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The Entrepreneurial Exchange

The Two Sides Of Tom Hunter

SCOTLAND'S richest man works in a very ugly building which used to be a chemical plant on a large industrial estate in the middle of the Ayrshire countryside. Entering the building is like a firsttimer walking into Dr Who's Tardis. The main door looks like a side entrance, but once inside you realise you are entering a modern labyrinth.

I am led to Sir Tom Hunter's comfortable, airy, spacious office. Just outside is a mock-up of one of his USC stores - one of a number of chains he owns.

The building was originally the headquarters of Sports Division, the retail chain he created and sold in 1998 to JJB Sports for £290m, Hunter receiving £260m of that.

Since then he is said to have quadrupled his value through a series of astute investments, mainly in property and retail, with his company West Coast Capital.

Though it might have been tempting to retire to sunny Monaco, Hunter and his wife Lady Marion stayed in his home country to bring up their daughter and two sons.

He is rarely out of the headlines, whether it is a corporate bidding battle such as his tussle with Tesco over Dobbies Garden Centres, or one of his philanthropic activities investing millions to help lift Africans out of poverty with his new pal, former US President Bill Clinton.

Hunter laughs when I ask why he has kept his HQ in such an unusual venue - he owns both the building and the industrial estate it sits in.

"It is ten minutes from my home," he says. "It is cheap space and has been very lucky for us. The investment bankers who visit us from London raise a few eyebrows, but it is all part of their education."

Although the Tom Hunter story is now part of Scottish business history, the fuller tale reveals some interesting aspects about his character.

His father Campbell, who still works with him, ran two grocers shops and a mobile shop in New Cumnock, which was still a mining town when he was growing up.

Even as young as six or seven, Hunter was very aware of the importance of the family business and it was always the talk around the dinner table.

"That was the big education," he says.

After leaving school with his highers, Hunter got a degree in economics and marketing from Strathclyde University. Today he does not think his degree prepared him for anything he went on to do, which is why he is trying to change that by opening the Centre for Entrepreneurship at Strathclyde University.

Leaving Strathclyde he found another course for unemployed graduates at Glasgow University to be much more practical.

"That taught you about cashflow and doing the spreadsheets and you actually went to work in real life companies."

Meanwhile, the miners' strike hit his father's business badly and he had to sell up. Campbell backed another businessman selling footwear. He did the books and worked on a stall in Irvine indoor market. When his son came home from university at the weekend, he looked at the sales returns and noticed that trainers were a big seller.

"That was my luck," recalls Hunter, who realised there was a big opportunity.

In 1984 he borrowed £5000 from the Royal Bank of Scotland and another £5000 from his father and approached a number of retail chains to see if they would display his trainers on a stand in their stores - he could not afford to buy one himself at that stage.

After a number of rejections, Keen Jeans in the north east of England offered to take a stand and the business got off the ground. But Keen Jeans - his only outlet - later went bust.

Hunter learned not to put all his eggs into one basket.

"Being a business angel wasn't what I wanted to do. I perhaps thought I had a bit of the golden touch, which was very quickly dispelled.

"It also made me get off my backside and see who else was out there," he says. "I got in with people like Fosters Menswear and Concept Man, the chain that is now River Island.

"These were much primer high street stores. My first customer going bust I thought was a disaster, but as it turned out it was a good turning point."

Five years after starting his business he opened his first Sports Division shop in Paisley and two years later his first store that sold clothing. In 1993 he opened his first superstore and in 1995, with the help of retailing chum Sir Philip Green, he bought the Olympus Sports chain.

That deal transformed Sports Division which became the number one sports chain in the UK, growing to 250 stores.

Hunter had got to know Green when he bought the What Everyone Wants chain and used to come up every week to Glasgow. So when Olympus wouldn't take his bid seriously, his new friend put them right about Hunter.

At the same time Hunter started a relationship with HBoS which has now become a major part of his business ventures.

Prior to the Olympus deal he had been a Royal Bank customer. He met Gavin Masterton, then governor of the Bank of Scotland, when he went with his friend David Murray to see Rangers play Juventus in Italy.

"Gavin and I got on great and he said whenever you need anything just let me know. I said I am very happy where I am.

"When the Olympus deal came up, Royal Bank wouldn't back it, so I was scurrying about asking David Murray who was that guy we were with. And Gavin basically gave the job to Peter Cummings and the rest, as they say, is history."

Three years later Hunter received an offer he couldn't refuse from rival JJB Sports and became seriously rich.

He admits that after the deal he lacked a proper personal strategy.

"I was only 37 and my business had been my whole life. I had not worked for anybody else apart from my dad, so I didn't really have that many skills. It was kind of scary to be honest with you."

Initially he became a business angel, which he admits was a bit of a disaster.

"It certainly wasn't what I wanted to do. I perhaps thought I had a bit of the golden touch, which was very quickly dispelled."

Hunter said it really took him about two-and-a-half years to re-educate himself about what he wanted to do.

"I travelled a lot and spoke to a lot of people and was introduced a lot more to philanthropy. I met Vartan Gregorian, New York president of the Carnegie Corporation, which was kind of transformational."

The Carnegie Corporation was set up by Scots-born entrepreneur Andrew Carnegie who, like Hunter, became extremely rich relatively young and went on to be one of the world's greatest philanthropists.

Hunter's conclusion was to follow the twin track of making more money and still being a wealth creator but for the real purpose of philanthropy.

On the business side he formed West Coast Capital with property specialist Jim MacMahon and on the philanthropic side he created the Hunter Foundation and recruited Ewan Hunter (no relation).

"Those were big, big decisions and with hindsight they were fantastic ones," he says.

Both in philanthropy and business Hunter's strategy is to work in partnerships. In property it is with developers like Nick Leslau, Tim Walton and Julian New is and also closely with HBoS.

"These were relationships that Jim had going back many years.

Jim owns that part of the business in terms of responsibility, but the way we work is we chat all the time about things."

In retail Hunter owns the Wyevale garden centre chain, USC, Office, D2 and Qube and has interests in House of Fraser and BHS.

When looking for a business to invest in, Hunter searches for the magic bullet of a growth sector and tries to see opportunities others haven't spotted.

"The UK retail market is very mature. Over the past ten years ownership of the high street has changed dramatically. Currently you just need to look at private equity trying to buy Boots. You would never have dreamed of that.

"A lot of inefficiency has been taken out of the market through private ownership. It is a very, very competitive market.

"One of the reasons we invested in garden centres was because it was something that hadn't really been touched.

"We need to try to be a lot cleverer and we commissioned some research about the changing demographics in the UK and the grey pound came up - garden centres fit into that agenda.

"We are trying to buy into a train and see what businesses over the next 20 years are going to benefit from this change in demographics.

"That is another differentiator - we don't need to get in and out in three, four, or even five years time."

Although he is a philanthropist, Hunter says everything the Hunter Foundation does is seen as an investment and he wants to see a return on that investment.

"We don't see it as giving money away. Again, it is not some rich bloke deciding that he knows best about education - that is not how I made my money and is not how I am going to run my foundation."

The foundation's first project was helping to fund enterprise education in primary schools.

"Educationalists were doing this but in a very small area. The outcomes as seen by them were fantastic, but I said this is not good enough. It is just working for the select few.

"So I went to the Executive and said we will take the risk on this - governments don't like risk - but if after three years we prove the following points, which will be externally validated, we want you to adopt it as policy because we are not substitutes for the tax payer.

"The Executive agreed and now every single primary school pupil in Scotland gets at least two modules of enterprise education and it is being totally paid for out of public funds."

The foundation is now turning to secondary education under the Determined to Succeed agenda.

"I said there is no point lighting the torch in primary school and then putting it out in secondary school. Determined to Succeed is something a bit different - it is wider. I spend my life explaining enterprise education isn't about how to become an entrepreneur. It is cross curricular and it is about building confidence, a can-do attitude and a bit of aspiration."

Hunter was also a founder member in 1995 of the Entrepreneurial Exchange to help nurture Scotland's aspiring business people.

"I think what the Exchange does is very important. It is for entrepreneurs, by entrepreneurs.

"The very powerful thing about it is that you can only become a member if you want to grow your business. It is about people who have ambition.

"The second thing the Exchange does is put people together who have had experience with those who are looking for experience.

And that exchange of information in a very non-threatening environment is so powerful.

"I still really enjoy doing the focus dinners where people get together round a table and say it is selling your company. There will be two entrepreneurs who have sold and maybe ten entrepreneurs looking for that information. That is so, so powerful."

Increasingly over recent years Hunter has made his views about the future development of Scotland's economy very public.

He believes that Scotland has had 100 years of what he would call a dependency economy.

"My careers officer at school said go down the pit - there's a job for everyone, it's a job for life and a big pension. Someone else was taking care of you.

"That in my opinion is a bad thing, because that gives you a dependency culture. Now there are no more coal mines, no more steel making and very little ship building.

"There is a huge cultural shift in Scotland which frankly we have struggled to come to terms with and this is why we do so much in schools and primary because we need to re-educate a generation about a can-do attitude.

"Nobody is going to look after you and there isn't a job for life - there will be multiple jobs.

"It scares me to death that Scotland's public sector is bigger than its private sector. That is unsustainable and I don't think enough is made of that.

"So we have a culture of change to go through and that is tough and it doesn't happen in four years or in ten years, but it has got to start with education, hence our foundation works so much at looking to try to influence education policy."

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