Sunday, 25 September 2016

Belgium's most renown investor: Albert Frère

In this series we will take a look at some of the world's most famous investors. Since I'm a Belgian I think it would be good to kick of with the series and take a look at a famous Belgian investor. 

Albert Frère (born 4 February 1926) is a mythical figure in Belgium who seemed born to be in the world of high
finance . That picture is wrong. Frere travelled in reality, a very quirky track down.



Steelbaron

The route of Frère is very atypical for Belgium . Frère began in the steel distribution of his parents and
extended it to an impressive sales machine with international tentacles. Afterwards, he managed to work his
way up to uncrowned steel baron in the steel area of Charleroi, and then at the end of the seventies to build
a career in the financial world. Frère likes to describe himself as 'a professional shareholder', a shareholder
who watches over the return of large investments. Financiers of the caliber of Frère are found rarely in the
stock market world. Some people like to compare him to the American super-investor Warren Buffett, who
with a consistent investment policy, was able to build a huge fortune.
Frère has, all things considered, certainly not done badly. Compared to Buffett, Frère suffered from a small
stock market, a limited investor base and a lack of institutional investors.
The investingworld is a microcosm with its own rules and its own laws. Frère understands the rules perfectly
and knows how to use them to his advantage. The financier perfected the cascadesystem at the
stockexchange. A cascadesystem consists of a succession of holding companies, where every time other
parties invests money in . Frère is not the inventor of this system, but he is someone who perfected it in
Belgium.


The big advantage of the system is to built with relatively few resources,a large investment without losing
control. The financial levers can greatly increase the firepower of any financier.
Frère undeniably has a nose for business. He combines the ability to set strategic goals while he quickly
responds quickly to opportunities.


GBL


Frère was not anchored in the traditional French-speaking Brussels establishment that the salons of
Brussels' high finance dominated. He stepped inside the financial world by taking control of the holding
company GBL in 1982. This holding company was in financial difficulties and Frère smelled an opportunity to
build a financial empire with GBL. GBL was an outsider in the financial landscape. The holding company was
headed by Baron Leon Lambert, a descendant of the Rothschild dynasty.
Lambert himself had big plans with his group, but he ran out of money. And besides, he bumped up against
opposition from the Brussels establishment. In the early sixties, GBL had the temerity to launch an
unsolicited bid for Sofina, the holding that grouped the interests of the family Boël. Together with Solvay and
the Janssens family, Boël forms the core of the traditional establishment, closely related to the industry but
also with the royal family.


That Frère chose GBL was for tactical reasons because he knew that the baron at the time was weak and
could not fall back on the traditional financial circles. But it was also a strategic move. GBL remained after
the ubiquitous Société Générale, the largest holding in the country and, therefore, had a huge potential to
make investments.


Société Générale


The breakthrough of Frère and his meteoric rise in the Belgian capitalism comes after the battle for the
Société Générale of Belgium in 1988. The largest holding of Belgium comes under fire from the Italian raider
Carlo de Benedetti. After a fierce and turbulent stock market battle Generale eventually fell into the hands of
the French group Suez. And came with that acquisition, in hindsight, an end to the existing Belgian
capitalism.
Because the financial powerhouse of Belgium imploded and eventually moved to Paris, there was room for
other initiatives. And that had Frère well understood. Tactically that the rules were changed, strategic GBL
now had space to pursue their own line.
Remarkably, Frère kept himself during the whole episode of the struggle for Société Générale emphatically in
the background, unlike other tenors. He was more than an attentive observer of the fight and perhaps one of
the most knowledgeable. It is known that De Benedetti consulted Frère before he made his plans public. At
some point, there was even worked on an alternative with Frère, but eventually, the man from Charleroi kept
quiet.


Frère responded by choosing a new goal, an ambitious goal: he went for power with the largest company of
Belgium, oil group Petrofina. And he assured himself simultaneously from the absolute control of GBL, so
hostile raids could be prevented. Due to the relative weakening of the Generale he had suddenly room for
maneuver, which he fully exploited. Frere's favorite motto is: 'In every danger, there is an opportunity, "a
statement by Winston Churchill. The saga around Generale illustrates that perfectly.


Partners


For Frère partners are also essential. To invest with relatively limited resources on a large scale, he needed
stable partners. Those were the French banking giant BNP Paribas and the Canadian Francophone
Desmarais family. The alliance with BNP Paribas was more than forty years old when she finished in 2013.
The Canadian family Desmarais has been a loyal ally since 1988. Frère built by Paul Desmarais, who died in
2013, an empire that will be continued by the families. The collaboration Desmarais-Frère runs until 2029.
Here are some of the things Albert Frere looks for in his investments.


- Buy the participations as cheap as possible.
- Once he has built a large stake in a smaller company, he looks for a merger with a larger company.
- Use financial levers so he doesn't need to much capital
- Look for solid business partners.
-Invest in companies that you understand. Frére invested a lot in industrial companies since he understood
this sector the best.


Long: Sofina, GBL, Solvay

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