“Little minority shareholder – little fool. Big minority shareholder – big fool.” — Albert Frère

Albert Frère: Background & bioALBERT, BARON FRÈRE

Albert Frère was born on Feb. 4, 1926 at Fontaine-l’Évêque near Charleroi, Belgium. He is a Belgian entrepreneur and the richest business person in Belgium. A high school dropout Albert, Baron Frère reconstructed his family’s scraps metal company into a gush of resources in media, utilities and oil. Albert Frere is also a connoisseur of fine wine.

Albert Frère was a son of a nail merchant and took an interest in the family business from early childhood. When Frère was 17 his father passed away and Frère had to leave school to run the company by himself. He started investing in Belgian steel factories at the age of 30.

By 1970s he practically supervised the whole steel industry in the region of Charleroi. He was able to foretell the frightening steel crisis of   1970s and sold his enterprises to the Belgian state after amalgamating them with the competing steel firm Cockerill to create Cockerill-Sambre.

Frère invested his earnings and was able to build an investment kingdom around the Swiss holding company Pargesa that he established with the collaboration of  Canadian investor Paul Desmarais. Pargesa owned the Belgian holding company Groupe Bruxelles Lambert in 1982 and in a year added major stakes in wide ranging Belgian companies like Petrofina, Royale Belge Insurance, Compagnie Luxembourgoise de Télédiffusion (CLT), and Tractebel. He vigorously promoted international consolidation of the business areas in which he was involved, selling  Royale Belge to Axa, Tractebel to Suez, Petrofina to Total S.A., and RTL to Bertelsmann and Banque Bruxelles Lambert to ING Group.

Today, Groupe Bruxelles Lambert is Europe’s second largest holding company. Albert Frère stepped down from managing the company during February 2015. According to the latest filings, piblished in 2014, Groupe Bruxelles Lambert owns a fifth of the cement group Lafarge, and 7.5% of Pernod Ricard. It also owns 3% of Total, France’s largest oil company — a byproduct of its merger with the former Belgian oil company Petrofina, in which Groupe Bruxelles Lambert had a large stake.

Groupe Bruxelles Lambert is always on the look out of, long-term investments, but is not limited to a specific industrial genre. It prioritizes investments that are in a way concerned with European financial system. Groupe Bruxelles Lambert in recent years, GBL had expressed interest in turning away from holdings in “mega-cap” companies to focus on building bigger stakes in smaller companies, in order to exert more control on their governance.

Groupe Bruxelles Lambert invests  in  companies  that  offer  potential  to  create  value  for  shareholders  and  sells investments deemed to have reached maturity. It stands as one of the ten biggest Belgian enterprises, and also a part of the BEL20. in Brussels it was listed in  1956. Groupe Bruxelles Lambert was also involved in Drexel Burnham Lambert, having made a sizeable investment in the early 1980s.

Albert Frère: Investment philosophy

Albert Frère has amassed wealth by being serene. He invests long-term. He does not take note of transient fluctuations.

If he decides to venture in a business situation, he does his best to make it a success.  This is his art of investment that entices him to undertake perilous business decisions like the frantic The Suez-GDF deal. The French President Nicolas Sarkozy had to promulgate a law relinquishing state control of GDF so that the planned merger was made possible.

He tries to avoid large, public companies  and rather invests in private or appoints his management. He exercises influence in corporate Europe through much planned investments, by planning to affect mergers and takeovers and now and then by superseding his opponents just with the help of his intellect and experience. He has weird timing in making investments.

In 2001, Frere swapped his 30% holding in Luxembourg- based television and radio broadcasting company RTL Group for a 25% stake in the German media company. While affecting the trade, he included a section in the contract securing his right to float his Bertelsmann shares on the stock market.

He conducted talks with the Mohn family that rules Bertelsmann, and demanded 4.5 billion Euros for his shares. He succeeded in getting his price after announcing a strategy for a lucrative public offering. However, the Mohn family members disliked the suit.

Liz Mohn who is in control of Bertelsmann, said in a statement in early 2006 that the purchase of Frere’s stake surefire the company’s autonomy. Frere and his business mates pocketed more than 2.4 billion Euros on the deal. The best deal Frere did is probably with RTL and Bertelsmann. Profits earned from the Bertelsmann transaction made Frere one of the top line investor in Lafarge and Pernod Ricard. In his characteristic style he bought shares of Pernod Ricard in 2006 and strengthened his position as an investor further.

His one of the preferred investment technique is that he buys large number of shares in a small corporation and exchanges it for a small stake in a large company. Accordingly in the year 1996 he sold his 25% holding in Belgian utility Tractebel SA to a unit of Paris-based Suez, that resulted in a merger of the two businesses  and the conversion of Suez into a corporation that the very next year had 44 billion Euros in revenue.

Frere and his team sold the Tractebel stake for 49.4 billion Belgian francs, about 1.2 billion Euros. Their 9.5% stake in Suez was worth 5 billion Euros as of June 20. Suez’s record earnings last year of 3.6 billion Euros correspond to a 32-fold increase because Frere had bought these shares more than ten years ago. He could profit again through a rise in Suez’s share price if the corporation by pulling off its merger with Gaz de France, which would make it the largest utility company in the world, earning revenues more than 72 billion Euros.

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