"I did it for internal reasons to manage some of my own capital better," he says. "But in reality, the business made me manage the capital worse, not better, because if you have outside money to manage, you have to be much more careful and cautious."
Two years later, as the stock market's bull run was nearing its peak for the decade, Berggruen moved to cash in. He and business partner Martin Franklin set up Freedom Acquisition Holdings Inc., a blank-check company that went public in December 2006. It raised $528 million, a record for a blank-check-company IPO at the time. The next year, Freedom purchased U.K. institutional investment manager GLG for $4.15 billion.
"This is a bit like big-game hunting," Berggruen says. "You look for companies of a certain size that deserve to be public."
El Pais
Berggruen and Franklin played the blank-check game three more times: Their Liberty Acquisition Holdings Corp. raised more than $1 billion on the American Stock Exchange in December 2007 and acquired Spanish media company Promotora de Informaciones SA-which owns El Pais, the country's largest paid-circulation daily newspaper-for $1.29 billion in November 2010.
Then came Liberty International Acquisition Co., which went public on the NYSE Euronext in Amsterdam, raising $879 million, in February 2008. It acquired U.K. insurance provider Pearl Group Plc-now called Phoenix Group Holdings-for $1.45 billion in September 2009.
Finally, they founded Justice Holdings Ltd., which raised $1.44 billion-another record amount-on the London Stock Exchange in February. It has yet to make an acquisition.
Berggruen and Franklin's investment in Freedom didn't work out as well as they had hoped. As founders, they were entitled to purchase shares of Freedom at a deep discount. The stake they spent $54.5 million to acquire was worth more than $270 million in the days immediately following GLG's reverse merger with Freedom.
Then, staff defections from the renamed GLG Partners Inc. and the global credit crunch caused the firm's shares to plunge 90% from November 2007 through mid-December 2008. Two years later, U.K. hedge-fund manager Man Group Plc bought GLG for just $1.13 billion, about $3 billion less than what Freedom had paid for it. Berggruen made $1.8 million in the end, and Franklin, who was given additional shares as a director of GLG, pocketed $6.2 million.
"All of the alternative investment managers, including GLG, got decimated," Franklin says.
Long before dabbling with blank-check companies, Berggruen had already made enough money to buy all of the trappings of the ultrarich: a Fifth Avenue apartment in Manhattan, a mansion on a private island near Miami, the Gulfstream IV and artworks by Damien Hirst, Jeff Koons and Andy Warhol. Berggruen says that living amid all of that luxury turned into a burden and didn't make him happy.
"I understand the human instinct to want to create a nest and possess things, to show them off," he says. "But for me personally, it became less and less interesting."