Real life Gordon Gekko becomes billionaire

June 11, 2014 06:35 AM

James Tomilson Hill, the Blackstone Group LP (NYSE:BX) vice chairman who runs the company’s $58 billion hedge fund business, has emerged as a billionaire as the world’s largest private-equity firm and his art collection have surged in value.

Hill, who joined Blackstone after engaging in some of the biggest takeover battles of the 1980s, owns 17.4 million shares of the alternative-asset manager, according to filings with the U.S. Securities and Exchange Commission. The stake is valued at $585 million as of yesterday.

The 66-year-old, who’s credited with inspiring the look of Gordon Gekko in the movie “Wall Street,” also owns an art collection valued at about $500 million, according to seven appraisal experts. Hill and his wife, Janine, have acquired more than 100 bronzes and paintings created over a span of seven centuries by artists such as Peter Paul Rubens, Francis Bacon and Andy Warhol.

Hill declined to comment on his net worth.

“I don’t like to talk about the financial aspect of art,” the billionaire said in a separate interview about an exhibition of a portion of his collection at the Frick museum in New York. “Collecting art is a highly personal endeavor.”

Bacon, Warhol

The Hills started buying art in 1980. His collection now includes works by artists whose prices have skyrocketed in recent years. Bacon’s “Three Studies of Lucian Freud” became the most expensive artwork sold at auction, fetching $142.4 million at Christie’s in New York on Nov. 12. The next day, Warhol’s “Silver Car Crash (Double Disaster)” sold for $105.4 million at Sotheby’s.

Hill doesn’t own either, but his four Bacon paintings may be worth more than $140 million, according to two valuation experts familiar with the collection who asked not to be named because the information is private. Hill’s 1956 “Study for Portrait II (Pope)” by Bacon fetched 14 million pounds ($27.4 million) at Christie’s in London in 2007. Its current market value is about $60 million.

He bought Warhol’s 1962 “Campbell’s Soup Can (beef consomme)” for $340,000 at auction in 1996, according to Artnet Worldwide Corp. In 2010, a similar-sized painting from Warhol’s soup can series sold for $9 million at auction.

Frick show

His 34 bronze statuettes, from the 15th to the early 18th centuries, are on view through June 15 at the Frick Collection, a museum founded by earlier-era financier Henry Clay Frick. They are valued at more than $70 million, according to people familiar with the works.

Hill’s 1612-14 canvas by Rubens of a battle commander hangs at the Metropolitan Museum of Art in New York, where Hill is a trustee. The Rubens fetched 9 million pounds at Christie’s in London in 2010. Its current value could range from 15 million pounds to 20 million pounds, according to Johnny Van Haeften, a London-based art dealer. The Hills have promised a gift to the Met of the 14th-century resurrection scene by Giovanni da Milano, said Elyse Topalian, a Met spokeswoman.

“I don’t know many collectors who can spread their wings over that kind of time frame,” Richard Feigen, a New York art dealer who has known the Hills professionally and socially since the 1990s, said in an interview. “As collectors they are more sophisticated than most museums. In order for them to like something, it has to be world class.”

Blackstone billionaires

Hill is the fifth billionaire to be minted at Blackstone. The company was started in 1985 by Steven Schwarzman and Peter G. Peterson, who left the firm in 2008 to pursue philanthropic causes. Schwarzman, Blackstone’s chairman, has a net worth of $10.7 billion and is the world’s 114th-richest person, according to the Bloomberg Billionaires Index.

Tony James, Blackstone’s president, has a stake valued at more than $1.1 billion and sold more than $275 million of Blackstone stock since the firm’s 2007 initial public offering. Hill has collected more than $300 million in share sales, dividends and compensation since 2006. Jonathan Gray, the 44- year-old who runs the company’s real-estate business, emerged as a billionaire last year.

Blackstone has been the most successful of the large private-equity firms to expand beyond leveraged buyouts, gathering assets under management of $272 billion.

Harvard graduate

The firm’s stakes in companies from Hilton Worldwide Holdings Inc. to Pinnacle Foods Inc. have soared since the financial crisis as Blackstone improved operations and unprecedented central bank stimulus across the world inflated the price of real estate, stocks and art.

Hill’s business investing in and backing hedge funds has more than doubled since 2008 to $58 billion. Gray’s real estate group is also the largest of its type in the world with $81 billion and the firm has a $66 billion credit unit.

After graduating from Harvard Business School in 1973, Hill worked in mergers and acquisitions, rising to co-chief executive officer of Lehman Brothers Holdings Inc.

He became a “steely M&A gladiator who’d been in the thick of some of the most memorable hostile takeover battles of the 1980s, siding with Federated Department Stores in its defense against Robert Campeau and working with Ross Johnson, the CEO of RJR Nabisco, in the fight for control there,” according to “King of Capital: The Remarkable Rise, Fall and Rise Again of Steve Schwarzman and Blackstone” by Bloomberg News’s David Carey and John E. Morris.=

Bespoke suits

Hill, known for wearing bespoke Paul Stuart suits and a slick, combed-back hairstyle, “dressed the part to perfection,” according to the book. “Rumor had it that Gordon Gekko in the movie ‘‘Wall Street’’ was styled after Tom Hill,” the authors wrote.

He’d also been an architect of some of the most iconic friendly mergers of the age: Bendix Corp.’s $1.8 billion merger with Allied Corp. in 1983, American Stores’ $2.5 billion takeover of Lucky Stores in 1988, and Time Inc.’s $14 billion merger with Warner Communications in 1989.

Hill joined Blackstone in 1993 and has grown Blackstone Alternative Asset Management, which invests in and backs hedge funds, to be the largest allocator in the $2.7 trillion industry.

Good, great

“As a collector, your first priority is to determine what turns you on,” he said. “What am I passionate about? What is good and what is great? If you’re thinking about an increase in value, you shouldn’t buy it. It’s the wrong reason.”

Initially drawn to Greek and Roman sculpture, the Hills were wary of the provenance and repatriation issues encountered by U.S. museums and private collectors. They decided to go after what they saw as the next best thing: Renaissance and Baroque bronzes.

At the same time, they chose eight post-World War II and contemporary artists -- Roy Lichtenstein, Cy Twombly, Willem de Kooning, Ed Ruscha, Brice Marden, Pablo Picasso, Warhol and Bacon -- to collect in depth. Over the years, they reduced their Picasso holdings and added Lucio Fontana, Mark Grotjahn and Christopher Wool.

In 1996, the Hills bought Hubert Le Sueur’s 17th-century bronze “Venus,” which was once owned by King Louis XIV, and Warhol’s 1962 soup can, within a month of each other.

‘Real synergy’

“What we wanted to have is a very high bar for quality, at least a nine out of 10,” he said. “We also wanted to see how the work fits in a dialogue with other art.”

The Frick show pairs sculptures by Italian, German, French and Dutch masters with postwar artists Twombly, Ruscha and Fontana as well as Old Masters.

“There’s real synergy between the bronze sculptures and postwar paintings,” said Denise Allen, the Frick curator who organized the exhibition. The installation is “replete with beauty, sense of animation and life,” she said.

In January, a 16th-century bronze “Samson Slaying the Philistine” attributed to Willem Danielsz van Tetrode fetched $3.3 million at Sotheby’s, setting the artist’s auction record.

“There were multiple bidders from all over the world,” said Andrew Butterfield, a New York dealer whose Butterfield Fine Arts specializes in Renaissance and Baroque sculpture. “It drew attention from people who have never collected Renaissance and Baroque bronzes.”

Top prices for these bronzes have hovered around $15 million for the past two decades, but more trade at $5 million than ever before, Butterfield said.

Several weeks later, the Samson piece joined the Hills’ Frick exhibition.

“I am ferociously competitive as a collector, just like I am in my business,” Hill said.

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