William Foley - the billionaire in our vines

JOHN SAKER
Last updated 10:13 12/12/2011
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CRAIG SIMCOX/Fairfax NZ

EYES OPEN: Bill Foley sees many more investment opportunities.

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The new laird of Wharekauhau wails. "I wish I had more depth!"

American billionaire William P Foley II (Bill to pretty much everybody) has been fielding those annoying little questions that writers of profiles (this one, anyway) like to ask.

What do you enjoy reading? "Military history - I've just finished The 900 Days about the siege of Leningrad."

Favourite music? "Country and western, especially female singers like Patty Loveless and Gretchen Wilson."

It's the last reply that brought on the depth wish. "Country and western! Why not Beethoven's 6th or something?"

He's joking, or is he? After talking to Foley for a couple of hours, I'm left feeling he's quite comfortable with who he is. Also that he's utterly unpretentious (Exhibit A: the white T-shirt under the old V-neck with a few stains on the sleeve) and speaks his mind. At one stage, he says: "I'd love to be a writer. I've got a book I've been fooling with forever."

I do think he harbours some small regret that all those years of sitting at America's corporate poker table left parts of him unexercised. If so, that awareness itself reflects a degree of depth. What's more, Foley is now cashing in his very large of stack of chips. No, he's not about to enrol in a Beethoven appreciation course; he's found himself another gaming table - a far more convivial one, though not without its own tough odds.

Wine is what Foley is increasingly about these days. He's collecting wineries, with collateral dabblings such as his purchase last year (with two other parties) of Wharekauhau, the South Wairarapa luxury lodge. It was reported at the time to be worth more than $24 million.

The club of wealthy Americans who have invested in the New Zealand wine industry is small and discreet. It includes Las Vegas casino magnate Glenn Schaeffer, who is behind Nelson's Woollaston Estate, and Wall Street tycoon Julian Robertson, who owns Wairarapa's iconic Dry River winery and Hawke's Bay labels Te Awa and Kidnapper Cliffs.

Foley gained membership only recently. His first acquisition was the New Zealand Wine Fund in 2009. Previously a private investment vehicle for wealthy individuals, the entity houses a cluster of Marlborough brands including Vavasour, Dashwood, Redwood Pass, Boatshed Bay, Goldwater and Clifford Bay. For good measure, Foley also bought a 50 per cent stake in the seasoned New Zealand wine distribution company EuroVintage.

This year, he added to the portfolio pioneering Martinborough winery Te Kairanga, and now runs all his New Zealand operations from the Te Kairanga office. And he's not finished yet.

"There'll be some more opportunities. I'm looking for appellations or locations. Martinborough is perfect - it has a great history for pinot noir. So that's covered. I would go to Central Otago, but I'm all about not stressing out trying to get somewhere. In Marlborough I would keep on going. I'd buy more vineyards - if there was a good brand available I'd buy that and really try and build up my production base, get the company doing three-quarters of a million cases in New Zealand so we've got some size and mass. And maybe add some more distribution horsepower. So that's sort of my idea for New Zealand."

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At this time of pain and price cutting in the New Zealand wine industry, that manifesto seems barely credible. Here is someone who wants to invest where others have been losing their shirts, where scared banks are calling the shots on highly leveraged operations, where half of Marlborough, New Zealand wine's beating heart, seems up for sale.

That's the way Foley likes it.

He first came to this country in 2001, intrigued by the quality of the New Zealand wine he had tasted in California. He started the trip in Central Otago and took in several wine regions. In the Wairarapa he found much to admire, though not the journey over the Rimutaka Hill ("I much prefer to come in by chopper"). Smitten by the Ata Rangi pinot noir - which remains his Desert Island New Zealand Pinot - Martinborough's aptitude for the grape excited him. Foley's goal now is for Te Kairanga to produce a pinot the equal of (or better still, superior to) Ata Rangi.

On that tour he stayed at Wharekauhau for the first time, loved it, and idly thought what fun it would be to own the lodge with its accompanying sheep station. He also talked to several wineries about investment possibilties. His chequebook, however, never left his pocket. He already had a wine foothold in California, and was interested in establishing an annex in New Zealand but Bill Foley was in no hurry.

That changed after 2008. That year's monster vintage burdened New Zealand wine with a massive oversupply, while the global financial crisis added "complex notes" of its own. Once proud brands were relegated to discount bins. The rush to get in had become a rush to get out. The stage was set for Foley to go bargain hunting. "Some people say I'm cheap. I'm always trying to find a value purchase and get some assets. It's a good time to buy."

Foley's own introduction to wine came in the mid-1980s, relatively late in life. A friend suggested they have a white Burgundy and Foley, a wine ignoramus whose glass usually contained scotch or vodka, found his interest piqued. He began tasting, talking and learning. "I knew nothing, it was news to me that white Burgundy was made from chardonnay and red Burgundy from pinot noir." A visit to Burgundy followed and his interest spread to Californian (and eventually, New Zealand) versions of those grape varieties.

Besides his enjoyment of wine and a conviction that done properly it can make good business sense, there are other reasons for Foley's late midlife (he's 67) sideways plunge into vats and vineyards.

He was, he says, ready to move on from the businesses that had elevated him to the super-rich category.

Fidelity National Financial Inc (FNF) is a provider of title insurance, a form of insurance commonplace in America that covers you in case something dodgy emerges in regard to the title of a property you own. It was a small acorn when Foley, who was practising law at the time, bought into it in 1984. Under Foley's leadership (he was CEO between 1984 and 2007) it burgeoned, as the noted "deal addict" made one canny acquisition after the other. It is now No 398 on the Fortune 500, a list of America's largest companies.

For Foley's part, in 2004 he was placed fourth on Forbes magazine's list of CEO compensation, earning a total of US$179.56m (NZ$240m) that year. He remains chairman of FNF.

Over the years his interests spread into other spheres. Generally, they have been businesses that have weathered the recent global financial tempest well.

"In the mid-90s, when I was learning about wines, I said: 'I'm going to retire - the title business is kind of boring, the market's no good, and I've got to get my kids out of school in Orange County' . . . They were public schools and my kids weren't learning anything. So we moved to Santa Barbara. That's where I got into the wine business."

The step from consumer to producer came in 1997, when what was to evolve into Foley Family Wines was formed and acquired a winery in the Santa Ynez Valley in Santa Barbara County.

As he gained experience in producing and selling wine, he was beating an orderly retreat from other businesses.

The big wine push began in 2007, when further purchases came in rapid succession. Most of them have been made in California's glamour regions, Napa Valley and Sonoma, and include cult brands such as Chalk Hill and Merus. By production volume, he now ranks among the top 30 wine producers in the US. In January, Foley was named Man of the Year for 2010 by the American magazine Wine Enthusiast.

"I love land," Foley cries, gesturing to the open vista before Wharekauhau, beyond which the waters of Palliser Bay look typically restless. It's a happy cry, a cry of liberation even. "I grew up on a cattle ranch in west Texas. I love wide open spaces . . . I love going in to the vineyards with our viticulturists and winemakers, looking at the grapes . . . It's a high for me. I get immediate gratification.

"The high of doing a successful business deal spikes up and then once you're done you have to find the next one. In the wine business, every day there's something to be done. It's a process. And of course, I get to be a deal guy too."

Family is also a significant factor in the wine equation. Foley and his wife, Carol, met in the late 1960s when she was a United Airlines flight attendant. They were married 42 years ago near her hometown in the state of Washington. They had four children (two boys, two girls) in rapid succession.

They are a tight family, and wine is bringing them closer. One son, Rob, runs the tasting room at Chalk Hill, and Foley is confident daughter Courtney and the youngest, Patrick (aka William P Foley III), will take up roles with Foley Family Wines.

"Courtney has been on the sales side at Young's Market (a West Coast wine and spirit distributor). I want to figure out a path for her. I'm lobbying Patrick to get that graduate diploma in oenology at Lincoln, then work harvests in New Zealand. Trouble is, he's got to learn how not to drink all the product.

"My kids are all workers. None feel entitled, but I want to make sure the people around them don't think they're entitled. They have to work their way up and learn the way everybody else does."

A ring on Bill Foley's right hand gives a strong clue to the inner man. It's his class of 1967 graduation ring from the storied army academy, West Point.

Foley was a reluctant cadet. He was in "goof-off" mode as the clock ran down on his senior year in high school and his father suggested he apply for a place in a military academy. Partly to irk his dad, a career air force man, Foley replied: "I would only go to West Point  that's where tough guys go." He secretly hoped, and expected, he would never get in, but an astonishing run of bad luck for those ahead of him on the waiting list saw him enter the gates of West Point as a "plebe" (freshman) in 1963.

"The dream of most of the class was to be there. I wasn't even interested. Once there, I hated it. All I wanted to do was get out, but it was easier to stay than quit. So I was in a group whose attitude was 'I'm here, but I'm going to do everything I can to rebel and not do what they want me to do'."

One compensation was military history, a subject at which Foley excelled. A semester spent studying Napoleon absorbed him. Later, he would name one of his companies Cannae, after the clever, strangling victory achieved by Hannibal over Rome in the Second Punic War.

After West Point, he was spared the horrors of Vietnam after failing a physical ("I couldn't fly because my eyes weren't good enough"). Thirty of his 582 classmates lost their lives in the conflict; the others remain a close group. "I have great friends. I can call any classmate anywhere and ask for something and they'll do it and I'd do the same for them. It's a four-year bond that's hard to describe. And my class was a very successful class.

"West Point honed me. It got me thinking the right way - how to lead guys into combat and make instant decisions. I can prioritise, I can multitask. I do a good job of identifying a problem and seeing things in three dimensions.

"It also taught me how to delegate. In my businesses, I delegate people not only responsibility but also authority. Then people have to perform. If they perform, they survive, they achieve and they're rewarded. So I'm all about team-building and letting people be masters of their own destiny. West Point taught me all that  but at the time I hated it."

Foley donates regularly and generously to West Point. He has done similarly to the Republican Party over the recent past, though doesn't feel so inclined at present. "Right now, I really don't support much of anybody in politics. I'm disgusted with all of them."

I tell him Robertson and Schaeffer, his compatriots and confreres in New Zealand wine investment, have given generously to the arts in New Zealand. Does he feel a similar philanthropic urge coming on?

"Give me a while. I would probably do something related to business, maybe help with the business school at one of the universities. I hate to say that because I know what's going to happen now  'Bill, we just read about you and we have a naming opportunity'."

For Bill Foley, you get the feeling the opportunities are just going to keep on coming.

- © Fairfax NZ News

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