RICH PICKINGS: Packer's handy profit plays

The sale of cosmetics company Jurlique is just one example of many successes produced by the Packer family's particular style of venture capital.

The mythical story I most love about the late Kerry Packer concerns the businessman who approached Packer in an airport lounge one day with a simple request.

"Kerry, I’m about to have a really important meeting with someone. It would really impress this bloke if you came over and said hello.”

Packer agreed and a few minutes after the meeting started he sauntered over to help his new friend.

But before he could speak, the man waved him away.

"Not now Kerry, can’t you see I’m in a very important meeting.”

The story has been retold so many times there’s probably no chance it's true, but it’s a great little fable that underlines how important the backing of men like James and Kerry Packer can be.

The canny company-backing ability of the Packer men was underlined again this week with the sale of Australian cosmetics company Jurlique to Japan’s Pola Orbis.

The Packers bought into the company in 2002, acquiring a 24 per cent stake for $25 million. At the time, it was a calculated risk. Founded by Janice Smith and Dr Jurgen Klein in the 1980s, the business was a leader in the movement towards 'natural' cosmetics products and was priced very much at the premium end of the market. Its push into Asia was somewhat risky, but proved to be an inspired move.

By selling its stake in the $335 million takeover, James Packer’s investment vehicle Consolidated Press Holdings will take $75 million off the table – a profit of $50 million.

"This has been a very good investment for CPH. Jurlique is an excellent brand,” Packer said after the deal.

"This continues the rationalisation of CPH's investment portfolio."

Well, sort of. The Packer family’s collection of private assets has been slimmed down but there are still a few nice assets, including retail group Pretty Girl Fashion, a 73 per cent stake in the Perisher ski field and an investment in online retailers Catch of the Day and DealsDirect, made in April and May this year.

It had appeared that James Packer might not have inherited his father’s love of angel investing. Kerry was famous for buying little assets on the cheap and selling them for handy profits, but James has now sold many of the investments they had going when Kerry died, including Jurlique and Challenger Financial Services.

However, the investments in DealsDirect and Catch of the Day could symbolise something of a return to the Packer style of venture capitalism. Here are some of the big hits the Packers have had over the years.

Puma

The Packer family’s famous investment vehicle Publishing & Broadcasting Limited used to house an incredibly diverse range of assets, including a stake in German sporting goods giant Puma. PBL’s association with the company started in 1994, when it bought a stake in Hollywood film studio New Regency; two years later, New Regency bought a stake in Puma. PBL would go on to buy its own stake in 2001 and sell it two years later for $57 million, booking a $32 million profit. In 2004, New Regency would hand PBL $140 million for the sale of New Regency’s stake in Puma.

Seek

James Packer may never completely live down the One.Tel disaster, but his record in terms of tech investments is actually pretty good. His best investment was clearly online job classifieds company Seek, in which PBL invested in August 2003, buying a 25 per cent stake for $33 million. James Packer sold out six years later as he sought to defend Consolidated Media from a potential takeover, taking $441 million off the table when the shares were at $5.08. Packer’s only sin is that he probably sold too early. Seek shares peaked at about $8.50 in May 2010 and are still at $5.95.

PC Tools

James Packer made a profit of $40 million on a $20 million investment when entrepreneur Simon Clausen sold his computer security company PC Tools to US software giant Symantec for around $300 million. The PC Tools investment was a canny play; Packer bought his stake in an investment round in December 2005 and tripled his money in less than four years.

Carsales.com

James Packer didn’t get to enjoy the fruits of this investment, but it was still an inspired pick. PBL invested $100 million in the business across 2005 and 2006, two years before Packer split his casino and gaming businesses and effectively exited PBL. Nine Entertainment Company (the renamed media wing of PBL) sold this stake for $562 million in March this year.

Challenger Financial Services

While this isn’t an angel investment, it’s worth noting that Packer did sell a parcel of options in Challenger this year for a profit of about $80 million.

These are some of Packer’s winners, although it must be pointed out that he has had his fair share of losers. One.Tel screams out as the obvious example, but the family’s investment in Gold Coast property developer Sunland was also a dud; Packer bought in at $1.87 and sold out at 80c.

However, you get the feeling that these little dabbles are in Packer’s blood. I’m sure there’s someone in an airport lounge somewhere who's got a great deal Packer won’t be able to refuse.