Afternoon:
9°c
Some say you're the most networked man in London, I tell David Giampaolo. He grins and shakes his head.
“I'm not the most networked man in London but I do know a lot of people. I'd never be so arrogant as to say it. But it's true, I am quite networked because of the business of Pi.” He adds hastily: “But I didn't wake up one morning and say: Hey, I want to meet a lot of people.' It's just through the Pi club that I get to meet most leading politicians, corporate titans and major financiers…”
To spend time with the charming, personable, silky-smooth Giampaolo is to be in the presence of an irreversible force. His famous friends and contacts trip off the tongue: Sir Stuart Rose, Sir Martin Sorrell, Brent Hoberman and Jon Moulton. All of them among the 300 members of his super-elite Pi Capital investment club. (The Pi stands for Private Investors, he explains helpfully, before I am carried back to maths lessons at school and not the foggiest idea why we were studying something called Pi).
They each pay £1000 to join and £4000 a year. For that, they get to go to a host of private lunches, dinners, seminars — usually with a starry speaker (Willie Walsh, Boris Johnson, George Osborne, Michael Spencer, Jim O'Neill, Sir Richard Branson are recent ones), and of course to meet each other.
They also receive the chance to invest in ventures that Pi puts their way. They get a one- or two-page email summary, a “teaser” says Giampaolo, of a “very high-level investment opportunity”. All 300 receive the bulletin but not all put up their money. “Of the last 20 deals we've done, there's a sweet spot' of 20 to 45 members who commit. Some deals attract under 20, some attract over 45. That doesn't matter — what matters is that all the members have the opportunity to invest.” The minimum investment is usually £25,000, the average is £50,000. The most an individual has invested is £1.5 million.
Each year, 200 possible punts cross Giampaolo's desk in his office in Berkeley Square. Before the downturn, Pi was typically investing in four or five a year. In the last two years, it's gone into just two. “The members aren't joining in order to do deals. They want to preserve their wealth and make money. We don't rely on transactions. So in the last two years, I've offered only two. That's not a position of weakness but a position of strength — I've thought, in this crisis, only two deals were suitable for Pi members.” Of those two, one was in an early stage fund, Oxford Capital Partners, and the other was in the Better Capital private-equity vehicle that Moulton floated in December. “We're not like other private-equity groups. We don't have to invest,” says Giampaolo. “I'm not sitting here with a pile of money I have to invest.”
Seven people work full-time for Pi, and Giampaolo draws a salary of £120,000 a year. He is, though, far richer than that. How much? He won't say, but his smile is broad.
He's an American, who grew up in Florida and has been developing and running businesses since he was 16. He left school to start his own gardening firm in Miami. “I figured that everybody in Florida has a yard and some shrubs.” But it was so hot in the summer he had to find an alternative. He got the weight-training bug and became a gym instructor, helping with the running of the small gym he was using.
With the backing of others, he opened his own gym, then two more. Eventually, he sold them and joined Bally Total in Chicago, then the world's largest health club operator. In 1987, Bally Total commissioned Bain, the management consultants, to see how the company could best cash in on the exploding fitness fad. Bain identified the UK and Japan as likely huge markets. “Nobody spoke Japanese so we said we'd begin with the UK,” says Giampaolo.
He came here and opened the country's first American-style gym at the Barbican. (In typical upfront fashion, he wrote to Princess Diana and got her to launch it.) He's stayed ever since — today he lives in Kensington (he's divorced with two children, and the family also have a house in California).
Giampaolo opened more clubs and started a gym equipment business in Europe. He went on to buy and sell health clubs around the world. Today, he is still a large shareholder in Fitness First — the world's biggest gym firm (it's in 21 countries) — which was sold to management in an £835 million private equity-backed buyout. Pi also has a stake in Fitness First.
In 2002, he says, “for the first time in my life I found myself with the time and money to invest in a variety of businesses”. He came across Pi, which was then a private-equity house with 70 clients. He took it over and turned it into a club.
“Pi back then was transactional only. It did no lunches, no dinners — there was none of the esprit de corps that we now have. I felt something was missing, which was how can we get more out of being in private equity. Pi evolved into a club with primarily wealthy and high-achieving members.”
There's nothing funny or secret about it, he says, although he won't let me take away the membership directory that all members receive and reveals a roll-call of many of the luminaries of London business, complete with biographies, interests and contact details.
“Pi itself is a tiny concern. But do the math — the power is not in Pi but in the members. They've got real influence, wealth and connections.”
They also like the peer-to-peer networking and privacy. “In January, we had John Varley to dinner. There were 70 of us at Claridge's under Chatham House rules. They could talk with the CEO of Barclays, one on one — and could let rip if they wanted to.”
Some members, he says, he sees regularly, away from the functions. They will just drop by for a chat, to share a problem, seek his counsel (he comes across as someone who is a good listener and who cuts to the chase).
But why do the investing bit at all — why not stick to being an exclusive club? “Because the average wealthy individual is very busy, they may have limited investing experience and they are constantly looking for an opportunity to de-risk their investments. One individual on their own can't get the access to the opportunities we have or the time to study them.”
Usually, he will admit around five new members a month. They've normally been referred by existing members. “They will come for a coffee and to talk.” If they display “the same interest in global themes, philanthropy, wine, food, the arts and travel, and the same attitude towards wealth preservation,” they will get the nod. “Despite being successful in their own field, they're often looking to benefit from the intellectual exchange with others from different fields. Most people in their careers are very concerned with the vertical, Pi enables them to spread themselves, to look at the horizontal.”
Once Giampaolo gets to 400 members, he will stop — after that he says, he won't feel as though he knows them all. But that won't be the limit for Pi — he's planning other clubs in Mumbai and Singapore.
As I leave, the chairman of one of the big four accountants is waiting patiently to see him. A member? Of course, Giampaolo replies.
THE LIFE AND TIMES OF DAVID GIAMPAOLO
Born: 1958
Education: Cooper City High School, Florida
First job: Running his own gardening firm
Key moves: Set up gym called The Gym; opened and sold health clubs; joined Bally Total Fitness; started The Barbican Health and Fitness Centre in London, later sold to Holmes Place; founded European health clubs and gym equipment businesses; involved in buyout of Fitness First; chief executive, Pi Capital
Hobbies: Swimming, ice-skating, surfing, wine, music
