The Geneva Connection

by Martin Bodenham

  Merriman shut his office door behind Greenough and sat to check his voicemail. Then he rang his contact at the Mexican central bank to thank him for his help. Merriman knew his contact would have bent a few rules to gain access to the information. At last, this investigation is going somewhere. No one’s traced an end point for Caruana’s fund transfers before.

  “Oakham, Oakham, Oakham,” he said quietly. No, don’t know what it is, but we’re gonna find out.

  Chapter Fifteen

  Hotel Morgana sat on the edge of Lake Geneva on Quai des Bergues. Built in 1820, it had accommodated Europe’s glitterati and power brokers for decades. It was the finest hotel in Geneva, and looked across the water to the Alps beyond. Tritona had reserved two adjacent suites on the fifteenth floor. Kent wondered who was selling to whom when he saw the hotel.

  “It’s six fifteen now. Shall we meet in the lounge bar at, say, seven forty?” he said to Tara as they stepped out of the elevator.

  “Okay. This place is amazing,” she replied. He was reminded that this was all very new to Tara. He’d long taken for granted international travel at the highest level. Sarah had often said he lived in a bubble, far removed from the real-world experience of most people.

  Kent unlocked his door, placed his overnight bag on the king-size bed, then walked over to the large window to take in the view. It was getting dark. The lights of the city hugged the lake. Snow covered some of the higher peaks in the distance. He was reminded of some of the recent ski holidays he’d taken with Sarah. There would be fewer of those luxuries if CBC failed. Is Tritona really considering making an investment commitment? They sounded interested at the meeting and seemed satisfied with my answers. They certainly have the financial capacity with their massive resources.

  If nothing else, Kent was a realist. After a few minutes, he remembered he’d been here before. He knew from experience that an investor meeting could go well, only to find no commitment is made, and then again he’d known situations where the opposite was true. He sat on the corner of the bed, grabbed a pen, and noted down a list of institutional investors his team had approached since the Grampian Capital disaster had hit. The list ran to more than forty names, and not one of them had made a commitment. Many of them had known CBC for years and knew of its excellent investment record but, as a result of the recession, most had the same problem: they were overweight in private equity and needed to reduce commitments, not increase them. No — Kent knew in his heart Tritona was likely to decline a commitment, particularly in the absence of an existing cornerstone investor.

  He rang Sarah. “How’s it going?” she asked.

  “Okay, I think.” He didn’t want to share his pessimism with her.

  “Did they say whether they’re interested?”

  “No, but we haven’t finished yet. They want to continue over dinner.”

  “That sounds promising.”

  “It does, but we’ve been here before, remember.”

  “I understand. I know you’ll give it your best shot.”

  “I should know more when tonight’s over.”

  “Whatever happens, John, we’ll be okay you know. CBC isn’t everything. Keep that in mind.” In spite of his effort to sound upbeat, Sarah must have realized from his tone that he was expecting this to be another wasted trip. CBC is everything, he thought; everything he’d worked for and the physical manifestation of his success. If it failed, he’d make his fortune again, no matter how difficult the challenge. Anything else was unthinkable.

  “The hotel’s good.” He didn’t want to discuss his company failing right now.

  “Where is it?”

  “On the edge of the lake. They’ve put us in suites on the top floor. Great views. It’s a shame you’re not here with me.”

  “Sounds lovely. Don’t enjoy it too much without me.”

  “I’ll try. Well, I’d better get ready. I still need to shower and change before dinner. I love you.”

  “I love you, too. Good luck.”

  Kent made a quick call to the office to check in with Johnson. He was always the last to leave the office. Since his divorce, a few years back, Johnson had struggled to find another partner, which Kent thought was odd given he was such a sociable animal. Johnson spent many evenings sat at his desk. On the few occasions when Kent had to work very late, he’d insist on throwing Johnson out of the office to make sure he didn’t become a hermit.

  “Have we set up any more potential investor meetings?” asked Kent.

  “A couple, but we’ve had a load more polite rejections today. It’s not looking good,” said Johnson.

  “I know. Grampian could not have failed at a worst time.”

  “How’s it going with the Swiss?”

  “Hard to tell, really. They’ve got plenty of money. Whether they want to use it is another matter. We should learn more tonight as we’re seeing them again for dinner.”

  “Sounds good. Who’s paying?”

  “They are.”

  “Make sure you order something expensive. At least get something out of the trip. Good luck.”

  “Thanks. I’d rather come back with a big commitment, but don’t hold your breath.”

  Kent jumped in the shower, had a quick shave, then caught a few minutes of the news on CNN, before making his way to the lounge bar next to the main restaurant. It was seven forty, and he was the first to arrive. He sat in an armchair facing the entrance so he could spot Baumgart and his weird assistant coming in. He scanned the room. The usual bunch of international business people. He thought he could be sitting in a luxury hotel anywhere in the world and he’d see the same collection of people. In one corner was the usual group of loud Americans. There was always at least one group of them. Why do they always need to shout at each other so the whole room can hear their conversation? He gave them a sneering glance, but it made no difference. They were oblivious to him and everyone else in the room.

  How do you get a drink in this place? At that moment, Baumgart entered the lounge. His assistant was tucked in behind him. Kent waved so Baumgart could see him, and he came trundling over, taking up the most of a three-seat sofa. Kulpman sat upright on a hard-back chair. Kent couldn’t understand why he didn’t choose to sit in one of the many empty armchairs.

  “Is the hotel satisfactory, Mr. Kent?” asked Baumgart.

  “Wonderful, thanks,” replied Kent. “Such great views.”

  “We always entertain our visitors here. I don’t think any of them have been disappointed. The food is good, too.” Kent knew that must be true from the three chins trapped by Baumgart’s collar.

  Tara walked in, and Baumgart smiled. “Over here, Ms. Sanderson,” he said, patting the cushion next to him on the sofa. Tara duly obliged by sitting next to him. Bright girl, but you’ll struggle to squeeze on.

  The headwaiter came over. “Gut, Sie wiederzusehen, Herr Baumgart. Was kann ich für Sie und Ihre Gäste zu bringen?” Baumgart must be a German Swiss, thought Kent.

  “Ich würde sehr gerne einen Kir Royale haben, wenn das möglich ist, bitte,” replied Tara.

  “You speak German?” said Baumgart. He looked astonished.

  “Yes. Also Spanish and French,” said Tara.

  Bull’s-eye! Kent was reminded of how many men saw only Tara’s beauty and underestimated her as a result. He’d lost count of how many times he’d seen this happen. She was his secret weapon. A smart hire.

  Baumgart placed the drinks order. “I want you to make the best Kir Royale possible for Ms. Sanderson.”

  He’s smitten. Now he’s flirting with Tara. Maybe she’ll be able to coax an investment commitment out of him, thought Kent.

  “Please Mr. Baumgart, call me Tara.”

  “Then I insist you call me Dieter.”

  “Let’s all use first names,” said Kent, breaking up the love-in.

  At eight o’clock, they were shown to their table. Kent looked around the dining room as he sat. Baumgart must have some pull in this place. We’re in t
he best hotel in Geneva and now we have by far the best table in the restaurant. The waiters fussed over Baumgart and his guests as though they were the only table in the room.

  Baumgart was slow moving the conversation back to the business in hand. Kent couldn’t work out why. They talked about the economy, politics, and even the weather; anything but a potential investment commitment to CBC. Kent tried several times in vain to steer the conversation round to his firm and its search for new investors. By the time they were halfway through dessert, the night was almost over, and Kent was dismissing the whole trip as a waste of time.

  Why is Baumgart still flirting with Tara? Was he always out just to have a good time with no real intention of making a commitment? Does he understand how critical this is to CBC? Maybe he’s getting to know us as people first?

  Kent had seen other investors place a lot of store on whether or not they liked the CBC team as people. Maybe that’s Baumgart’s style. Baumgart’s assistant had continued to scribble notes all evening. There’s been no discussion worth noting. He hasn’t uttered a single word; what’s the point of him being here?

  “What’s your own professional background, Dieter?” Kent thought he’d try one last time to turn the conversation over to a business level, although he’d pretty much written off the evening by now.

  “My career was based around international law for twenty years.”

  Finally, Baumgart is actually prepared to talk business. Pity most of the night’s over.

  “How did you find yourself managing Tritona with that background?” asked Tara. Kent smiled at her, grateful for the help.

  “One of my clients was the Deutchman family. As we got to know each other better, I became the Deutchman family counsel on a full-time basis. When they established their family investment office, I was asked to run that, and so it was natural for me to end up running the multifamily office, when they linked up with the Kvarnback and Needmeier family offices four years ago.”

  The waiter came and took their coffee order. Baumgart suggested they all move into the lounge to continue the conversation in comfort. Just as the conversation gets interesting, the bloody waiter ruins the moment. It’s going to be difficult to move the conversation back on track. Besides, it’s probably too late. The night’s virtually over.

  They found a quiet corner in the lounge. Baumgart watched where Tara sat then deposited his hulk next to her. The man’s a limpet.

  “If you had your time over again, John, would you have raised your third fund being so dependent upon Grampian Capital? As you know, it’s most unusual to be reliant on one investor,” he said.

  Kent hadn’t seen that one coming. “We didn’t set out that way. It just happened. We approached all of the usual institutional investors at the same time and expected it would take six to twelve months to raise the third fund. As you know from our fundraising document, our first two funds produced great returns, so we had a good story to tell.”

  “CBC has an excellent investment record.”

  “About three weeks into the process, Grampian contacted us to say they’d like to put up seven-and-a-half billion of the ten billion total target. We knew they were good for the money being one of the highest credit-rated institutions on Wall Street at that time.”

  “I understand they were the cornerstone investor in both of your earlier funds.”

  “Yes, that’s right. As we knew them so well, we decided to accept their large commitment; it meant we could focus our efforts back onto doing deals, rather than fundraising. I prefer deal-making to raising new capital.”

  “Would you do it again?”

  Kent took a moment before answering the question. A tricky one. “Knowing what subsequently happened to Grampian, it would be easy to say no but, if the exact same fundraising circumstances happened again, then I think we would. Nobody could foresee, at the time, how hard Grampian would be hit by the collapse of the US mortgage market.”

  “I see.” Baumgart paused and took a sip of his double espresso.

  “Do you think it was a mistake, Dieter?”

  “I think it was a brave decision, but the right one in the circumstances. Now, remind me what you’re looking to raise at the moment.”

  “Without Grampian in place as our cornerstone, we’ve had to cancel the two-and-half billion pound commitments from our other investors. Today we have no investment firepower at all. We’ve not been in this position before, so I can’t be too prescriptive as to what we need to achieve. Ideally, we’d be looking to replace the lost seven-and-a-half billion Grampian commitment from a handful of investors. If we achieved this, then I’m pretty confident our other investors would recommit their original amounts, taking us back up to ten billion. I’m sorry it’s a long answer.”

  “So you’re looking for ten billion pounds in an ideal world?” Another sip of coffee.

  “Yes. That’s right. I should’ve just said ten billion.” Kent smiled. Is he actually going to make us an offer?

  “One further question, if I may.”

  “Of course. What is it?”

  “We’re keen to invest directly in certain situations, rather than solely through funds managed by investment managers such as CBC. If we make a commitment to CBC, would there be an opportunity to coinvest directly in transactions? That way, we could put more capital to work without incurring your fund management fees?”

  Kent was reminded how shrewd Baumgart was with this question. CBC’s smartest investors liked to have coinvestment rights as these served to dilute the impact of fund management fees, which were only charged on commitments to the fund and not on the coinvested capital.

  “Of course.” Kent had nothing to lose. Besides, CBC often came across much larger deals than they could handle on their own and needed to bring in other investors alongside them to make up the required capital.

  “Excellent. Then let me share with you where we are as far as your fundraising is concerned.”

  Hallelujah! “I’d be keen to hear your initial views.” It was eleven o’clock, and the lounge was already thinning out. There were only two other groups in the whole room.

  “After we completed our discussion this afternoon, I spoke to our investment committee members. As you know, I chair that committee. We’ve agreed we will make a commitment to CBC. We’ve been impressed by your track record, and we believe your investment strategy, focusing as you do on distressed investment opportunities, is right for this difficult market.” Baumgart paused.

  “That’s good to hear. What level of commitment did you have in mind?” Anything less than a billion will be of no use in getting CBC back on the road.

  “We’ll commit twenty billion pounds.”

  Kent looked at Tara and wondered whether she’d heard the same number as he did. Clearly, she had; her mouth was wide-open. Did Baumgart really just say he wants to commit Tritona to more than twice the level committed by Grampian Capital? Fucking hell. Kent put down his coffee cup. There’s got to be a sting in the tail? What pound of flesh will they want in exchange? Kent knew he couldn’t be choosy and, within reason, he’d have to accept any conditions. It was hardly as though investors were lining up to support CBC.

  Before he could finish collecting his thoughts, Baumgart added, “However, there are conditions. First, we’d like to have first right to provide any coinvestment capital CBC requires for larger deals. Second, in exchange for such a large commitment, we’d want a twenty five per cent shareholding in CBC itself.”

  Kent quickly did the math. This would still leave him, personally, with a controlling stake in CBC. It would still be his show; he’d still be calling the shots. With twenty billion pounds he’d be back on the road with a vengeance. With twenty billion pounds, his ambition to make one hundred million pounds personally would become a reality. Hell, it might even become two hundred million pounds. Kent could no longer pretend he was giving the offer serious thought. It was obvious to everyone the Tritona proposal was a great one.

  �
��Dieter, CBC would be absolutely delighted to accept your commitment and the associated conditions. I know we can build a substantial portfolio of fund investments with your backing. Thank you for your confidence in our team. We’ll reward it with excellent investment returns.” Kent reached out and shook Baumgart’s hand. No pain this time.

  “That’s good to hear. We can settle the legal formalities over the next week or so. These need not take long; we don’t want you to be out of the market for too long. In these difficult economic times, you need to be busy tucking deals away for us.”

  “I’ll make the legal documentation our top priority so we don’t risk losing deals. Thank you, again, for your faith in CBC.”

  “Now, I’m afraid we must leave you as it’s getting quite late,” said Baumgart as he and his assistant stood up. Kulpman had not said a single word all night, but this no longer bothered Kent. He had a result. He could have kissed them both.

  Kent and Tara walked with Baumgart to his waiting car and said their goodbyes. Baumgart shook Kent’s hand and gave Tara a kiss on both cheeks, and then left.

  As the car moved out of sight, Kent yelled out loudly, “Fantastic! Absolutely, bloody fantastic!” His British reserve quickly kicked in when he realized they were drawing attention from people outside the hotel entrance. “Let’s go back inside for a celebratory drink,” he said.

  “Great idea,” said Tara.

  They made their way back to the lounge and sat in two comfortable armchairs, furthest away from the group of noisy Americans, who’d returned. Kent ordered a bottle of expensive champagne.

  “You were wonderful tonight, Tara.” Kent clinked their glasses together.

  “You did all the hard work. I was watching Baumgart as you answered his questions. I couldn’t follow all of the conversation, but he was clearly impressed. I think he decided he’s backing you. Supported by the team, of course.”

  Kent knew Tara was right, but could not openly agree. He allowed himself to absorb the moment as the champagne began to increase his sense of elation. He’d rescued his firm from near certain death and had come back even stronger. With a fund of twenty billion pounds, not only was he back in the game, but now CBC would rank in the top few global firms in the private equity industry. In fact, if Baumgart was intent on putting up coinvestment monies, then CBC may even be the largest global player in terms of investment firepower. It felt good to be back. He’d dodged the bullet and come back stronger.