Spotlight falls on serial Kiwi investor

Whenever former Fay Richwhite wunderkind Bill Birnie visited his office in the 1980s, Chris Lee couldn’t help but think of him as a ‘‘boy assassin’’. ‘‘He had a killer’s mind in a young head. He was an unbelievably positive and aggressive dealmaker – and all the time he looked just like your son,’’ recalls Lee, a former investment banker turned stockbroker and financial adviser.

More than 20 years later, Birnie’s enduring boyish looks still attract comment from his peers. However, the 56-year-old chairman and managing partner of Birnie Capital Partners says the rigours of the past year have wrought ‘‘some changes’’ in the face he sees in the mirror.

The venture capitalist had a rough 2009 and Birnie says this year is shaping up to be a gritty one as well, with disgruntled investors and legal action pending. His reputation has, he says, been damaged by the failure of pharmaceutical startup Protemix (though the drug science is considered so promising salvage work is under way overseas).

Though he rejects any suggestion he is in financial trouble, Birnie implies the high-end investor ‘‘property space’’ he is now in is an uncomfortable place to be. Birnie’s wealth, estimated at $100 million in last year’s NBR Rich List, had its foundations in those heady Fay Richwhite days of audacious corporate deals in a deregulating economy. It was then boosted further by property development and export ventures – sectors that have since been particularly vulnerable to the global economic crunch.

Apart from the fallout over Protemix, another promising Birnie associated venture, MonstaVision, also caused talk last year. After a recapitalisation, Birnie, who had been the advertising motion video company’s biggest shareholder, resigned as a director and emerged with just a 9 per cent shareholding. A major shareholder said MonstaVision, which today has a new set of directors, ‘‘just ran out of money’’. The shareholder said next year’s Rugby World Cup was expected to boost the business.

Then to cap the year off came news of High Court action lodged against Birnie and associates over Northland property deals gone sour. Two shareholders of Birnie Capital Property Partnership – Allen Peters and Bernard Quinn – have filed proceedings against Birnie and his related interests, Paoneone Settlement Trust Number 5 and Picasso Nominees.

Auckland-based Peters is leading the challenge, supported by Quinn, representing Ngati Awa Asset Holdings. BCPP, half-owned by Birnie and half by investors including Timaru’s Allan Hubbard, of South Canterbury Finance, Ngati Awa and Peters’ investment vehicle Peters Capital, could join the two original plaintiffs.

At the heart of the action are disputed 2008 sale and purchase deals, in particular the purchase of Lion Rock Golf Course and Lion Rock Development. The venture has resource consent to develop an international quality 18-hole golf course and residential property project in the Bay of Islands.

Court documents show the total purchase price of the property deals was $37.5 million, including $19 million for the Lion Rock assets. The court papers say Birnie and his associates received $21.5 million in cash and were issued 16 million shares in BCPP. Other investors in BCPP paid out $17.25 million while BCPP borrowed a further $6.5 million from the Bank of New Zealand to fund six properties on Kawau Island in Auckland’s Hauraki Gulf.

Birnie says ‘‘there has been no monetary default’’ to the BNZ.

‘‘Debt was under 20% of the total assets of the partnership when we closed the transaction.’’

The plaintiffs are seeking an order for damages of $19 million, plus interest and costs.

Birnie dismisses the court action as just ‘‘a bit of a scuffle between professionals’’.

‘‘If it goes ahead we will obviously defend it – hopefully, it won’t get there.’’

Maybe not, but the legal challenge has thrust Birnie’s business dealings further into the spotlight. It is scrutiny he has not been under since he and Tony Gibbs, of Guinness Peat Group, raided grower-owned pipfruit exporter Enza in 2000, went on to dominate the company and then fell out. Gibbs eventually bought out Birnie.

‘‘I’ve tried to keep my head down but Protemix has stuck it right up on a rooftop,’’ the Remuera-dwelling lawyer says.

In contrast, Birnie the New Zealander has a relatively high public profile. He is deputy chairman of Sparc (Sport and Recreation New Zealand), a trustee of the James Wallace Arts Trust and deputy chairman of the Film Commission. He’s particularly proud of his honorary life membership of Equestrian Sports New Zealand and is a former Hillary commissioner and a founding trustee of the Wellington Stadium Trust. An original sponsor of the Theatre Artists Charitable Trust and a principal funder of Wellington’s Circa Theatre, he was a major sponsor of the Auckland and Wellington film festivals for a decade.

But to quote his own words, the story of Bill Birnie, businessman, has never been told.

In its early stages, it’s not a story too different from that of many other Kiwi achievers – Auckland teenager from broken home discovers a strong work ethic and entrepreneurial bent.

From the age of 14 he began helping his property developer mother, Barbara, on projects, worked holidays in building sector jobs, ran a work gang of his rugby team-mates, put himself through law at Auckland University, and got a job as assistant credit manager for Smith & Smith while doing his law exams.

So far, so ordinary.

But then someone suggested Birnie might make a merchant banker – ‘‘I didn’t know what a merchant banker was’’ – and he joined Challenge Securities, the investment banking arm of Challenge Corporation, buying and selling wholesale money. Birnie watched company head Sir Ron Trotter negotiate a major deal with a Canadian forestry company and was hooked.

‘‘It had a profound effect.’’ He took his new passion to the Don Brash-run BroadBank, then New Zealand’s largest merchant bank, and in 1980 joined the small Fay Richwhite merchant bank in Auckland, setting off solo in 1983 to set up its office in Wellington. As a director and partner of the dynamic Michael Fay and David Richwhite dealmaking duo, Birnie went on to write himself a place in one of the most colourful and controversial episodes in New Zealand corporate history. When Fay and Richwhite left to live and invest in Geneva, Switzerland, in the late 1990s, Birnie bought the investment bank side of the business, naming it FR Partners. Through it, he helped list The Warehouse, Office Properties Trust and Restaurant Brands, among other big deals.