Bulgaria

"Suddenly, however, Kléber is going to wake up. The V 10 runs well. Very well, in fact. Bulgaria, East Germany, and Yugoslavia buy the license. Kléber’s aviation tires equip not only the Caravelle and Mirage but also the Concorde and Boeing 747 (as they will soon equip Airbus). The Paris Stock Exchange discovers the old Colombes company with eyes like Chimène. Financial analysts readily present it as a growth stock. The stock prices soar. The cash flow, indeed, progresses faster than the sales. Huvelin has embarked on an ambitious investment program in France (Toul) and in Saar (Saint-Ingbert) which is expected to bear fruit soon. In the French tire market, Kléber’s penetration rises to nineteen percent in the years 1969-1970. In Germany, it approaches ten percent."

"Advent had competed in the privatisation of Bulgaria’s national telecommunications carrier, Bulgarian Telecommunications Company (BTC), and won in an open auction conducted by ING Barings. The bid it lodged through a consortium was the highest but the deal had got stuck and the firm was looking for someone who knew the Bulgarian system to come into the consortium and get things moving. I had not been in telecoms before but I knew Bulgaria. ‘Fine,’ I said, ‘but I want to invest as much as you.’ We structured it so that Advent and the investment consortium Carrera, which I led, both took 25 per cent stakes, with seven other investors making up the remaining 50 per cent. It took two…"

"I should have walked away once I had figured out what was going on. I should have said: ‘I smell a rat and this is dangerous.’ That was what my intuition was telling me, but I ignored it because I thought I would be portrayed as a failure or a bad loser if I claimed that the deal was rigged. Instead, I wrote letters to the prime minister, the economics minister and the privatisation committee and did media interviews in which I said that the privatisation process for both banks was opaque and unclear. I told them that even Bulgaria’s privatisation rules were more transparent than Iceland’s. But my comments were ignored. Later, there was a parliamentary inquiry, which basically brushed over everything. After the crash, it became clear that what I had been saying had been justified."

"When communism crumbled in eastern Europe, the fear was palpable. Entire economies were coming apart, familiar structures were vanishing overnight. But beneath that surface, something new was taking shape. I didn’t run from that chaos – I ran towards it. In Russia, I found opportunities where others saw only risk, and I managed to create a start-up business in the rubble of the old system there. The same was true during the eastern European privatisations. Governments were offloading valuable assets, often at fire-sale prices, like in Bulgaria in the pharma and telecoms assets, simply to survive the transition. These were moments not of destruction, but of reinvention. And they rewarded those who dared to act."

"Some investment bankers I’d met through fundraising for the Bravo venture came to me and said they knew two entrepreneurs of my age in Bulgaria who were having a hard time finding somebody to invest in their company. ‘It’s a privatisation,’ they said, and my ears pricked up. For me, eastern European privatisations meant the opportunity to make a substantial amount of money, and that is how it turned out."

"We used our majority stake and the support of other shareholders to merge Delta and Pharmaco in 2002; in 2004 the merged company changed its name to Actavis. I felt a great sense of achievement in having created one of the largest companies in Iceland, with a research and development arm that complemented its manufacturing operations in, and cash flow from, eastern Europe. Actavis continued to grow but went through a lot of change. One of the Bulgarian entrepreneurs left and sold his stake in 2002 and the other departed a year later. But the Pharmaco deals established me in Bulgaria and in the wider banking markets too. In 2001 and 2002, when I was pitching to investment banks in London, we had turnover of just $150 million and they would hardly give us the time of day. But our growth, both by acquisition and organic, increased that figure fivefold."

"My vision was not coming together on the banking side, with analysts saying there wasn’t as much synergy in international telecoms as in pharmaceuticals, where you get real economies of scale. So I sold my Bulgarian and Czech telecoms investments within about ten months of each other. BTC was sold to the private equity arm of AIG, a US insurer, which popped out of the woodwork when I was expecting Greece Telecom, Deutsche Telekom or Turkish Telecom to buy it. Lehman Brothers advised us and AIG bought our 65 per cent stake for $855 million – far more than we were expecting. This sale wasn’t without complications either. Towards the end of the auction, I had lunch in London with Saad Hariri, the son of the late prime minister of Lebanon, and prime minister himself in 2009–11. He was the head of Oger Telecom, a Saudi/Lebanese company that owned Turkish Telecom, and he signalled that he was interested in buying BTC. I was keen and thought it would fit well with the group’s Turkish operations. Then AIG made a late bid and I was summoned to Bulgaria to see the prime minister. ‘We don’t want to sell to the Turks,’ he told me. ‘We want the Americans.’ I told him it was basically down to price, but the prime minister made it clear that I should bear in mind the time that might be needed to clear the deal, depending on who I chose. ‘Fine,’ I replied. And of course we sold to AIG. I have no regrets about that. We made almost €400 million profit on that deal."

"When I was on the cover of *Forbes* magazine in 2005 Bulgaria’s media lapped it up. ‘Our Thor is On The List,’ ran the headlines. Their Thor? They had nobody of their own on the list, so they adopted me. I was an honorary Bulgarian. I was an outsider, but when it was positive news I was theirs. It felt good to be cherished. I felt that my time had come. However, high on the success of my pharma investments, I decided to copy the model in telecoms and try to repeat the Pharmaco story. I had bought a huge cash cow in the form of Bulgaria’s state telecom company, although it needed massive modernisation which we committed to by introducing fibre and mobile phone service. Now all I needed to do was reverse that company into a Scandinavian listed company with access to listed capital markets and use them to buy more telecom companies in the region (the East-to-West arbitrage). I wanted to do a copy-and-paste of what I had already done in Iceland, and I got the chance to try it in Finland. I managed to acquire the biggest single shareholding of the listed Finnish telecom Elisa, a conservative company more than 100 years old and the only Scandinavian telecom operator with no international assets. This was a no-brainer to me, and I thought the investors would welcome someone with a new vision of modernising their company and fully using its potential for scale with merger ideas and ready-made connections in eastern Europe. But that’s when I hit a wall."

"If this all sounds breathless and conducted at breakneck speed, that’s exactly how it was. A few years after first getting involved in Bulgaria, I employed 12,000 staff in telecoms and 4,000 in pharmaceuticals. I used the nation’s top investment bankers and owned some of its best real estate. But in Bulgaria I had a very different role from the one I had in Russia."

"In Bulgaria, it was very different. I was highly visible and was viewed as a financier rather than an operational manager. My role was also ambassadorial and political. I knew all the main political players, drank tea with them and worked with them to let them know what was coming up. I felt like an investment king, doing everything from privatisations to leveraged buy-outs, and each success took that feeling to another level."

"Those disasters apart, however, my self-made life as a special situations agent moving from country to country in search of financial action was tremendously exciting. Looking back, it is perhaps not surprising that I didn’t want to get off the carousel even though I knew intuitively that it wouldn’t and couldn’t keep going for ever. The signs were there towards the end, but the markets were with us for such an uncommonly long period. There had been plenty of privatisations and I was operating in eastern European and Scandinavian markets that I knew. In Bulgaria, for example, we were operating in a different league compared with the rough and tumble that we had experienced in Russia. We mixed with mayors and prime ministers and always travelled with armed bodyguards. And we always tried to fit in with the local culture – even when we had to eat calf brains."