкс» самым требовательным и элитным клиентам со всего мира. За последние три года наша компания выросла и стала самой крупной в Швейцарии сетью элитных поставщиков в сфере услуг. На сегодняшний день, мы предлагаем Вам сеть, в которую входит более чем 20 партнеров, каждый из которых предоставляет услуги, соответсвующие самым высоким стандартам качества.

Rayan Partners a été fondée au printemps 2005 avec comme objectif de satisfaire la demande en matière de service VIP en Suisse et à l’étranger. Durant ces 3 dernières années, nous avons pu construire le plus grand réseau de prestataires de services de luxe (avec plus de 20 partenaires). Nous sommes ainsi à même de vous fournir tout type de services par le biais de notre réseau et de nos connaissances.

Switzerland’s Number 1 VIP Advisor

www.rayanpartners.com www.switzerlandclinics.com

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General Enquiries

Mrs. Natacha Liechti +41 79 208 55 09



I feel as if I’ve just emerged from the Stone Age; like a blind man who finally sees the light... I feel like I’ve been looking for answers for the longest time but firstly I was looking in the wrong place and secondly I was shying away from change, which is what most people tend to do I suppose. For the past years I’ve been going from one PC to the next, looking for better performance and more user friendly applications and more cognitive. As I pursued my quest, the PCs kept getting more and more expensive and nothing really seemed to make a difference. No matter how expensive and how “advanced” the PC laptops became,

they were always fairly slow and none of them every really exceeded a battery life of two to three hours… Did

macattack

you ever watch a DVD on your laptop on the plane and right before the end the battery went out on you? How many of you have to defragment your hard drives ever so often to get a bit better speed out of your machine? How many of you have loaded your PC with spam ware, firewalls, anti-viruses and what not, slowing you down considerably? Well, all of that could change…A few weeks ago I decided to jump into the seemingly ice cold water and to make inquiries about Apple… I spoke to some friends who were using them, raving about their user friendliness for years. For example, I asked one of them: “Which anti-virus do you use?” and he replied “common sense!” and so I said “aaah, so what is it? Commonsense.com?” he just laughed and explained that Mac doesn’t get viruses – ever. That was it for me; I went to the Apple store (I must admit I was there at least a dozen times, circling my prey like a predator before the kill) then I finally made my move. I bought the Macbook Pro 17” and that was the beginning of my transition from PC to Mac. A bit creepy at first, thinking that I’d have to start all over; learn to use an unfamiliar system from the ground up. Well, surprise surprise to all of those out there who still think that PC is the paramount, the apex of mankind’s technological achievement. The Mac

attack has begun in many places and I bluntly assume that as more and more people get the ever so hot and popular iPhone, those same people will get very curious about Apple computers. Because truth be told, the iPhone is like a miniature Mac and if you like the usability of the iPhone then any Mac computer will please you greatly. My last PC was an Alienware, custom built high performance PC with excellent components and cool design. Well, once again, even those state of the art PCs have nothing on the Mac, especially not when it comes to the design. Just to give you an idea of the performance, the battery of the Macbook lasts up to eight hours, which is four times as much as the average PC laptop – but you’re doing the very same things if not more. It took me about half an hour to get the hang of the basics, and another three to four hours to get familiar with the system. Sure there are many little tricks that the avid user knows and I don’t but those tricks make things even faster and I’m already using the machine to my full satisfaction at my total capacity so what more do I want! I can personally recommend the transition to Mac based on personal experience. Everything makes sense, works better and faster – what more can one want? In my opinion, the Mac should be everyone’s favourite companion (if you don’t have a dog).

wo

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Man discovered weapons and invented hunting.

Woman discovered hunting and invented furs.

Man discovered colors and invented painting.

Woman discovered painting and invented make-up.

Man discovered speech and invented conversation.

Woman discovered conversation and invented gossip.

Man discovered agriculture and invented food.

Woman discovered food and invented the diet.

Man discovered woman and invented sex.

Woman discovered sex and invented the headache.

Man discovered trade and invented money.

Woman discovered money and man has never recovered.

On June 25th 2009, Michael Jackson the King of Pop, died of cardiac arrest in Los Angeles at the age of only 50. Economically speaking, beyond the world of music,

some companies may be at a great loss as Jacko was

scheduled to perform 50 concerts over the course of the next 9 months, all of which were already sold out. Jackson leaves behind an astonishing musical legacy that will most likely make his heirs hundreds of millions of Dollars over the coming years.

historic discoveries

‘58-’09 MICHAeL jackson

MONTREUX - GENEVA - LONDON ANTWERP - CHICAGO

web: www.hept-media.chemail: [email protected]

c r e a t i n g v a l u e i n p u b l i s h i n g

With the global downturn cooling investors’ appetites for traditional investments like stocks and property, many are looking at alternative places to put their money. Tangible assets like wine are attracting a lot of interest – and not just to drown investors’ sorrows!Traditionally, fine wine does well in difficult times, dropping in value more slowly than other investments and recovering faster. In the current recession, the first indicator has held true – Liv-ex, the index of the world’s top 100 investable wines, weathered the first half of 2008

well, rising by 9.5% before stalling in the summer. The end of 2008 and the turmoil it brought to the global economy saw a correction, the first in a decade, where the index fell by 25%. But the beginning of 2009 brought stability, and by the end of June 2009, the index was up 4.5% for the year. In April, the index rose by 2.8%, its largest increase since June 2007. Wine professionals believe that the market is looking up, and should rise fast in the coming half year – and some commentators think that picking up a few bottles might, for once, be the sober thing to do.


wine asan asset





The “Golden Jubilee” at 545.67 carats, closely followed by “The Cullinan” at 530.20 carats. Both stones were discovered in the same mine near Pretoria (South Africa).

The “Eclipse” at 167.1 meters or 548 feet and 22 inches. It is owned by Roman Abramovich the 42 year old Russian billionaire. His yacht is closely followed by the “Dubai” at 162 meters, owned by Sheik Mohammed bin Rashid Al Maktoum.

...longest Motor yacht...Most expensive hotel

...largest uncut diaMond ever

found

the Grand Resort Lagonissi in Athens, Greece. The “Royal Villa” is rented out at USD 50’000.- per night and comes with a private butler, chef and even a pianist. (We reported about the Grand Resort in a previous issue). The second most expensive is the “Hugh Hefner Sky Villa” at the Palms Casino Resort in Las Vegas at USD 40’000.- a night.

The “Henry Graves Supercomplication” by Patek Philippe, made in 1932 and sold at Sotheby’s for over USD 11’000’000.- at an auction in 1999. The second most expensive watch is also a Patek, from 1989, sold for over USD 5’000’000.- at auction in 2004.

...Most expensive watch ever sold

Still in use is actually the British Pound. It is also the third largest reserve currency (after the Dollar and the Euro). It is traced back to King Offa of Mercia (757 – 796 A.D.). The pound got its name from the actual weight. At the time of introduction, 240 sterling silver pennies weighed one pound.

...Most ancient

currency

tHe worLd’s...

Carried out by a Boeing 777-200LR, the aircraft flew 22 hours and 40 minutes from Hong Kong to London, covering a distance of 21’600 kilometers. Today, the longest commercial flight is Newark to Singapore, a distance of 16’600 kilometers and takes 18 hours and 40 minutes.

The Bugatti Veyron at EUR 1’200’000.- which happens to also be the fastest production car in the world; closely followed by the Lamborghini Reventon which is sold at EUR 1’150’000.-.

...Most expensive car

...longest coMMercial flight

...Most expensive

Big Mac

...Biggest truffle

We did a little research to find out a few fun facts that will make you more interesting at your next dinner partywords: david johansson

A 1787 Chateau Lafite, sold for a whopping EUR 115’000.- per bottle at Christie’s auction house. That is a steep price to pay for something that doesn’t even serve it’s original purpose.

...Most expensive wine Bottle

Is sold in Norway and costs USD 5.79; the most affordable Big Mac is sold in Malaysia for USD 1.70 that is more than three times the price in difference! As a matter of fact, the Big Mac is used as a measure of purchasing power parity.

Weighed 1.51kg and made its way into the Guinness book of records. Not surprisingly it was the most expensive truffle ever sold at EUR 125’000.-. That is one expensive mushroom!


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our team of experts provides access to the best solut ions in pr ivate equity,

asset management and viP advisory.

MONTREUX - GENEVA - LONDON - ANTWERP - CHICAGOweb: www.hept.ch email: [email protected]

b e c a u s e t h e r e i s s o m u c h m o r e t o l i f e

INTRODUCTIONINTRODUCTIONperla GroupA new turnkey provider in the Middle East, focusing on efficiency and quality for an elite clientele. From satellite communication, aviation to armoured cars or even K-9 services, Perla has developed solutions for a number of market needs and is now aspiring to be the first taxi-jet provider in the region.

player24sevenPoker is a business that has been discovered only recently by serious entrepreneurs around the world. Whether you call it gambling or sports, it is a big business. The latest addition to the league of market participants is Player24Seven.com, a company that will attempt to harness the immense market potential generated by soccer fan clubs into one players platform.

winch enerGyA new and ambitious Italian energy company, Winch Energy is focusing on photovoltaics. With a management that brings 25 years of experience to the table, the company aims to develop a portfolio of 300-400 MW solar PV and create enterprise value of at least €500 million in the coming three years.

volna waTchesAlways on the lookout for new ideas, we found Volna Watches. The company combines Swiss luxury watch making tradition with Russian nostalgia and icons. The result is an interesting blend of precision craftsmanship and design, reminiscent of cold war submarines. Does Volna have what it takes to succeed in this market?

houseTrip While travelling, be it for business or leisure, one doesn’t always feel like staying in a hotel. If that is the case, HouseTrip has the solution. This team of young hospitality entrepreneurs is developing a portal that’ll allow you to find a home away from home. Learn more about this new interface in the short term private property rental market.


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InternationalPerla Group

THE Middle East offers opportunities for serious profit, but doing business there comes with its own set of challenges. Dubai-based company Perla Group International Ltd. (www.perlagrp.com) established itself as a successful turnkey solutions provider by helping others address the obstacles of long distances, weak infrastructure and difficult political climates – all of which can add significant costs to bottom lines. Now, the company plans to leverage its success in telecoms, armoured cars and K-9 services to launch the first low cost corporate taxi-jet service in the Middle East.

To get Perla Aviation off the ground, the company is seeking to raise US$4.9 million, by offering 4.9 million Ordinary Shares for sale, representing 49% of the total shares in the company. The controlling interest will remain in the hands of company founder and CEO Charles D’Alberto. The majority of the

The Middle East is an interesting marketplace for luxury goods and services. What does it take to be

successful in the region? words: justine doody

Perla GroupInternational


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capital raised will go on the purchase of two Mustang Citation Corporate Jets, which will be acquired with a 60% down payment of approximately US$3 million, the remainder being financed directly by Cessna Finance. Perla expects that the aircraft will be wholly owned by twhe company within 24 months. The rest of the funds raised will be used to support the aviation operation as well as going towards working capital needs throughout the company’s other divisions, Perla Telecoms Group, Perla K-9 Services and Perla Armored Cars.

From its base in Dubai, at the centre of the GCC States of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, Perla Aviation will be able to ferry business people to emerging markets in Africa as well as Middle Eastern states like Afghanistan in flight-times of just an hour or two. Alternatives in the region to the transport service Perla Aviation proposes are few, a fact that the company hopes to capitalise on. Low cost operators are still unable to offer routes across many of the markets that Perla Aviation will serve. Current prices for chartering planes in the region, according to Perla CEO Charles D’Alberto, are at the lowest US$5,000 per hour, with a typical rate hovering around US$6-8,000 per hour. Perla Aviation will be able to significantly undercut the competition. By operating aircraft with low overheads and low maintenance costs, Perla Aviation will be able to offer rates on its corporate taxi-jet service of US$3,000 per hour. The model, according to D’Alberto’s research, has proved successful in Europe and the US, where low cost travel options are much more widely available – so he is confident that uptake in the Middle East and Africa, where communications infrastructure still lags behind the West, will be strong.

Perla Aviation has already begun

operating. To supplement the activities of Perla Group International’s other divisions, Perla Telecoms Group, Perla K-9 Services and Perla Armored Cars, the Aviation division has delivered cargo for clients to several areas of the Middle East and Africa. And the company’s strength in other areas will continue to be key to the success of the aviation venture. Perla Group International counts among its clients global entities like US private military contractor and aircraft maintenance company Dyncorp, as well as engineering company Bechtel, and even the United Nations, all operating in hard-to-access areas across the region, such as Somalia, Kenya, Pakistan and Iraq. Perla Aviation can leverage the group’s existing client

base to provide a ready-made source of customers for the corporate taxi-jet service. New clients will be attracted through a range of marketing strategies; as well as employing on-the-ground sales liaison officers to reach out to new clients doing business in Dubai, the company plans to promote its services heavily on the Internet, and its booking procedures will be fully automated and accessible online.

D’Alberto’s track record in business is strong: at Australian company NewSat, he recognised the potential of VSAT technology for the Middle East, and helped make NewSat the fastest-growing VSAT company in the world. As CEO and founder of UAE-based DigitalSkys Ltd., he built the company from initial seed funding of US$250,000 to a market capitalisation of US$40 million. He was the first to bring auto-deploy satellite technology to the Middle East, and followed it up by pioneering the use of GSM over IP in the region. Perla Group International grew out of his expertise in telecoms – the first division

to start operations was Perla Telecoms Group, which in 2007 began providing turnkey solutions to SMEs, large telcos, military customers and other clients needing specialised communications products and facilities. Expanding on the success of the telecoms division, and in order to meet the needs of its customer base more fully, the company evolved into providing armoured cars, aviation solutions and K-9 services. Himself a qualified helicopter pilot, D’Alberto has enlisted the expertise of key industry figures and experienced pilots to help build the aviation segment of the business.

Dubai has been hit harder than most by the global downturn; its once-booming property market has slumped, taking a good deal of the emirate’s energy with it. But D’Alberto views the current dip as an opportunity for Perla’s new venture: as companies try to cut costs, the lower rates Perla Aviation can charge should appeal to clients who need to do business in the region. Moreover, D’Alberto says, Dubai’s location makes it the ideal springboard for doing business in the region. And as Western companies who were quick to enter the market in better times now hustle for the exit, Perla has the advantage of remaining on the ground – as D’Alberto puts it, “To do business here, you have to be based here.” Combining Western corporate governance and standards

with regional expertise and a strong local base, the company is well positioned to take advantage of the niche it has identified.

D’Alberto contends that investors will see an immediate return on investment. Pointing to the fact that the group’s other divisions are profitable, he projects that the company will continue strong growth, and sees this share issue as the final capital-raising exercise before the company goes public. The eventual goal for Perla Group International is to list initially on the Australian Securities Exchange (ASX), followed by a dual listing on the Dubai International Financial Exchange (DIFX). D’Alberto explains the reasoning behind the two-pronged strategy, which he calls “going out and coming back in”. Besides the advantages that will accrue to the company from listing on

the ASX, listing in Australia will enable the company to bypass the lengthy process of listing on the DIFX, through a mechanism that enables companies publicly traded on the ASX to list on the DIFX following a period of as little as 60 days from application. This dual listing will allow the company to benefit from the corporate governance standards of the ASX as well as to tap into the considerable appetite for investment and substantial available capital offered by the Dubai exchange. And having one foot in each market parallels the company’s vision for success – putting together the best of the West with the new opportunities of the Middle East, the company hopes that for its new venture, the sky’s the limit.

TOP: uLTra LIGHT jET aS PErLa aImS TO PuT InTO uSE raTHEr SOOnEr THan LaTEr TO caTEr TO ITS ELITE cLIEnTELE.

“Combining Western corporate governance and standards with regional expertise and a strong

local base, the company is well positioned to take advantage of the niche it has identified”

For ten years we have offered our clients tailor-made solutions in all areas of Wealth Management.

We would be pleased to speak with you about your individual wishes and objectives.

FINANCIAL SERVICES

www.jasso.ch

Sternmattstrasse 12B

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Phone: +41 41 368 50 77

Fax: +41 41 368 50 79

JASSOJASSOFINANCIAL SERVICES

JASSOFINANCIAL SERVICES

JASSOJASSOJASSO


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Gambling is a big business and Player24Seven.com has interesting strategies to capture market share where others failed.

words: Madeline thoMas

spend per visit and multiple revisits. It is all based around the badge-wearing mentality of the sports fan. This, he suggests, does not limit the gaming opportunities to single-sport events. Research conducted by Player24Seven showed that 87% of respondents would be open to playing poker tournaments against rival supporters and 94% would like to play poker on a site that offered the opportunity to win tickets, go to events and meet idols.

Fans’ site visit times could be boosted by streaming sports news, videos, league statistics etc – all tools Player24Seven intends to implement, particularly as 78% of respondents to its survey said they would play on a sports gaming site “over other sites available today”.

Of primary concern to investors and Player24Seven alike, is the resilience of the gaming industry in the face of recession. So far, the biggest rivals in the business have demonstrated growth in tough economic conditions.

Playtech’s end of year results for 2008 showed revenues rose 86% to $104m on the year with casino revenues up 58% and poker revenues 269% higher at £27.4m, leading to PBT of $70m.

888.com’s end of year results for 2008 showed operating income grew 21% to $262.5m, PBT rose 6% to $48.6m.

Sporting Bet’s year end results showed the company posted a £7.7m increase in half-year operating profits to £11.7m.

Yes, these are leading companies and, for all their success, there will be other gaming firms struggling with a lack of consumer loyalty and excessive marketing costs at the bottom of the heap. However, Pearson’s understanding of the industry, its vagaries and vulnerabilities will insulate Player24Seven to a reasonable extent.

This can be demonstrated in the decisions made by the firm to date.

The gaming license will be held in the jurisdiction of Malta. As eCOGRA pointed out, the firm will be able to operate across its European markets from Maltese base at a fraction of the cost of a UK one. It is a common decision taken by gaming companies.

Player24Seven will not develop its own back-end software. Instead it will white label the software of Canada-based PokerNetwork, which also provides solutions to the world’s largest online betting gaming group, AIM-listed Sportingbet. This cost of this will come in two parts: a set-

up fee plus and ongoing running cost, typically between 17% and 20% of the “rake” (the revenue). There is a long-term revenue bleed in this approach but there is also the security in knowing that PokerNetwork has been working with the Interactive Gaming Council for around a decade and has a great deal of experience is counteracting electronic play infiltration and other fraud issues.

The unofficial fan-based approach may e considerably cheaper than attracting curious punters through shirt deals or celebrity endorsements but it is not free. Indeed the plan is that fan clubs will be remunerated with a revenue share for each fan referral that is between 20% and 40% of the rake over the life of the player’s spend on the site. Underfunded fan groups therefore have an incentive to plug the Player24Seven site over rivals and the site itself does not have to stomach upfront ad spend; it can be funded directly from revenue.

The industry may still be in its infancy but there are significant profits to be had for the player with the correct approach to market. Online poker room rates are currently worth around $5.7 billion a year and are expected to top $12 billion a year by 2012.

Player24Seven is poised to come to market but for two issues: the cost of getting back-end software up and running and the cost of the license. These two will cost just over £200,000; marketing spend � although significantly lower than rivals - is still projected to cost £300,000 and legal costs associated with the licensing and start-up along with associate office costs will cost around £100,000. This, combined with staff costs, means the company is looking for an initial investment of £1 million to allow it to make the final step to come to market. It proposes to release an equity stake in return for the investment.

That funding would be sufficient to see the firm through the first six months, after which it would need a further £3 million to bankroll it through to profitability. Assuming the company projections stack up and the funding falls into place, Player24Seven would be looking to reach breakeven by month 15 and turn cashflow positive in month 16.

successfully pulled together sponsorship deals and top-draw tournaments for other gaming firms and represented star players worldwide, it would be discourteous not to sit up and take notice.

This is the story behind the ready-to-launch business, Player24Seven and its CEO, Stephen Pearson.

Pearson has a long track record in puling deals together and, more importantly, in understanding who will comprise Player24Seven’s loyal customer base and how to attract and retain them for a fraction of the cost his rivals employ.

Most online gamers are men aged between 18 and 34 who are committed sports fans. That is why companies such as 888.com have spent fortunes securing high profile football sponsorship deals.

Pearson is CEO of Sports Media Gaming – a company founded in 2005 – that has rapidly become a leading agency in sports, media rights and gaming industries. Indeed, the nugget of his idea came from an SMG client: goalpoker.com

Goalpoker.com started and finished in 2005, its demise brought about by lack of funding. Pearson, who was the first ever commercial director of the FA Premier League as well as the marketing director for the UEFA Champions League knows his target audience. Furthermore, he was the one, essentially shaping the industry by marketing poker as a sport as opposed to leisure gambling. Armed with substantial experience, a gambling license in Malta as well as manpower (Peter Moore of Center Parks, a chairman of excellent pedigree), Pearson attempts to capitalize on the merger between sports and poker.

The question investors will be keen to see answered is why would Pearson and Player24Seven succeed where others have failed?

With more than 15 years in international sports marketing, Pearson both understands the demographic he is working to attract and understands how expensive sporting failure can be. He intends to keep marketing spend to a minimum by eschewing high profile shirt sponsorship deals (think 888.com or Mansion.com), touchline bill board advertising (goalpoker.com) or celebrity endorsement (Boris Becker and PokerStars) in favour of tapping into the unofficial fan clubs through fan forums, fanzines and supporters clubs worldwide.

A natural born marketer, he has ideas aplenty to generate brand loyalty, clicks and

good betSpotting a

THE ONLINE gaming industry is still in its infancy and has huge growth potential. In part that is be cause – as a young industry – there are still punters to attract. More significantly, it is because many countries are only now granting online gaming licenses (such as France and Italy) or considering changing their stance on online gaming (such as the United States).

The pattern for emerging industries is reasonably standard: entrepreneurs spot a new opportunity; new entrants

flood the market to try and take advantage of being first at the feeding frenzy; the market begins to mature, customer volumes stop growing at exponential rates but brand loyalty becomes more determined; businesses fail or consolidate or position themselves to take advantage of a distinct customer subset within the new industry; the market stabilises.

Despite being an emerging industry, it is not quite the free-for-all consumers might fear. Firms are licensed and, as

part of that procedure, must demonstrate certain funding requirements. Despite that there is a glut of entrants in the market. In the UK alone eCOGRA (the industry standard’s authority) has approved 7 mobile sites, 28 online poker rooms, 90 online casinos, 4 bingo halls, 6 sports books and 5 group sites.

Given these volumes one would understand a degree of reticence when a new player stands in the wings awaiting the capital to come to market. Yet, when the brains behind that operation has

• Historic

his historic and lavish estate features a variety of attributes which, in Switzerland, are hard to come by as opportunities are scarce. The castle offers a magnificent view over Lake Geneva and the Alps. It’s private park is landscaped in fine detail, featuring fountains with a private water source, beautiful walkways as well as an outdoor swimming pool.

This 18th century jewel is built in such a way that it can be used as a highly representative, private residence as well

as an office, for example as a prestigious company headquarter. It’s proximity to main business hotspots such as Geneva (only a few minutes by helicopter or 30 minutes by car) as well as its absolute privacy make it second to none. The castle is classified as a historic monument, built of 16’000sqm of land, the construction volume of the castle amounts to nearly 4’000 cubic meters. Sale price upon request, please contact [email protected] or call +41 21 345 36 38.

T

SwissCastleChâteau de Mézery


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GettinG power from the sun is an idea that has been around for a long time, but as the world begins to wake up to the joint crises of climate change and the final end of fossil fuels, new emphasis is being put on developing renewable energy sources. Winch energy thinks that it can harness the power of the sun to create a reliable energy source for europe – as well as a glowing business opportunity.

europe is ahead of the game when it comes to solar energy: more than 80% of new worldwide photovoltaic (PV) capacity installed in 2008 was in europe, according to market research company iSuppli. But there’s plenty of room

winchfor expansion – according to the european Photovoltaic Association, by the end of 2008 europe had an installed solar energy PV capacity of 9,251 MWp, and it is estimated that the end of 2013 will see the continent with an installed capacity of 45,863 MWp. Moreover, the eU is pushing for greater utilisation of renewable energy sources. in December 2008, the eU confirmed its commitment to have one fifth of its energy come from renewable sources by 2020. Solar energy is expected to provide the largest part of that, accounting for 15% of eU energy by 2020.

Focussing on photovoltaics and concentrated solar power, Winch energy plans to develop a portfolio of 300-400 MW solar PV over three years, and to create an enterprise value of at least €500 million within three years. the company sees its greatest opportunities in italy and France, where the Mediterranean sun generates plenty of usable power, and where solar energy has had limited uptake up to this point as compared to neighbours Germany and Spain. Later, Winch plans to expand to Bulgaria, Portugal, Spain, Greece, turkey, tunisia and Morocco.

Winch energy is developing solar

energy projects adding up to over 400 MWp in italy and more than 100 MWp in France. its italian projects are getting underway – in the third quarter of 2009, construction is set to begin on the 37.31 MWp Scilla Project in Calabria and on the 18 MWp Foggia project in Puglia. the fourth quarter will see construction start on five further projects, and the first quarter of 2010 will see the company’s first operations open at Foggia. By the end of 2010, the company will have operations at 12 different projects throughout Calabria, Puglia and Sicily, as well as construction ongoing at some smaller projects, accounting for a total of 243.27 MWp.

On its Scilla project, the company cites a total project cost of €194 million, with project equity of €29.1 million and project debt of $164.9 million. the financial life of the project is 20 years, with an assumed operating life of more than 25 years; the company estimates iRR over 20 years at 10.42% post tax.

the company emphasises the expertise of its management team: between them, the members have more than 25 years developing renewable energy. Winch energy has relationships with technical partners including BP Solar, Solar Reserve and Solar integrated.

After the economic downturn, lack of financing is slowing down some solar energy projects. But the european Photovoltaic Association points out that government support programmes offer investor security in the long term – in Winch’s focus countries, these take the form of Feed-in tariffs over 15-25 years. And since the downturn has reduced the cost of necessary materials for PV plants by as much as 20% since the start of 2009, the sun might still be shining on the investment potential of solar energy projects.

Fossil fuel’s are likely to run out at some point in the

future but the sun appears to be an

infinite resource...


Focussing on photovoltaics and concentrated solar power, Winch Energy

plans to develop a portfolio of 300-400 MW solar PV over three years, and to create an enterprise

value of at least €500 million

energy


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Introducing an all new online platform that allows travellers to stay in a home away from home rather than an impersonal hotel. words: justine doody

WITH more and more people going online to find accommodation for holidays and business trips, finding a hotel online has become commonplace. But while many websites exist to help customers easily and quickly negotiate the range of options available in the hotel segment, the fast growing industry of short-term private property rental has few such portals. New hospitality website HouseTrip’s goal is to become the leading marketplace for short-term accommodation rentals.

According to consultancy PhocusWright, the short-term rentals industry accounts for 10% of the travel industry, and vacation rentals company HomeAway has valued the short-term rentals segment at US$63 billion, almost half as much as the hotels industry. And yet in 2007, just 12% of short-term rentals were booked online, as compared to more than half of hotel visits. HouseTrip thinks its model will provide a new way of doing business in the industry, beating the competition at the same time as attracting new customers into the short-term rental online space.

The HouseTrip model allows anyone with a place to rent to list their property on the website. Up to now, the most common outlet for

vacation rentals online has been the classified listing site, charging a flat fee to property owners for a fixed term ad. But unlike listing sites, HouseTrip will allow users to list their property for free – HouseTrip’s cut will come from charging a commission of 5-10% on rentals. Like established hotel booking sites and unlike the usual listing sites, HouseTrip will offer direct booking facilities, so that users can complete the whole transaction within the HouseTrip platform. The company will also enable property owners to auction certain sought-after dates in their accommodation, for instance at times of major sporting events.

HouseTrip hopes to leverage the new opportunities offered by Web 2.0 to build a website that will be the first stop for those 50 million individuals every year who consider an online vacation rental. Each property will have a profile page, like those used on social network sites such as Facebook; potential renters will be able to examine their hosts’ profiles to get a sense of the property and of the opinions of previous tenants. The site will use familiar social networking features like ‘groups’ to allow users to rent within a closed community, for instance, the alumni of a particular

university. But HouseTrip founder Arnaud

Bertrand points out that the company is not trying to muscle its way into the already crowded social network space:

“We have a social interface because we think it is important that hosts see who stays at their property and guests see at whose property they stay at. We do not want to be yet another social network, so we try to benefit from existing social networks.”

Bertrand intends the company to develop widgets for use with existing networks like Facebook and LinkedIn, playing off users’ existing online identities to create an instant comfort level with the HouseTrip platform and to facilitate easy sharing of information between potential guests and property owners.

HouseTrip will launch at the end of July 2009 with 5,000 listings, and hopes to expand to 8,000 listings by the end of the year. By the end of its first year of operations, it expects to have over 10,000 listings, and by the end of its second, it should have more than 22,000. The company has already met its first round investment objectives, around €217,375, and is now seeking its second round. It hopes to attract €2 million in this round of investment.

On THE LEfT: vIEw Of THE HOuSETrIP OnLInE InTErfacE wHErE mEmbErS can vIEw HOuSES and rEnT THEm dIrEcTLy vIa THE SITE. v

According to consultancyPhocusWright,the short-term rentals industry accounts

for 10% of the travel industry

Don’t take a hotel, take a house trip..


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UNITING Swiss manufacture with Russian iconography, young luxury watch company Volna Watches launched the latest addition to its range in March 2009. The Typhoon Siberia, a titanium sports watch, exemplifies the brand identity built up by Volna since its inception in 2007, linking new materials with classic design themes to create a prestige product that the company hopes will capture the imagination of consumers.

Founder and CEO Francois Candolfi gained his experience of the watch industry at luxury watch company Audemars Piguet and the Swatch Group’s luxury brand Léon Hatot. Together with partners Eleonore Paschoud and Marc Calmonte, Candolfi has reconstructed an iconic brand – Volna means ‘wave’ in Russian, and the company’s watches are based on those worn by divers of the Soviet submarine fleet. The new iteration

of the brand creates divers’ watches too, but replaces Russian manufacturing with Swiss fabrication, capitalising on the prestige and reputation of Swiss-made watches. The company’s hopes for success rest on the combination of nostalgia and novelty represented by the Soviet theme, backed with the trustworthiness of Swiss technical competence.

Candolfi’s ten-year vision for the company hinges on three factors – maintaining a high-quality, original product, creating a distinctive image and keeping up the historical continuity of the brand. Each line of watches maintains the nautical theme with names like Typhoon, a nod to the submarine class of the same name, and design elements like oversized dimensions and high water resistance. Volna shipped its first watches in March 2007, to the United States, Singapore, Asia, Europe and the Middle East. The Typhoon range retails at 4,900 CHF to 7,250 CHF; Volna has had some success in arranging distribution for the range, signing up as its US distributor PK Time Group, a company dedicated to introducing European watches to high-end American consumers.

The luxury watch industry sees its latest addition

with Volna, a brand that unites Russian nostalgy

with Swiss expertise.


VOLNASwiss manufacturers dominate the luxury watch industry, taking almost 100% share of the market. The Swiss watch industry has been hit hard by the economic downturn, and 2009 is predicted to be one of the worst years for the industry since the 1970s –exports declined 24.3% in the first four months of the year alone. But if the industry follows the expected trend for luxury goods overall, it should stabilise in the second two quarters of the year: consultants Bain and Co. expect sales of watches to fall by 12% in 2009 as a whole. Watchmakers feel that the industry is sufficiently buoyant to ride out the recession without too much concern – between 2003 and 2008, Swiss watch exports rose by 67%, and the total value of Swiss watch exports grew to €11.25 billion in 2008, up €728 million on the previous year. The growth of demand for luxury goods in emerging markets like China and India may be the key to bringing the market out of its slump, as traditional US buyers scale back. Industry analysts believe that the market will reach 2008’s highs again in two to three years – so if Volna can wait out current conditions, it may see an uptick in the market’s fortunes before too long.

abOvE: dIffErEnT vIEwS Of THE vOLna dESIGn; THE rOTOr Of a SubmarInE aS OnE Of THEIr kEy dESIGn ELEmEnTS.

“the combination of nostalgia and noveltyrepresented by the Soviet theme, backed with the

trustworthiness of Swiss technical competence”

watches

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S P O n S O r E d b y jasso

We are, hopefully, in the end game of a global economic recession. The definition of a depression is not always agreed on but is, broadly, “A period of sustained recession in one or more national economies.”, The root cause of the economic predicament that we all now face is down to a financial crisis caused by questionable, some say reckless, lending practices on mortgages in the US just when commodities rocketed in price, leading to a boom in asset prices. What goes up must come down and it has.

Like it or not, market regulation is coming and the markets will have to adopt and adapt to what may, eventually, become a globally co-operative regulated market. In the world’s largest economy, the US, President Obama is attempting to push through five basic points of change. The first is to increase the power of the Federal Reserve, allowing it to be able to rein back the big financial institutions, scrap the thrift charter (two of the largest sub-prime lenders were thrift charter banks) and force them to become federally regulated commercial banks or state banks and also to require institutions to hold more capital. The second point is to police the securitisation and derivatives markets. The third point is to establish a consumer protection agency. The fourth point and, perhaps, alarming for some companies, would be to allow the US to wind down and/or seize the assets of globally inter-connected firms. Finally, President Obama wants to increase international co-ordination and, hopefully, do away with an organisation’s ability to shop for the best regulations under which to operate. It’s entirely possible that not all of these changes will take place in their entirety.

Change is afoot in the European Union (EU) too. The EU plans to create a European Systemic Risk Board (ESRB) to monitor and assess threats to the financial stability of the economy. The ESRB will have the power to issue risk warnings and recommendations for action said

market regulation: innovation killer or safeguard?

the EU Council in its Presidency Conclusions bulletin. The EU council has also put forward that a European System of Financial Supervisors be established that would have supervisory power over credit rating agencies. In a statement, the council said, “The financial crisis has clearly demonstrated the need to improve the regulation and supervision of financial institutions, both in Europe and globally. Addressing the failures exposed by the present crisis will contribute to preventing future crises. It will also help restore confidence in the financial system, in particular, by enhancing the protection of depositors and consumers and will thus facilitate the recovery of the European economy.”

The US and EU are the world’s biggest economic players. Nonetheless, the wind of change is

HOw mucH rEGuLaTIOn can THE markETS TakE bEfOrE THE OvEr-PrOTEcTIOnISm drIvES away ParTIcIPanTS?

For the last twenty years the Fund of Funds (FoF) model encompassing mutual funds, hedge funds, private equity funds and investment trust funds have ruled the roost. Today, following the unmitigated disaster of 2008, FoFs are starting to pick up the pieces in an uncertain market and an uncertain regulatory environment going forward. Will FoFs ever be the same again? And, is that really a bad thing? Given some of their activities leading up to the global recession, probably not. One of the highlights of bad behaviour is Bernard Madoff ’s US$50bn fraud of investors. This probably never would have happened if FoFs were more regulated, less complicated and more transparent.

The current call for international regulations and registration to make the industry toe the line, remains strong. The Madrid based International Organization of Securities Commissions (IOSCO) said that financial regulators should be able to demand information from FoFs and be able to share data of “globally active” funds and fund managers. “The crisis has given regulators the opportunity to consider the systemic role hedge funds may play and the way in which we deal with the regulatory risks they may pose to the oversight of markets and protection of investors,” said Kathleen Casey, a US Securities and Exchange Commission member and chairwoman of IOSCO’s main working body, the 13-country Technical Committee. The international will is there, it is highly likely that, given the time, a way will be found and FoFs will have to comply.

The activities of many FoFs during the last few years became a returns numbers game, often leading to opaque and very short-term investments which can be volatile. Investors’ money was lost in the recession and confidence has been badly dented. A recent survey

fund of fundsby Reuters seems to show that companies are turning away from hedge funds. The trends were noted from part of a Pan-European survey of 261,000 votes from 1,450 buy-side, 170 brokerages and 500 of Europe’s largest quoted companies. The survey said that no companies avoid hedge funds in 2009 but only 29 per cent of the survey rated hedge funds, as informed investors, compared to 39 per cent in 2008 and 46 per cent in 2007. The poll for the importance of hedge funds for companies is revealing too, “The decline in importance from 43 per cent in the 2007 Survey to 16 per cent this year is striking,” said Steve Kelly, global head of surveys at Thomson Reuters Extel.

The survey also showed that companies are looking for capital closer to their home markets and that over 90 per cent of equity asset managers regard direct company meetings to be paramount.

Nonetheless, some money is certainly flowing again. Felix Chee, one of the advisers to China’s US$200bn sovereign wealth fund and is initially running China Investment Corp., said in an interview at the GAIM International hedge fund conference in Monaco that they will be looking to make investments in hedge funds, “We will have a preference for managed accounts, it’ll be across the spectrum of strategies,” he said. “We’re looking for the best managers and a handful of fund of funds and, when I say a handful, I mean five or less.”

The ability of FoFs to hold a, hopefully, well managed diversified portfolio remains attractive and, although the FoF has taken a severe hit, it is unlikely that the concept will disappear from the investment scene. Good funds run by consistently performing managers and will ride the recession out and emerge the other side. Regulation may be unpopular with FoFs but is, frankly, inevitable.

wHO’S On TOP THESE dayS, buLL Or bEar? arE wE STEamInG aHEad

wITH THE HErd Or GOInG InTO HIbErnaTIOn;

IT’S SummEr SO HIbErnaTIOn IS OuT.

Or IS IT?

blowing over other major economies such as Canada, China, Russia and the UK too. There is a real fear that market innovation will become the victim of bureaucracy and some fund managers are nervous. In a recent study of asset fund managers, 70 per cent expected the future of the industry to be dominated by large players, while only 17 per cent expected the sector to become more vibrant, with a closer association between asset managers and their clients. However, the market has been largely left alone in the past and the result has been horrendous. To those that have walked the edge of regulation for years it is clear that they must change their strategies pretty quickly. Over the long term, investors should be safer if, perhaps, largely unable to go for the larger, riskier returns. A bird in the hand is worth two in the bush, isn’t it?

on the horns of the bulls or in the claws of the bears?

are we in a bear market or a bull mar-ket? The answer to that is probably nei-ther and both. confidence and gloom are infectious. Too much of either in today’s stock markets can surge prices up or down propelled more by sentiment and hunches than for good hard reasons. june 22, 2009’s savage correction has been attributed to the world bank’s dec-laration that the world economy would decline 1.2 per cent more than the 1.7 per cent forecast for 2009. The confidence that we are out of the woods factor was too much and the market snapped back. However, the trend should be slowly upwards and within that period there will be some mini bear and bull trends. The year of 2009 is, short of a miracle, effectively shot, in terms of results and national economies. Some companies do well in a recession. However, the major-ity will not. Therefore, analysts have pinned their hopes on 2010. Earnings, however, are largely still falling. com-ments in the media have said that many equity analysts are pushing the earnings expectations too high and the word, “lemmings,” was used. The reputation of analysts is also somewhat tarred given their recent track record leading up to and during the current recession. So perhaps these predictions should be taken with, “a pinch of salt.”

If consumers and companies aren’t buying then we can’t expect to see a surge in demand for commodities and a growth in company results and with that higher stock valuations can reasonably follow. On a positive note, respected organisations the world over are now predicting modest if uncertain growth beginning in 2010. The key word here is, “uncertainty”, the word is like a cross to a vampire for stock market traders and investors. To, perhaps, “expect the unexpected,” is the key message here given the economic events of the last couple of years. well-managed and well-structured companies will emerge strong, as will some start-ups. but, bear in mind (no pun intended) that any kind of growth will see the start of an upward cycle again but always, in the early days, with the danger of a stock market bear waiting to rip your economic face off. The bull is, apart from rare forays, prob-ably firmly penned for the time being.




currencies where is your money safer?

wHIcH cOunTry HaS THE bEST POLIcIES, LImITInG InfLaTIOn and PrOmOTInG GrOwTH? THaT’S THE mILLIOn dOLLar quESTIOn...

In these days of day-to-day volatility, currency trading is not for the faint hearted. Money can be made or lost on the up and down swings of a single day. If you’re looking for a cast iron safe investment, currency trading may not be for you. Nonetheless, if you have an amount of risk capital on which you’re prepared to take a hit or lose altogether then there are possibilities to make some money. Currency trading is all about knowing when to get in and when to get out which means a lot of research and second-guessing events and trends.

On Wednesday, June 24 the US Federal Reserve, as expected, kept its benchmark rate unchanged at 0.25 per cent. The statement accompanying the announcement was more bullish than the market expected so the following day the US dollar rallied. In the short-term however, the dollar is expected to be under some pressure, with the long-term trend still bullish. The Federal Reserve said, “Although economic

Please give us a brief background about yourself and Capricorn Asset Management.

I was a proprietary trader for Smith Barney working from the Geneva office when I decided

to go on my own and form Capricorn. I know I was not the first ‘ex-prop trader’ with a well performing strategy wanting to start his own hedge fund, but I knew that I needed to find someone to ‘seed’ the fund. As it happened, the prop desk also serviced a number of the banks’ HNW clients, which I had developed quite a close relationship with. It was two of these clients that offered to back me if I did go on my own, so I suppose you can say that they prompted me to form Capricorn. Things have evolved a lot since 1999, both in terms of Capricorn as a business as well as the fx market as a whole. I started out as a one man operation and ran the business like that for 2 years. I however realized that doing the trading, marketing, administration and many other things was too much and focus was not there to do every job 100%, therefore the organization gradually has grown since then. Today we are a team of 4, myself as CIO, Mike Rasmussen, Partner and COO, Martin Zoller, Compliance & Klaus Oesterballe, Global head of sales.We run 3 trading strategies covering different time frames, as well as an external multi manager strategy which was launched in cooperation with a US fund which is already a

activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilise financial markets and institutions, fiscal and monetary stimulus and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.”

The UK pound hit a 12 day high on June 24 almost hitting US$1.66. However, current market expectation is that that bubble will burst especially when the Bank of England governor, Mervyn King, said, “I feel more uncertain now than ever. This is a pattern of recession that we’ve not seen since the 1930s.”. He followed on by saying that economic recovery could still be a, “long, hard slog.” Early trading on June 25 at the US$1.63 mark would seem to confirm this sentiment. However, smart buying before the 12 day high would have netted a profit.

The Euro has been described recently as choppy and the Japanese Yen is expected to be under some

The current economy; on the up, going down or bumping along the bottom?

Lately, there have been signs and portents that the global economy may have reached a point where the situation is not going to get much worse but, conversely, is not expected to climb off the bottom anytime soon. The recent rise in confi-

dence got a severe hammering when the world bank revealed that it thought that the world economy would decline by 2.9 per cent in 2009 instead of 1.7 per cent as previously forecast. The bank said that 2010 may see some growth but that it was uncertain and that those who could least bare the pain, developing countries, would see more to come. The International monetary fund (Imf) is upbeat however, predicting modest growth mainly for 2010. “finan-cial conditions have improved, confidence is recovering gradu-ally and indicators of future production and demand have firmed,” said Imf first deputy managing director, john Lipsky, at a conference in Turkey.

The Organization for

Economic cooperation and development (OEcd) recently released its twice yearly report, in which it estimated that the uS recession will bottom out in 2009 with a 2.8 per cent contraction but should grow 0.9 per cent in 2010. The OEcd did note however, that the decline in the uS housing market ap-peared to be coming to an end, citing a reduction in the supply of unsold homes relative to demand. The news isn’t that good from canada, as reported bank lending for may shrank 3.5 per cent, the third consecutive monthly drop in the commodity rich nation, suggesting that for the short term the recession will continue.

In asia, speaking at an execu-tive meeting of the State council

in china, chinese premier wen jiabao said that the economy was at a crucial point as a steady recovery has begun. He tempered his words saying that there were still uncertainties for a stable economic recovery such as weak exports, the fiscal deficit and trade protectionism. In japan, there are encourag-ing signs as the nation logged a fourth straight monthly trade surplus for may of uS$3.2bn beating expectations by around 37 per cent.

reading between the lines, it’s pretty clear that we are not out of the woods yet but, hope-fully, the recession won’t get any worse. Getting back to where world economies were before this all started however, is likely to be a long, slow haul.

bearish pressure. Other notable currency movers to look out for, given recent movement, are the Australian dollar, the Canadian dollar, the New Zealand dollar and the Swedish Krona. Will investing in any of these currencies be absolutely safe? Absolutely not. Could your investment net a profit? Absolutely possibly.

Mikkel thorup

making money in

forexclient of ours. Our combined asset under management are currently just under 300 million USD across the strategies in managed account and fund formats, and our clients include corporate treasuries, fund of funds, family offices and HNW individuals.

Do you see increasing investment opportunities in the currency markets despite the

current turmoil in other markets and why do you believe currency management should be part of an investment portfolio?

I believe there will always be investment opportunities in trading currencies, mainly

because of the inherent inefficiencies of the marketplace. As long as these inefficiencies continue, in my opinion a skilled trader should be able to generate risk-adjusted returns over time regardless of the situation in other markets. For this reason I believe that every investment portfolio should have an ‘active currency’ component seeking additional returns. Empirical evidence has suggested a low correlation between currency strategies and other asset classes, and this simply strengthens the argument for currency management for me. However in my judgment, increasing investment opportunities in the currency market will only prevail by introducing unique strategies and ideas. The marketplace is vast and deep enough for skilled managers to develop alpha seeking strategies that truly add value,

while the ‘copycat’ funds are unlikely to gain any traction.Currency investments are gaining momentum and popularity with investors as a source of uncorrelated returns. With markets in a general slide and funds losing billions in capital, new ways to achieve better portfolio diversification is at the top of the agenda for institutional investors. Currency as an asset class provides low correlation to traditional investments and even to alternative investments (making them almost the alternative to alternatives). The last two years have also strengthened the need of investors for highly liquid investments and the right risk tools in place in times of distress. Only a few managers were able to still deliver their performance, with all three of the above-mentioned needs in mind.

What are the benefits of currency as an asset class ? Liquid market: High liquidity is one of the primary advantages, an area in which currencies are

unrivalled. This market is extremely liquid. Turnover is over three trillion a day, according to the triennial BIS survey 2007, and recent surveys by central banks indicate higher totals for the 2010 survey. Transaction costs are, I would say, on average 20 times more advantageous than equity, maybe even more. It’s the most cost-efficient capital market in the world. This high liquidity allows for much shorter redemption periods, and also means that Capricorn does not

PHOTO Of mIkkEL THOruP, fOrEx

STraTEGIST and fOundEr Of caPrIcOrn

aSSET manaGEmEnT




impose any lock-ups on clients.Free leverage: The instruments used for our investment strategies gives our fund access to free leverage. However, this doesn’t mean that the team is overly aggressive when it comes to gearing. “You can get leverage of up to about 20 times for free, “but in our case we use only a maximum of two. We are very conservative on leverage. Our performance has been better than most hedge funds and at the same time our leverage has been well below the other hedge funds.Low correlation: A good currency strategy can prove to be extremely useful in generating alpha, as correlation is very low to the traditional asset classes used by institutional investors. That’s why we see more and more pension funds actually looking at currency as an asset class. We have provided asset-liability studies to several of our investors, adding our portfolio to their existing portfolio, and you see very positive portfolio effects. And the interesting point in our case is that the correlation with other alternatives is also low. So even within your hedge fund portfolio, you can create diversification by adding currencies as an asset class.

Can you elaborate on the currency programs Capricorn currently offers and how have

you tailored your investment vehicles to assist investors to participate in your strategies?

The first program that I developed was the Short-term strategy that was launched in

January 1999. This is our flagship program in terms of the long track record and annualized returns. The program is currently available only as a managed account as it is the preferred investment vehicle of our clients. Institutional investors such as Fund-of-Funds, Banks and Corporate Treasuries approve the transparency and the ability to notionally fund the investment. The strategy has a very low margin-to-equity ratio and therefore the managed account format is extremely cash efficient. The Medium-term strategy was launched in February 2007, utilizing a long-options strategy to capitalize on the broader intra-month market moves.

caPrIcOrn manaGEmEnT aT wOrk;

SIx ScrEEnS, cHarTS and a HEad fuLL Of

IdEaS TO GET rETurnS fOr InvESTOrS.

This program is available to investors as a managed account only. Our most recent strategy is our Long-term program, Capricorn fxG10 that was first introduced April 2008, developed as a ‘carry trade’ strategy with a specialized arbitrage component to reduce risk. This strategy is only available as a fund as we target clients seeking an investment opportunity they can passively managed because it is administered and audited professionally.

Achieving risk-adjusted returns consistently is never easy. What key attributes do you think

successful currency managers need to have?

I am definitely an advocate of the ‘Turtle’ philosophy to successful trading; having

confidence, consistency and

discipline. So even though I technically analyze market opportunities daily, our trade frequency is comparatively low due to our discretionary view and methodology. A clearly defined methodology with a robust risk control policy is crucial for a currency manager to be successful in the long term. Creating a unique strategy that is able to achieve risk-adjusted returns is half the battle, being able to maintain your discipline during all market conditions and follow your rules to trading is the other half. My personal view is that the ability to be selective over the identified ‘alpha’ seeking opportunities is more important than following what the charts indicate. I have seen too many occasions when even professional managers have given back their profits and more by over-trading.

You have been nominated as “best newcomer” for the European Performance Award.

What’s your secret? Tell us about the strategy.

The Capricorn FX G10 fund’s strategy is categorized by Capricorn as long-term,

fundamental seeking alpha opportunities in most market conditions by benefiting from currency arbitrage and exchange rate discrepancies. The program seeks risk-adjusted returns that are uncorrelated to other investment strategies by trading the most liquid assets available to investors, the major currencies. The strategy uses currency forwards and has a directional bias in the carry trade, borrowing low-yielding and lending high-yielding currencies. Risk is controlled through a dynamic hedging

strategy aimed at reducing exchange rate risk. Performance tends to be strong in all market conditions, providing ample liquidity is available. When we launched the Capricorn FXG10 fund, we had already established ourselves as a foreign exchange manager over the past 10 years so I did not want to stray into another asset class. In early 2008 I thought it wise to launch the strategy because of the diverse changes and inefficiencies in the currency markets at the time. The differentiating factor behind this program is the fundamental approach of the strategy; where as the other programs that we run are technically orientated in analysis. The Capricorn FXG10 fund uses a systematic approach to trading with a longer-term view. We also checked that our clients would like the offering and it turned out that a small Swiss family office wanted to

seed the fund, as they believed in the approach. In order to provide a source of uncorrelated alpha to professional investors, Capricorn believes our niche, as a currency manager is the discipline inherent within its trading methodology. The routine for the strategy is initiated with the analysis of interest rate discrepancies, as well as the global macro fundamentals of the major currencies. After the fundamental view is determined on the G10 crosses, leverage is re-balanced on a portfolio level depending upon the monthly cash adjustments within the fund. The individual currency crosses are then entered into the in-house carry model, used to optimize the allocations of the components within the portfolio. This builds a portfolio that is balanced in currency weighting, in order to reduce the exchange rate risk of the components and to isolate the carry benefits of the strategy. Execution is automated across multiple liquidity providers to access the arbitrage opportunities created by the risk control measures. The recent foreign exchange environment has not been the best type of environment for this strategy because it has seen interest rates coming down. When this happens, carry trades do not get very exciting and there is not much interest rate arbitrage around. Nevertheless, I attribute the recent success of the fund to hedging off much of the fund’s exposure in long carry trades, and being able to time entries and exits efficiently. Through this we have been able to maintain constant performance. If we look at the first year track record, we have only have three down months. The main reason for our success I think is discipline. You definitely need discipline in trading and in decision-making and we have 10 years of experience in discretionary and technical traders. Discipline and risk management are the key drivers of our achievement.

“you definitely need discipline in trading and in decision-making and we have ten years of experience. ”


F E AT U R Ef E aT u r E


alain sauseron tHe WAtcH industrY

The Swiss watch making industry produces around 10 per cent of the world’s product but generates some 90 per cent of the market’s income.

two years ago we featured Alain Sauser, a Swiss watch maker and jeweller as he was venturing out into the territory where the big brands live. the economy in 2007 was very different to the global economic crisis that businesses face today. Yet Alain is still pursuing his goals and seemingly getting there at a steady pace with his vision of 100 per cent Swiss watch-making craft combined with unique and valuable jewellery. We spoke to Alain again recently.

How is the watch industry doing in 2009?

I think the watch industry is really suffering. We hear fantastic results but if you look

at the reality a lot of companies are firing people. Today I can order any component and have no delay from my suppliers. It’s good for us that we can produce but it also means that they have no work. There is a double effect at work in my opinion. There is the global financial crisis but there is also the fact that many brands and many holdings were very aggressive with the distribution channels; with the retailers and with the distributors. They (the manufacturers) were pushing them (the distributors) so much during the past years, not giving them the chance to order what they wanted, and today we are in a situation where the distribution channels are totally strangled and full of product.

How was Baselworld 2009?

I was not an exhibitor at Basel but I was a visitor and I have to admit that I was very happy not to be an

exhibitor this year. I don’t remember when I went to Basel for the first time but I have never seen such a low attendance. Maybe this is due to the global economic crisis and the fact that the fairs have been split, Geneva is in January and Basel is in March, which in my opinion is silly because distributors will have to travel to Switzerland twice in six weeks.

How is Alain Sauser affected by the crisis?

The only orders that I have this year are for full-paved watches with big diamonds. Our strategy

for this crisis was to launch new full-paved, big diamond Element watches and also some versions with less stones and less carats to try to improve the price range. Today, I have to admit that this is not the way. People want higher-end watches. However, despite the lack of marketing, my brand has slowly become established. The people that have been coming to me are not looking for a brand, they are looking for a real, high-end exclusive product; most of my pieces are limited to 25 pieces. I have built up a small network of agents and retailers, here in Switzerland, the Middle East and in some eastern European countries.

aLain SauSer

What have been the high and low spots for you since start up?

Last year, 2008 was a year of very big change because perhaps I was wrong in the past. The market is

ready to integrate you slowly and follow your development. But in our world I think either you are a brand or a kind of independent artist. There is no place between. I had a request from my clients to develop more products, more jewellery items, to go along with a project about a gent’s watch. So, I had a big decision to make, either I had to step up to becoming a brand or to stay as an independent. I decided to move to becoming an established brand. In 2003, I noticed that it became more important to pay for advertising, to manage very big events, to pay renowned stars as ambassadors and there was more structure in big holdings. So there was less and less space for independent, designers and product developers such as myself. From 2001 to 2003 I would say that it was quite a frustrating period for me. I was working a lot but when you get a chance to place a project the client was not willing to pay. Clients were coming to me for crazy one-off jewellery pieces and after when they wanted 50 to 100 pieces they preferred to manufacture under their own structure to increase their profit. I have designed the Elements watch. I patented the design in October 2003 and I said that this design will either come out under my own name or stay with me to my grave.

Is Alain Sauser still open for external investors?

Yes, we are. As a brand we have a new business plan and we are looking for new investors and

partners. Up until today we have been self-financed; we are not working with banks. The financing will mostly be devoted to product development and to build a bigger rolling stock of product. With this new trend in the market you must be very reactive. Especially with a retailer or a private client, if you meet a client you cannot say, madam you will have your delivery in two, three or four months. The client is ready to pay, so you must deliver, which is why I need to increase my stock. This year our sales are not up on last year but they are not

down that much either. The real trend will emerge in the second half of the year when I traditionally do 70 per cent of my turnover. Despite the absence of large structure, financial means and communications since I started my business I have doubled my turnover every year. We are now building up a concept, to have a kind of corporate identity. Our new website will be ready soon.

How does Alain Sauser see the next few years for his business and the watch industry in general?

Many brands are pushing product as consignments now. I think that the habit of consumers will

change. A few years ago it was trendy to buy Swiss watches with tubular movements with solid rubber or carbon fibre cases. Clients were spending around US$250,000. However, I think that this kind of trend on consuming is quite over now. Either you can survive as a brand selling reliable mechanical watches or sell reliable watches with intrinsic value, using materials such as gold, platinum and diamonds. I focus my business today on the traditional adages of business, quality and customer service. Consumers may not buy as many watches as before but when they do they will want a reliable watch, value for money, a different product and real exclusivity.I think that the markets will slowly adapt. Consumers will have more interest for valuable things. People like limited editions they want them very well done.

PROFILE:founDeralain Sauser is a second generation Swiss watch maker who has found his nice in ultra luxury design. after working for some of the world’s biggest luxury brands he founded The Emotion workshop in 2004 to cater to the very few, very affluent who are looking for that little extra you can’t just find in every other shop.

People and distributors will concentrate more on the product rather than on the expensive star system promotions. I want to continue to focus on quality limited editions and grow, particularly in the North American market. I remain convinced more than ever that my way is to focus on my clients that are asking for me, looking for me and expecting me to be a high-end jewellery watch maker.

What are the important elements of ultra-luxury watch making?”

I can say that the more the product is expensive, the more the product is rich, the easier it is to

sell. Today I think that time is the biggest luxury that you can afford. I have to invest an enormous amount of our time into the product. My product is 100 per cent Swiss made. We offer a three year warranty on our watches. And, if a client returns to change the strap, we offer the strap at no charge. It is this kind of service, small things or small personalisation that enables me to be close to my clients and close to their demands. I think there is no compromise for high quality to offer a real exclusivity and that luxury is not only a matter of gold or diamonds but it’s a way of behaving and serving the clients.

If you wish to contact Alain Sauser with questions, you can visit www.alainsauser.ch or email [email protected]




He tackled Wall Street and Washington – now this financier-turned-philanthropist is on a quest to save America’s errant economy

legacy

billion DollarleGacy

words: esMé e. deprez

“Kurt Vonnegut and Joseph Heller were at a wealthy hedge fund manager’s palace out in the Hamptons,” Peterson recounts, when Vonnegut turned to Heller and asked, “Joe, doesn’t it bother you that this guy makes more in a day than you ever made from the worldwide sales of Catch-22?” Heller rejected the assumption and replied instead, “No, because I have something he doesn’t have.”

“What the hell could you have that he doesn’t have?” asked Vonnegut.

“I know the meaning of enough.”“That kind of clicked with me,”

Peterson says in a low and tempered voice, his calm demeanor accompanied by a firm sense of gravity manifested in a furrowed brow. His face is tan and weathered with deep dimples that bounce as he moves his mouth, and rimless eyeglasses sit atop a slightly bulbous nose. Always impeccably dressed, his striped silk tie complements a matching handkerchief tucked in the pocket of his dark navy suit and a crisp shirt peeks out at the wrists just enough to catch a glimpse of gold cuff links.

America, meanwhile, does not know the meaning of “enough,” Peterson says. After the 2007 initial public offering of Blackstone, the private equity powerhouse he co-founded in 1985 with Stephen A. Schwarzman, Forbes declared Peterson the 147th richest person in America with a net worth of

$2.8 billion. He has since committed $1 billion of his $1.8 billion windfall to endow a new eponymous foundation. Its mission is to make things click for government officials and the American public as well, “before it’s too late.”

The irony, of course, in Peterson telling this anecdote, is that he may be all three characters in one. Like Vonnegut, he’s bothered by the ostentation of his Wall Street peers who he thinks don’t realize the value of a dollar, and like Heller, he ruminates constantly about the lessons of “enough” that his Greek immigrant upbringing instilled in him at a young age. He is also, however, like the hedge fund manager, a billionaire who has made most of his money in private equity from leveraged buyouts (i.e. other people’s money) with a palace of his own at the beachfront playground of Manhattan’s wealthy. This may complicate his mission.

Friends and family rave that Peterson is the best person to consult when faced with any sort of problem. Ever since he was young, he reflects, “I wasn’t content to simply know what I knew, or thought I knew. I wanted to write about it, speak about it, even teach others.” When famed New York gossip columnist and close friend Liz Smith signed a $1 million book contract in the late 1990s and told Peterson she had no savings to speak of, he immediately set about instructing her on her finances. “He actively interfered in my life to keep me from doing something with this money,” she says. “He was determined to keep me from flittering it away.”

Now it’s the American public and federal government Peterson is address-ing. Along with David Walker, former Comptroller General of the U.S. and head of the Government Accountability Office, he established the Peter G. Peterson Foundation last July to raise awareness about a looming $56 trillion deficit that they say, left untouched, will leave the country in ruin.

A prominent fixture among business executives on Wall Street and policy makers in Washington for decades, Peterson served as commerce secretary under Richard Nixon and as chairman and CEO of Lehman Brothers in the 1970s. Since “retiring” last December after 23 years as chairman of Blackstone (no one who knows him actually believes that he will slow down until

he really does not have a choice), he can now finally commit full time to the foundation, the culmination of a lifelong passion and last great attempt to shape the world. The New York Times calls him “one of a growing number of philanthropists whose foundations are spending increasing amounts and raising their voices to influence public policy—a marked shift from their traditional position.”

Peterson is to the federal government’s check book what Al Gore is to climate change: a crusader riding on his reputation, contacts and personal wealth to tackle a long-term problem that is politically complicated at best and hopelessly quixotic at worst. At a time when so many Americans are struggling to pay their bills, and populist sentiment against greed and corruption rises with each bank bailout and executive compensation plan, many question how a Wall Street billionaire can lecture the country on spending. “The headline of this is that it’s self-serving and hypocritical,” says Jeff Faux, founder of the Economic Policy Institute, a liberal think tank in Washington.

As he discusses in his new memoir, The Education of an American Dreamer, the June release of which coincided with his 83rd birthday, Peterson attributes much of his success over the years to luck. But with this next phase that may be beginning to change. He pledged to give away so much money when the economy and the country were in a much different state. The foundation’s inauguration last summer was the subject of much publicity but has since been overshadowed by lawmakers scrambling to revive the American financial system with federal spending diving deeper into the red each day. Is Peterson’s scolding on fiscal responsibility needed more than ever, or, as Robert Frank of The Wall Street Journal puts it, “is he simply worried about dried up lawns just before the hurricane hits?”

After nearly half a century as a self-defined “addicted workaholic,” Peterson’s announcement to retire from Blackstone at its 2007 public offering was a defining moment. Shortly after, “the phones seemed to stop ringing.” He had also recently stepped down as chairman of the Council on Foreign Relations—quite literally, in fact, when

On a spring morning, sitting back in a black

leather chair in the spacious 48th floor

offices of his new foundation overlooking

Fifth Avenue, Peter G. Peterson recites an

anecdote he likes to use – a lot – to demonstrate the

philosophy he says he’s lived by since growing up in the Great Depression.




he stumbled off the stage and tore the rotator cuff in his right shoulder (“I think you’re taking stepping down a little too seriously,” a friend joked later). The injury landed him on the operating table, where he would return less than two years later with a broken hand.

As the financial crisis started to take hold throughout the country, a life crisis—and legacy crisis, perhaps—took shape as well. Restless nights and melancholic laments to friends evolved into depression, because “at my age,” he says, “when you’re going through these kinds of transitions it’s very difficult.” And so he reverted back to two of his favorite pastimes to cure himself: psychotherapy sessions and his reputation as a deficit hawk.

“I had an image of what it might be like on my deathbed to have all this money that I don’t need and being very concerned about the future and not having done anything,” Peterson says. “And I thought that was unacceptable.” He thought of the old adage his former professor at the University of Chicago, George Stigler, once told him: when you don’t have a choice, you don’t have a problem. As Peterson saw it, he had no alternative—he had to spend that money. “What am I going to do, sit out on the beach and count my dollars? Play golf every day of my life? I didn’t think the typical retirement life was for me.”

Peterson looked to fellow billionaires and realized that “virtually all the ones I really admired were major philanthropists.” So, he writes, like Michael Bloomberg, George Soros, Eli Broad and his role model David Rockefeller, “I decided that was what I wanted to do.” He and his wife would soon become the third most generous American philanthropists in 2008, according to The Chronicle of Philanthropy. Beneficiaries besides the new foundation included the Peterson Institute for International Economics (another creation of his), Sesame Workshop and the New York-Presbyterian Hospital.

Years of harping about fiscal discipline and generational inequity had already made Peterson a target among friends. They mock his relentless crusade and the plethora of op-eds and articles it has produced for the New York Review of Books, Times Sunday Magazine and Atlantic Monthly. He’s written five books that point out hulking yet somehow unseen financial crises,

including most recently Gray Dawn: How the Coming Age Wave Will Transform America - and the World in 1999 and Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It in 2004. “Once you put it down, you won’t be able to pick it up,” joked Ted Sorenson, President Kennedy’s speechwriter about one. Leslie H. Gelb, a friend and colleague at the Council on Foreign Relations, recently riffed that while it took him 15 years to write one book in the time it took Peterson to write five, “it was easy since [Peterson’s] were all the same book with new covers.”

Peterson needed his new foundation to be different.

Back in 2007, Peterson sat alongside friends Paul Volcker, Warren Buffett and Bob Kerrey on a panel sponsored by the Concord Coalition, an organization that advocates for fiscally responsible public policy that Peterson helped found in 1992, as David Walker accepted the Concord Coalition’s “Economic Patriot Award.” Walker was Comptroller General of the United States and head of the Government Accountability Office since President Clinton had appointed him in 1998. He advocated many of the same policies about which Peterson was passionate on his “Fiscal Wake-Up Tour,” a series of Coalition-sponsored visits to cities and college campuses nationwide to bring attention to the federal government’s growing budget deficits. Peterson recruited him relentlessly for weeks, Walker says, until “he convinced me that I would probably have a better chance of accomplishing my final objective by coming with him and being able to do things at the foundation that I couldn’t do as Comptroller General.”

Walker and Peterson warn of “large and growing budget deficits, dismal national and personal savings rates, and a ballooning national debt that endangers the viability of Social Security, Medicare, and our economy itself.” A ticker on the left side of the

foundation’s website keeps track of a number too big for most of us to comprehend: $56,400,000,000,000—all those zeros mean trillion—which equals the “Real National Debt” according to their research team. It is followed by another ominous figure, $184,000, the burden of every individual American today. The U.S. government puts the figure closer to $11 trillion but the foundation contends that its number accounts for the government’s unfunded promises to military pensions, existing debt, Social Security and Medicare benefits and the like. They project that these latter two entitlement programs represent almost $43 trillion of red ink alone and cite studies showing that both funds will run out of money long before Peterson’s grandchildren reach retirement age.

Peterson has been a lifelong Republican, but clarifies, “I am a Rockefeller Republican. And there are two of us left, David Rockefeller and myself, I think.” His party has let him down profoundly, which “at least used to have a principle called fiscal conservatism,” he says with a heavy sigh. “I could not have imagined that we’d have a Republican administration that got rid of spending caps, got rid of pay-as-you-go and had endless tax cuts and terrific increases in spending.” Peterson’s lectures to George W. Bush on the immorality of providing long-term tax cuts to “genuine fat cats” like himself at the expense of more pressing entitlement reform have long fallen on deaf ears, and he has loudly lambasted the former president’s administration and Republican Congress for overseeing the “biggest, most reckless deterioration of America’s finances in history.”

During the 2008 presidential elections, Peterson supported John McCain, calling him “a true fiscal conservative.” But, says Michael, one of Peterson’s four sons and the foundation’s vice chairman, “the foundation is strictly nonpartisan and nonideological and Obama’s victory didn’t change our mission in any way. It

them a strong sense of “enough.” With a third-grade education and no English, Peterson’s father opened a successful diner at which Peterson, the eldest child, took his first job at age 8 counting money.

Peterson was an overachiever throughout grade school, mastering Greek and the clarinet and receiving only one “B” after failing to draw frogs in high school biology. He struggled with his weight throughout childhood (and would into adulthood) and his mother forbid him to play contact sports. Classmates labeled him a “sissy.” But if those years taught him anything, “it was that I could prevail through sheer obsessive diligence,” he reflects. “I could out-work and out-study almost anybody, and if that’s what it took to conquer a situation, that’s what I would do.”

The family business made enough money to send Peterson to college, and after a brief stint at MIT he went on to graduate summa cum laude with a degree in retailing from Northwestern instead. There, he writes, “I found out that I was good at what would later be called multi-tasking, and that I liked it. I was restless in my interests and got bored doing just one thing. I didn’t know it at the time, but I was setting a pattern I would follow for the rest of my life.”

In 1948, Peterson married his first

As stated, the foundation’s goal is to tackle not only the debts and deficits but also the “challenges weakening the foundation of our future: out-of-control energy consumption, an education system that lags behind other developed nations, and a health care ‘system’ that costs more and yet leaves more people behind with each passing year.” The foundation is still getting off the ground, and much of its two-floor space remains empty while the current staff of about 20 employees continues to expand. The office, which rises high over Central Park with views stretching to Yankee Stadium, is also home to Peterson Management, “like a family office,” Michael says, that separately manages his father’s investments.

Peterson repeatedly touts that his life has been “a case study in the American dream.” His parents, Georgios Petropoulos and his wife Venetia, arrived in Nebraska from Greece in the early 1900s. The immigrants soon Americanized the family name and had two sons and one daughter, instilling in

simply changed who we’re going to have to work with in the coming four years. During the course of the foundation’s existence there will be many.” Michael took time away from the foundation and his own Philadelphia-based private equity and investment firm to volunteer for the current president during his fall election campaign—“a pretty good indication,” he says, of the foundation’s nonpartisan commitment.

Last summer the Peterson Foundation unveiled itself as “an independent, nonpartisan convener and facilitator of solutions that transcend age, ideology and party lines,” with Peterson as chairman and Walker as president and CEO. Walker’s “Fiscal Wake-Up Tour” had by then evolved into a documentary, entitled “I.O.U.S.A.,” in which he starred alongside Warren Buffett and Alan Greenspan. The foundation bought the rights to the film—which aimed to be the “Inconvenient Truth” for the financial environment—after its premiere at the Sundance Film Festival and used it for publicity.

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“I found out that I was good at what would later be called multi-tasking, and that I liked it. I was

restless in my interests and got bored doing just one thing. I didn’t know it at the time, but I was setting

a pattern I would follow for the rest of my life.”




In 1979, Peterson’s attention turned toward Joan Ganz Cooney, a lifelong Democrat, feminist and great philanthropist herself, who he had met years earlier when she was pitching what became the Children’s Television Workshop to the National Education Television board, on which Peterson served.

Peterson’s “revelation on the road to Damascus” regarding fiscal responsibility came two years later, shortly after his marriage to Cooney, while the couple pined over a family friend’s East Hampton estate. The friend agreed to sell them the house in return for Peterson’s promise to examine Ronald Reagan’s budget proposals. “What I found astonished me,” he writes, “I felt that I needed to act like Paul Revere and sound the alarm…Voodoo economics was exactly what it was.” Five years later, the U.S. would cease to be a creditor nation and instead become a debtor nation, and Peterson’s crusade would become more difficult and more intense.

Since leaving Blackstone in December 2008, Peterson has been able to focus more on his family and nine grandchildren in particular. “There were times in my life when I didn’t achieve [balance]—I was so absorbed and addicted to my career and the family didn’t get as much time as they should have,” Peterson says. “That’s a lot different now. I think I’ve learned some lessons from the past.” He and his wife are active on the New York social scene and go out almost every night of the week, she says, and he will soon start instruction on abstract impressionism at the Museum of Modern Art. Says Anastasia Vournas, Peterson’s second cousin and close friend, “He is [still] like the energizer bunny on steroids. He’s not interested in learning how to play bridge or starting a stamp collection or any of those rich leisure time pursuits.”

Seated between Henry Kissinger, a friend and former colleague whom he served beside in the Nixon White House, and Donald Marron, fellow private equity tycoon, Peterson posed for a Vanity Fair photo shoot at the Four Seasons’ Grill Room in May. The 50 biggest spenders had gathered at “Manhattan’s Star Chamber for the power lunch” to celebrate its 50th anniversary, where Peterson is often seen on Sundays with his wife Joan and

Liz Smith. Diane Sawyer, Peggy Noonan and Barbara Walters are other frequent guests, as is Joel Schumacher who joined Peterson over Easter weekend at his Florida estate and helped him produce a mockumentary for a recent roast of the restaurant’s owners. Smith and Schumacher rave about Peterson’s vulgar and self-deprecating humor and love of practical jokes.

Now that he has finished writing his last book, “I’ve got more time to think and work on the foundation,” Peterson says. “I will be here much more and involved.” He reports to the office a few times per week and often works remotely from home. Walker commutes from Virginia to join him for one pre-arranged meeting per week and schedules others as needed to discuss their latest sit-downs with people such as David Plough and Linda Warren, from whom they gleam hints on how to employ strategies the Obama campaign used like targeting social networking sites such as Facebook and MySpace. The foundation is taking particular aim at the younger generation “to grow a youth movement,” organizing educational campaigns and “citizen engagement” efforts across the country. “InDebtEd” is a recently launched partnership with MTVu (the music channel’s college network) with kitschy gimmicks that include a video game called “DebtSki,” in which players navigate a rotund pink pig on a jet ski collecting coins and avoiding unnecessary purchases, and “Budgetball,” a new sport, apparently, described as “a variation on Ultimate Frisbee, with added game twists related to budgeting strategies.”

Of Peterson’s $1 billion commitment, the foundation has received approximately $325-350 million so far, Walker says, and will continue to get about $100 million per year until the total is exhausted. Walker estimated that grants and operating expenses totaled $20-25 million for the first year (a number of expenses that would otherwise be paid for by the foundation are paid for by Peterson Management, “in part because we have a beautiful space,” Walker says. “It’s really more expensive than you ought to have for a non-profit organization.”) So far, he says, the foundation, which is private, has given out about $12.5 million in grants to organizations touting similar

private equity firm to go public—Blackstone was valued at $33.6 billion its first day on the market. Also during this time, Peterson added chairman of the Federal Reserve Bank of New York to his resume and would later recruit Timothy F. Geithner as its president.

“I’ve had many more careers than most people—some people would say I haven’t been able to hold a job,” he muses. “That’s one way of looking at it I suppose.”

profitability, he was forced out when a power sharing agreement with Lewis L. Glucksman turned sour. Restless and anxious to move on, he soon tapped former Lehman colleague Stephen A. Schwarzman and in 1985 the duo started the Blackstone Group with a personal investment of $200,000 each. They would eventually diversify the private equity firm into commercial real estate, alternative assets and financial advising and grow it into the first major

wife and soon started attending the University of Chicago Graduate School of Business at night while working at a market research firm during the day. It was the beginning of “this tendency to focus on work at the expense of family and personal relationships…one of the legacies [my father] passed on to me.” The marriage would soon end in divorce.

A number of professors at Chicago Business School influenced Peterson but perhaps none more so than the Nobel prize-winning economist Milton Friedman, a staunch advocate of limited government and free market policy. In 1953, Peterson married his second wife, Sally, with whom he would have four sons and one daughter. At age 27, he became the head of the Chicago office of advertising firm McCann-Erickson, earning a salary of $50,000. It was there that Peterson began shaping American culture, albeit in a small, somewhat chalky way: he advised the executives at Tums to add flavoring to their tablets. By 34, he was the youngest president of Bell & Howell, a Fortune 300 company with 15,000 employees, where he “inspired the invention of the boom box.” But as his career progressed steadily, his workaholism would again deteriorate another marriage. He even missed the birth of his first son when he left on a business trip as his wife sat one week away from her due date, just as his father had done decades before.

After the assassination of President Kennedy and with the Vietnam War raging on, Peterson found himself growing tired of corporate responsibilities and longed to take an active role in shaping public policy. In 1967, he moved the family to Washington, where he worked alongside Defense Secretary Robert McNamara on the board of trustees at the Brookings Institution and established a commission on philanthropy for David Rockefeller. Shortly thereafter, he was nominated as assistant to the President for International Economic Affairs and later Secretary of Commerce under Richard Nixon. His face landed on the cover of BusinessWeek and The New York Times proclaimed that he was known around Washington as the “economic Kissinger.”

Peterson moved back to New York to rescue Lehman Brothers from bankruptcy as chairman and later CEO in the 1970s. After overseeing record

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ideals such as the Concord Coalition to focus on policy recommendations, the Institute of Medicine to find ways to reduce health care costs and America’s Promise Organization to teach financial literacy to the country’s youth. ($3 million was also donated to the Nuclear Threat Initiative to create an institute for nuclear security, another of Peterson’s longtime interests.) The foundation releases reports, books and citizen guides on topics like Social Security and the national deficit and has commissioned surveys on American sentiments about public and private debt.

The foundation strives to raise public awareness of the nation’s financial instability and persuade Congress and the federal government to institute increased transparency in

accounting and budgetary matters, simplify the tax code and revitalize budget controls with regards to spending and taxation. They also call for the establishment of a “Fiscal Future Commission” consisting of members of Congress and the Administration and non-governmental officials to provide recommendations on how to control the budget and reform taxes and entitlement spending. The commission would then receive an up or down vote by Congress, enabling quick and efficient policy change, they say.

“Our nation is sinking deeper and deeper into debt and unsustainable promises while Americans are asking more and more from government,” Peterson testified before the House Budget Committee last June, where he urged members of Congress, alongside Walker, to join in their mission. “This is a vicious cycle that MUST be broken, before it breaks us,” Peterson stressed.

Peterson and Walker made similar pleas to President Obama and his administration directly during the Fiscal Responsibility Summit held at the White House in February. Obama had just signed the $787 billion economic stimulus plan and promised to halve the annual deficit (which he says totals $1.3 trillion, an inheritance from the

Bush Administration) by the end of his first term and reinstate pay-as-you-go budgetary measures. Obama called the long-term solvency of Social Security “the single most pressing fiscal challenge we face by far.” Echoing Peterson, “we cannot simply spend as we please and defer the consequences,” the president said. “I refuse to leave our children with a debt that they cannot repay.”

Using their contacts to target lawmakers and policymakers directly, Walker says, is the starting point from which these two men approach their crusade and sets the foundation apart from other initiatives created to tackle these problems in the past. They do this by taking advantage of Peterson’s connections in New York and his connections in Washington, their experience working in the private,

public and now not-for-profit sector, and their provenance from different generations (Walker is 52, young enough to be Peterson’s son).

It is, of course, hard to say how much the Obama administration will listen to Peterson and his new foundation. Says Liz Smith, “this is just my theory, but I think he’s a little disappointed that he hasn’t been invited by the current administration to contribute.” Peterson’s close relationships with many Obama administration officials, however, can’t hurt his chances. Paul Volcker, who leads the president’s Economic Recovery Advisory Board, is a longtime friend, former colleague and current board member at the Peterson Institute for International Economics. Peterson has been a mentor to Treasury Secretary Timothy F. Geithner for years, and the pair often convened for breakfast meetings when Geithner was still at the New York Fed and Peterson at Blackstone. They were spotted having lunch at the Four Seasons in early March.

Even before the recession, Peterson recognized the ire that Wall Street wealth can produce. He likes to fashion himself in the model of the “old

money elite,” eschewing the behavior of his peers like Schwarzman who came under fire for a 60th birthday celebration at the Park Avenue Armory in 2007 where he dropped $3 million on 500 guests including Rod Stewart and Patti LaBelle. Yet for all Peterson’s insistence that he’s still just an average small-town Midwesterner, an early adopter of the plain black sedan who refuses to buy a private plane does not a common man make. In 2007, Peterson and his wife bought David Geffen’s Fifth Avenue duplex for a reported $37.5 million—he had long desired a view of Central Park—and then there are the large estates they own in Southampton, N.Y. and Vero Beach, Fla. He has come a “long way from Kearney, Nebraska,” indeed.

Peterson made his Wall Street fortune largely through leveraged buyouts at Blackstone. (Its stock was initially priced at $31 a unit —the company valued at $33.6 billion total—but has since tanked with the economic downturn. It was trading around $11 at the time this magazine went to press. Peterson maintains a 4 percent stake.) Private equity firms take over companies using enormous amounts of investors’ debt and benefit from capital gains taxed at 15 percent compared to earned income taxed at rates nearly twice that much. Blackstone’s IPO triggered some members of Congress to try to close this loophole, but the attempts eventually failed. Peterson dismisses the idea that raising these taxes would do much to aid the looming budgetary concerns and says it would be unfair to target only these earnings. But if the government is short on revenue, critics say, it could start by patching up this loophole and make investors like Peterson pay more.

The targeting of young people has led some people to accuse Peterson of plotting a generational war, and he has become a popular target for those who decry calls for “entitlement reform” as little more than a “euphemism for cutting benefits.” “He doesn’t come to the table as an honest broker,” says Jeff Faux of the Economic Policy Institute. “His jihad against the deficit is one sided, aimed at cutting the safety net while leaving taxes and other expenditures that benefit the investor class untouched.” To be sure, Peterson supports the inheritance tax and readily acknowledges that his taxes will need to

go up, especially given the current crisis. But while millions of people across

the nation are losing their jobs, and with them their health insurance, Faux says the foundation’s calls to scale back Social Security benefits and increase the retirement age is born of a class bias. He accuses Peterson of lumping together Social Security, assistance to needy people and rising health care costs when the latter is what will ultimately cause Americans to go bankrupt. Plus, Faux says, “Wall Street has done more than anything else to contribute to [the current crisis]. Peterson is correctly concerned about the future, but it’s ironic that [his] world—the world of high finance and Wall Street—are the people who have most contributed to the shortsightedness of American policy and the way we run this economy.”

All told, $1 billion pales in comparison to the amount of money the government spends in a year. But the difficulty is always trying to make one’s voice heard, says Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a conservative think thank in Washington, who has recently joined Walker on his “Fiscal Wake-Up Tour.” “You could argue he’s been trying to fix these problems for so long—maybe they are too difficult,” says Biggs. “On the other hand, they are not going to be fixed right away so there is no danger that this foundation will cease to be necessary. A billion dollars can certainly speak volumes. The difference is resources, and there is nothing comparable.”

That kind of commitment does put Peterson in the category of top-tier philanthropy, according to Robert Frank, a veteran reporter covering the wealthy for The Wall Street Journal. The bigger problem may be how to measure the results of Peterson’s new foundation. “These philanthropy guys are obsessed with measurable results,” Frank says. “They want to give away their money the same way they made it.” Bill Gates may be able to realistically say one day that it was his efforts that led to the eradication of malaria, and Michael Bloomberg can point to the Department of Education’s report cards to show how he has directly impacted New York City public schools. If the government eventually does climb its way out the hole, who’s to say it was Peterson’s foundation that made the difference? “Philanthropy has been most

successful when it’s devoted to one part of a community,” says Frank. Peterson’s goals are a bit more amorphous.

Back at the foundation, Peterson gazes out at the Manhattan skyline anxious to see how American International Group’s chief executive Edward M. Liddy will fare before Congress later that afternoon. “That poor guy is under fire today,” he says. “But that demonstrates the mentality, ‘I want all the rewards and none of the risks.’ It all has to do with the culture of America that has become very short term, wanting it all now and not wanting to pay for it.” Peterson predicts Wall Street will undergo dramatic changes after the current meltdown has subsided, warning of more regulation, less leverage, reduced profits and increased taxes. “Wall Street has become not the folk hero but the folk

“Wall Street has become not the folk hero but the folk enemy,” he says, “and it’s going to take many years to get over this.”

enemy,” he says, “and it’s going to take many years to get over this.”

Peterson needs to convince the American public to start a movement toward financial solvency and look to him as the hero and not the enemy—as Joseph Heller, who knows the meaning of “enough”, and not the self-indulgent jet setter parading around his wealth. The “active octogenarian” is attaching his name to one last ball of fire in hopes of producing a legacy that will live on after he does. “People who know me politely suggest that my favorite piece of furniture is not an antique table or an heirloom chest but my trusty soapbox,” he concludes. “I’ve been climbing on it for years and delivering my opinions, solicited or not…I have no intention of getting down from that soapbox.”

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“A GATHERING OF HIGH QUALITY TALENT IN GREAT SURROUNDINGS”JON MOULTON, MANAGING PARTNER, ALCHEMY PARTNERS

5146 AW.indd 1 2/6/09 16:55:30

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Assess the opportunities open to you • in 2010Make critical new contacts and • develop partnershipsFind out how your competitors • are planning to succeed in the next 12 monthsDiscover how PE measures up against • other asset classesDiscuss how deal terms and requirements • will be affected by changes in the industry

Beginning with a relaxed networking lunch, the delegates can use this day to get even more networking out of their time at the conference.

They will spend the day with top LPs including: Martin Källström, Senior Portfolio • Manager, Alternative Investments, AP1 - First Swedish National Pension Fund, Bernard Arock, Managing Director, • CAAM, Dan Aylott, Portfolio Manager, Private • Equity, BP Investment Management, Ltd, Jerome Delmas, Managing Director, OFI • Asset Management PE Multi-Managers, Raymond Abbott, Head of Private Equity, • Alliance Trust, Martin Langer, Managing Director, • HVB Unicredit, Jeremy Golding, CEO, Golding • Capital Partners,

Jonas Agesand, Principal, Private Equity, • LGT Capital Partners,Wolf Dietrich von Wrede, Managing • Director, Swift Capital Partners, Jesper Knutsson, Investment Manager, • Danske Private Equity, John Hess, CEO, Altuis Associates, • Patricia Jeanjean, Senior Portfolio • Manager, Caisse Des Depots, Jerome Bouix, Senior Partner, Head of • Investor Services, Capman, James Pitt, Managing Director, • Lexington Partners, Lorenzo Lorenzotti, Managing Director, • ACG Private Equity, Robert Mason, Specialist Adviser, • Lord North Street Ltd, Matthias Unser, Sal Oppenheim.•

Taking 2 days out of the offi ce may seem like a luxury right now, but year after year Capital Creation attendees tell that attending the conference gives them more clarity and contacts than they could achieve in a 2 weeks at their desks.

If you would like more information about this event, you can email [email protected] or visit www.capitalcreationeurope.com.

Are you involved in Private Equity?

decision-makers in private equity. Capital Partners,

5146 AW.indd 2 2/6/09 16:55:45




There is a place where the ultra affluent buy their toys. We went to learn more about the world’s most exclusive toy store.

of the original Auto Toy Store. The Aero Toy Store is the world’s biggest independent aircraft dealer. It is a shop for adults but not necessarily grown-ups.As I drove on to their tarmac at Fort Lauderdale Executive Airport it only began to dawn on me what kind of pleasures I was about to encounter. In my mind, the 8-feet-tall electric fence could have easily been the gates of heaven. I rubbed my hands in anticipation as I whispered my name into the intercom. As the gate opened and a couple private jets were whizzing by I knew that I had come to the right place. I parked my car and walked across the parking lot, which was nothing short of a wealth parade. There were rare collector’s cars carefully parked in an

open showroom, brand new Ferraris, a hand full customised Mercedes and several racecars. At that point I was wondering why it was called the Aero Toy Store when cars seemed to be their forte. Since my professional curiosity drove me to get an answer to that question I quickly learned that the founder of the Aero Toy Store, Mr. Morris Shirazi, is a big car enthusiast and a former race car driver, maintaining strong ties to the upscale automobile industry where his personal success story had once begun some twenty years ago.You’d think that in these days of financial turmoil a company like this one would be sweating blood as prices are slashed and (potential & existing) clients go bankrupt on a daily basis, especially since corporate jets were now

words: g. patrick gruhn

BIG BOYS PLAYwhere The biG boys play

We all know that when individuals accrue more and more wealth, it is frequently accompanied by an exponential development of extravagance. You can usually identify such indulgence by superficial appearance such as attitudes, clothes and cars and more... Not to anybody’s surprise then, there have to be companies who cater to these individuals as they become more and more numerous all over the world. Especially over the last 10 years we’ve seen a creation of wealth at exponential speed and in astonishing financial dimensions. On my personal quest for the last enclaves of wealth, my travels took me to Fort Lauderdale, Florida on business and it so happened that I had a meeting at the Aero Toy Store, the evolution

“Morris Shirazi [right] founder of the Aero Toy

Store is a very determined, yet a quiet and humble man,

always going the extra mile for his clients as he considers

most of them his friends.”




bearing the mark of the devil in the eyes of governments and shareholders. Again, to my surprise there were no frantic salespeople trying to hunt down the last clients on the planet, there were no sweaty palms, fearful looks or hectic people in the background shredding documents or simply clearing out their desks; nor was there a “rats are leaving the sinking vessel” atmosphere. Actually, none of all that was happening; on the contrary, people were joyfully busy and looked productive in a pleasant way. To me that was proof once again that the world is not actually coming to an end, on the contrary, it is business as usual on many places of the world. A friend and very successful businessman once told me: “If you want to be recession-proof you need to be selling the million dollar products because the people buying those are never that much affected by the ups and downs of the economy.” I never had

any doubts that this statement would be true but now I actually had proof. I met with Sherry Cannon and Gary Anzalone, the senior Vize President of the Aero Toy Store to learn more about the company. They explained to me that all a business really needs is a strong commitment and a flexible team to succeed. These were not just empty words as they are all at the office every morning at 5AM to handle the business where it is currently most active, the Middle East and Eastern Europe. If you are willing to do what it takes, you will always be successful. Morris Shirazi, the founder, told me that he prides himself in picking up talent along his way wherever he encounters it. In that perspective it was no surprise that all his executives come either from suppliers like Bombardier or from top ranking powerhouses in finance and law. Morris is a man so individual that he even developed his own fragrance – not to market it, but simply because he likes

what he likes. At the same time the man is very humble and sympathetic, always open for a nice chat about the finer things in life. I personally believe that the secret of the Aero Toy Store is really the atmosphere they create and the way they take care of their clients. It is a 24/7 job and they are all up to the task to make their clients happy in the most swift and efficient way possible.After a brief moment of inspection you quickly understand who is who and what is what and then you are accepted in a true “mi casa es su casa” spirit. Over the course of my trip I went back to see them several times, always welcomed back like an old friend, I felt comfortable there and if I were to buy myself an airplane I’d surely do it at the Aero Toy Store. As a matter of fact, since the whole story started with cars, the branched out into boats, you can really get any toy imaginable – it truly is a toy store.

TOP: aTS SHOwrOOm In fOrT LaudErdaLE (uSa) HOLdS a LarGE numbEr Of TOyS fOr THE rOad, THE aIr and EvEn fOr THE waTEr.

LEfT: aTS SHOwrOOm In mOnTrEaL (canada)

“Aero Toy Toy is the world’s largest aircraft dealer but there is so much more than meets the eye...”



Cinémacinéma

What is the Cinéma-Vérité?

We are an independent, not-for-profit organisation that advanc-es today’s global social and hu-

manitarian issues through the medium of film. Cinéma-Vérité was launched at the Cannes Film Festival in May 2007 as a platform which entails an-nual film festival International Tri-bunes for Socially Conscious Cinéma, Cinéma-Vérité Institute, Cinéma-Vé-rité Association and Cinéma-Vérité Fund. Founding members include HM Queen Noor of Jordan, HRH La Duchesse de Castro, Wangari Maathai, Jody Williams, Jorge Sam-paio, Sharon Stone, Yamina Benguigui, Christophe Girard and Rama Yade.

What is the mission of the Ci-néma-Vérité ?

We are raising public and politi-cal awareness of the world’s most pressing social and hu-

manitarian issues through the medium of film by:- • Inspiring, educating and expanding our horizons through engagement of renowned film-makers, socially con-scious artists, international NGOs, leading decision makers in govern-ments, international organisations, corporations and individuals globally. • Financing specific projects and pro-grams in partnership with other organ-

isations, including supporting film-makers to increase visibility of social and humanitarian issues. • Organising educational workshops, exhibitions and forums.

What are the four principals of the Cinéma-Vérité?

SCREENING – DEBATE - COMMITMENT TO AC-TION - FOLLOW UP

Who participates in the Ciné-ma-Vérité and where does it take place?

Cinéma-Vérité International Tribunes Socially Conscious Cinema - An annual film festi-

val Paris – Geneva - Abu Dhabi. Ciné-ma-Vérité International Tribunes brings together prominent films, di-rectors, actors, activists, politicians and opinion leaders to illustrate social and humanitarian issues. It engages wide audiences in debates and forums addressed by the films and organises workshops for inspiring film-makers. The festival’s locations offer extraordi-nary opportunities to increase its im-pact and reach to broader audiences: Paris, one of the world’s major global cities and cultural centres, Geneva, the birthplace of the International Red Cross and the seat of numerous international agencies and Abu Dhabi, one of the new, leading, international cultural centres of the Arabic world.

What were the first two editions about?

The 1st International Tribunes - Banning Landmines and Clus-ter Bombs was launched in Oc-

tober 2007 in Paris and Monaco and focused on the 10th anniversary of the Ottawa Treaty Banning Landmines. Supported by Carla del Ponte and Sharon Stone, Cinéma-Vérité hon-oured the actions of the Nobel Laure-ate for Peace, Jody Williams, to ban the use of cluster bombs. The 2nd International Tribunes – In-tercultural Understanding was held in October 2008 in Geneva, Paris

Vérité

Getting attention for those who need it by means of entertainment.

our team has extensive

experience in the trade of

art and our partners are all

certified experts in the art

world.

art has become a more and

more demanded asset class

and we are at your service to

provide you with the support

you need to build and maintain

an excellent collection for

yourself or your company.

not only do we assist our clients

in the creation and extension

of their art portfolios, we also

research and identify new

artists and artistic opportunities

so that we may merge the

appreciation as well as the

economic sense of all efforts.

to us, art is more than a passion.

it is the appreciation for the

creation of the extraordinary

combined with the knowledge

to allow our clients to benefit

from such talent.

ARTinvest



and Abu Dhabi and focused on the European Year of Intercultural Dia-logue through the theme, “Intercul-tural Understanding and Dialogue between People”. It was supported by HM Queen Noor of Jordan and for-mer president of Portugal, Jorge Sam-paio and honoured Professor Wangari Maathai, Nobel Laureate for Peace in 2004.

What is the 2009 edition about?

The 3rd International Tribunes - Our Legacy to Future Genera-tions will take place in October

2009 in Geneva, Paris and Abu Dhabi. It will be dedicated to supporting the achievements of the United Nations Millennium Development Goals by 2015 and The Millennium Declara-tion, adopted in 2000 by the United Nations Assembly, addressing the world’s main development challenges. Today, more than half way into 2009, we are celebrating undeniable prog-ress and facing serious challenges to reaching these goals and ensuring a more prosperous future.

How is the Cinéma-Vérité fi-nanced and how is the money spent?

The Cinéma-Vérité is financed by donations from individuals, private and public foundations,

corporations and other organsations. In addition to Cinéma-Vérité Interna-tional Tribunes specific programs and projects, our partners support the Ci-néma-Vérité annual dinner and auc-tion organised during the film festival in Geneva and Paris. 82% of the funds are spent to support our programs, 3% on research, 5% on communication, 8% on fundraising and 2% on adminis-tration.

Who is behind the Cinéma-Vé-rité?

Cinéma-Vérité is led by Joel Soler, President and Founder, Manuel Collas de La Roche,

Vice President of International Ren-dezvous Paris and Geneva and Domi-nique Marzotto, Vice President Ciné-ma-Vérité Fund. With offices in Paris and Geneva, we work with a growing

number of committed international personalities, who act as our board members, advisers and advocates.

How are the movies selected?

There are no particular selec-tion criteria, the films are se-lected based on importance and

the depth of the message they trans-mit to the general public. Both long and short movies are shown, both fic-tion and documentaries. The 2009 se-lection is still in progress.

To learn more about the Cinéma-Vérité please visit the website: http://www.cinema-verite.org or http://www.cinemaverite.ch/.

“Cinéma Vérité has numerous famous supporters such as

Sharon Stone, Meg Ryan or Queen Noor of Jordan”

continued...

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70849_210x297_Elevator_Corp_e.indd 1 27.4.2009 8:43:41 Uhr