Robert Tchenguiz is embroiled in a vicious spat with powerful City stockbrokers after his multi-million pound bet on the transport giant FirstGroup turned sour.
City sources said that at least one of the brokers had threatened legal proceedings, claiming the flamboyant tycoon owes them millions of pounds.
But Tchenguiz is understood to be furious with the brokers, whom he blames for his losses, and is investigating whether he has a case against them for damages.
Tchenguiz built up a near 7 per cent shareholding in FirstGroup – which operates the Great Western Railway, South Western Railway and the TransPennine Express – in 2019, when the shares were trading at between 90p and £1.30.
Party lover: Robert Tchenguiz with his sister Lisa at her birthday last year
The shares were bought using complex deals that involved borrowing money from several top City brokers, including Intertrader – a subsidiary of Ladbrokes owner GVC – FTSE 250-listed IG, and CMC Markets, which was founded by former Conservative Party co-treasurer Peter Cruddas.
At one point, Tchenguiz’s investment in FirstGroup, which also runs one in five bus services outside London, was worth between £70million and £100million.
Tchenguiz wanted FirstGroup to split its US business, which includes famous yellow bus operator First Student, from its UK operations, and was planning to push for a boardroom shake-up. But when the Covid-19 pandemic struck, FirstGroup’s share price slumped, falling to as low as 28p.
Tchenguiz’s brokers called in their loans, but it is understood that he did not provide the funds. His brokers then decided to sell his stock, leaving Tchenguiz suffering a loss.
Other private investors have suffered similar fates in the Covid-19 market rout after borrowing money to buy shares in other listed firms. Some are reportedly considering legal action against the banks that called in the loans.
It is not known how much the brokers demanded from Tchenguiz – who lives in a £20million mansion in South Kensington near the Royal Albert Hall – but the sum is thought to be in the millions of pounds. The Mail on Sunday understands that one broker has already issued a formal demand for a debt to be repaid as the first step in a possible legal action.
Echoes of his £1bn Sainsbury’s disaster
They say that lightning doesn’t strike twice. But Robert Tchenguiz’s failed bid to shake-up First Group has an eerie ring to it, writes Ben Harrington.
In 2007, the tycoon built a 10 per cent shareholding in Sainsbury’s worth £1billion. As with his First Group shareholding, the shares in the supermarket giant were bought using debt under a complex deal. His financier then was the Icelandic bank and broker Kaupthing Singer & Friedlander.
The entrepreneur clashed with Sainsbury’s management, arguing that the FTSE 100 giant should ‘realise value’ from its vast property estate, potentially by selling some stores.
In 2007, Tchenguiz bought a 10 per cent shareholding in Sainsbury’s worth £1billion
Tchenguiz also built a 25 per cent stake in Mitchells & Butlers, owner of All Bar One, Harvester and the Toby Carvery chains, after a failed attempt to buy the company outright for £4.4billion in 2006.
But the stockmarket crash following the banking crisis led Kaupthing Singer & Friedlander to sell his stakes in Sainsbury’s and Mitchells & Butlers at below market value. Kaupthing Singer & Friedlander was put into administration in October 2008.
The forced share sale left Robert Tchenguiz nursing hundreds of millions of pounds of losses. He reached a settlement in a legal action against the company.
Last night, a spokesman for Tchenguiz accused the brokers of ‘aggressive and opportunistic’ tactics when they sold his stake in FirstGroup.
‘Both the propriety of [the brokers’] conduct, and the amounts claimed by them from Robert as a consequence, are disputed, and enquiries in this regard are being undertaken,’ the spokesman said.
‘Until such time as Robert’s losses brought about by the actions of the traders is ascertained, it is unclear as to whether any amount is owed by Robert to any of the traders, or whether in fact any of them need to account to him for damages he has suffered as a consequence of their actions.’
The row marks a bitter ending to Tchenguiz’s first major foray into the City since the financial crisis.
Before the 2008 crash, he was one of Britain’s most prominent activist investors, building up shareholdings in firms such as Sainsbury’s and the pub and restaurant owner Mitchells & Butlers.
He became known in the City for stirring up boardroom battles – and for throwing wild parties and dating a string of glamorous girlfriends, including the lingerie model Caprice Bourret.
He reportedly once spent £100,000 on a Louis XIV-themed 40th birthday party.
Robert Tchenguiz (left) and his brother Vincent Tchenguiz were born in Tehran in 1956 and 1960, and their father, Victor, was the head of the mint for Iran’s ruler at the time – the Shah
The 59-year-old’s wealth came from a multi-billion property empire he built up with his older brother Vincent. The brothers were born in Tehran in 1956 and 1960, and their father, Victor, was the head of the mint for Iran’s ruler at the time – the Shah.
Victor brought his family – including daughter Lisa, now a prominent socialite – to Britain in 1979 after the Iranian revolution.
The Tchenguiz brothers set up Rotch Property Group with an investment in an office block in Hammersmith, West London. They turned Rotch into a giant – worth £4.5billion at one stage – using large amounts of debt to hoover up properties let to long-term blue chip tenants.
Robert Tchenguiz struck out on his own in the 2000s and – backed by Icelandic banks such as Kaupthing – built up shareholdings in firms such as Mitchells & Butlers, whose brands include All Bar One, Harvester and the Toby Carvery.
One of his boldest bets was in 2007, when he bought a 10 per cent shareholding in Sainsbury’s worth £1billion. However, in an echo of his recent stake in FirstGroup, the deal turned sour and he lost millions.
His misery was compounded when the Serious Fraud Office raided his and Vincent’s offices and homes. The brothers successfully sued the agency winning an apology and a damages settlement over the fraud investigation.
IG, CMC Markets and GVC declined to comment.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.