AIB Featured Business Leader – Graeme Hart
New Zealand’s richest man isn’t in it for the publicity. He doesn’t grant interviews, he prefers not to have his picture taken, and even his private jet is unlisted for privacy reasons. Graeme Hart has risen from a modest upbringing to become a world famous billionaire, famed for his superyacht collection and ruthless business acumen. Hart has used leveraged buyouts to accumulate a packaging empire under the umbrella of his Rank Group, and his net worth is now estimated at $US7.6 billion (over $AUD10 billion).
Hart was born in 1955, and attended Mount Roskill Grammar School in Auckland before dropping out at the age of sixteen. He went on to various manual jobs, including a tow truck driver, panel beater and taxi driver. But he was aiming higher. In 1977, at 22, he bought an offset press and started up his own business, Hart’s Printing and Office Supplies. The company thrived in a small way, but Hart wanted more. He acquired additional companies, with the name and style of his business changing six times along the way before landing on Rank Commercial in the late 1990s.
In 1987, though, he was running Carlton Party Hire Ltd and buying up marquee and function firms to bundle into the company. Married and with a young family, he redoubled his efforts, earning the reputation of a ‘one-man band’ whose wife would attend AGMs with their infant daughter in a pram to double attendance.
It was then that Hart went back to education, completing an MBA at the University of Otago. His senior thesis was on his own business, titled An Investigation Into the Business And Operations of Carlton Party Hire, which outlined a strategy that would see his company morph from a small business into a large operation. The strategy relied on using leveraged buy-outs, where a well-performing company uses its cash flow to fund and repay debt. He was awarded the qualification, and immediately began putting what he’d learned into action. For one, he sold Carlton, leaving the parent company Rank debt-free.
In 1990, Hart’s big break came when he purchased the Government Printing Office for less than its capital value, handing over $NZ23 million on generous payment terms: he was allowed to pay for it out of the future earnings he projected. Next, he bought stationer and bookseller Whitcoulls for $71million, and made his first appearance on the National Business Review Rich List. He was to sell Whitcoulls five years later for $320million, almost five times his original stake.
He faced his first major hurdle in 1997, when he acquired a 20% stake in a Sydney manufacturer, Burns, Philps & Co and used almost his entire fortune to do so. Burns Philps failed to divest their spice-making arm as anticipated, prompting a write down that took the company to the brink of bankruptcy, and almost dragged Hart’s Rank with it. Facing disaster, Hart persuaded the banks to agree to freeze interest on almost $1.3billion in loans while he turned the situation around. The lenders agreed, worried that they’d otherwise lose their money entirely, and Hart went back to the board. His eventual solution included investing $100million of his own money into the business as part of a recapitalisation, and buying out minority owners in the process.
It wasn’t until 2003 that Hart resumed acquisitions, with a focus on food manufacturers that began with Australia’s largest baker and including Uncle Toby’s cereal arm. Next was packaging with the acquisition of lumber giant Carter Holt Harvey. Extensive forestry holdings which came as part of the deal were sold off as plantations or redeveloped as farmland. Hart has increasingly shifted his focus offshore, buying up South American, US and European packaging companies including US manufacturer Hefty and enough factories that even US Senators have become involved with Hart in attempts to retain jobs in their area.
Hart is a man with a lot of clout, but he intentionally runs an ‘unsexy’ and lean operation. Very few people outside the industry have even heard of Rank, and he prefers it that way. Even friends and colleagues are reluctant to talk, with the consensus being that Hart cultivates an intensely loyal workforce and social circle who value his privacy as much as he does. Part of his strategy is to focus on necessary things rather than glamorous ones – tetra packaging and garbage bags instead of iPhones and ride-sharing apps – which fulfils the dual purpose of keeping him out of the limelight and into the rich lists.
He still lives in Auckland with his wife Robyn in a $40 million clifftop mansion, and owns property on Waiheke Island, two properties in Aspen, Colorado as well as a Fiji island. He is known for his love of luxury yachts, beginning with his first Ulysses in 1997, going on to the Weta and in 2014 a new Ulysses, Norwegian-built with swimming pools, hot tubs, helipad and enough infrastructure for long expeditions. He has two adult children, Gretchen and Harry, and the family is close knit. Hart’s business interests have increasingly moved overseas, but Hart himself is a New Zealander through and through.
This article was written by Tanya Ashworth-Keppel on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources were used to compile this article: New Zealand Herald, University of Otago Archives, Forbes, Bloomberg, National Business Review, news.com.nz and New Zealand Women’s Weekly.
Image credit: Australian Financial Review