For a long time, exactly between 1986 and 2017, AC Milan was Berlusconi. Until the former Italian chairman of the board sold it last year to a Chinese investor, Li Yonghong. To complete the purchase of one of the most prestigious clubs in Europe (seven Champions Leagues, 18 Italian championships), it had contracted a loan of 335 million euros from the American investment fund Elliott. Loan for which he failed to repay the first installments. This brought AC Milan into the hands of Elliott, who currently excludes reselling it.
Founded in 1977, Elliott is one of the oldest “hedge funds” (alternative investment funds) in the world. Legend has it that its founder Paul Singer, 73 today, launched his fund with barely $ 1 million, a straw in American finance, entrusted by a few friends and family. Attracted by the extraordinary performances, investors have since rushed to entrust him with their money: Elliott – this is Paul Singer’s middle name – now manages $ 34 billion.
Elliott may invest in all kinds of assets, his name remains associated with an ultra-controversial practice: that of so-called “vulture” funds. In 1996, he attacked a State, a great first: he bought at low prices on the financial markets loans issued by Peru, then in great difficulty; he then demanded before various courts – and obtained – that the country repay all of its debt. Result? $ 56 million earned for $ 11 million spent. A story that has been repeated in Congo-Brazzaville.
In December 2001, Argentina experienced a terrible economic crisis, saw a succession of three presidents of the Republic in eleven days and took the decision not to repay its 100 billion dollars of public debt. No one wants his loans any more, except Elliott who buys them back on the markets for three times nothing. While most creditors agree to be reimbursed only 25% of the loan, Elliott refuses. He takes cases to courts all over the world, going so far as to seize an Argentinian navy ship that is calling in Ghana. He wins after fifteen years of guerrilla warfare. At the end of the day, a gain of some $ 2 billion. For about $ 80 million invested.
Elliot has also become one of the scarecrows of large American or European groups. Following in the footsteps of the pioneer Carl Icahn, Paul Singer has become one of the main “activist funds” on the planet. Their method? Take a small stake in a company, sometimes just a tiny part of the capital, and then make noise, a lot of noise, to weigh on the management of the company or its directors and they change the strategy of the group. To obtain, for example, an exceptional dividend, share buybacks, the resale of an activity to improve the profitability of the whole … In short, to boost the stock market price.
One of the last victims of Elliott is called Heinrich Hiesinger and was, until last week, the boss of the German conglomerate ThyssenKrupp (steel industry, submarines, elevators…). Even though Elliott had only 3% of the capital of this group employing 160,000 people, he loudly denounced the company’s strategy. And caused the departure of the boss.
Paul Singer can boast of being one of the rare businessmen to have made Vincent Bolloré fold. Elliott may hold only 9% of the capital of Telecom Italia against 24% for Vivendi (controlled by Bolloré), the American fund succeeded in May in taking control of the supervisory board of the Italian operator, with the support of the government. .
Singer is known as a very longtime Republican Party financier. Close to liberal ideas, in favor of gay marriage, he fought Donald Trum’s candidacy for the primaries. Before reconciling with him once the latter arrived at the White House.
AC Milan is not the only football club where Elliott has put money. In Lille too, he loaned funds to businessman Gérard Lopez so that he bought the local team, not really in good financial health since. With, in the end, the same outcome as in Milan?
Paul Singer is one of the signatories of The Giving Pledge: he has pledged to give at least 50% of his fortune to charities, like Warren Buffet, Bill Gates, or other powerful activist investors like Carl Icahn or Chris Hohn .