Kickboxing Oil Trader Pursues Knockout at New Hedge FundMatthew Brown
The impact of leather on leather imparts a pleasing crack as Pierre Andurand releases a combination of jabs and hooks onto pads being held by his coach. Powerful shoulders hint at a past as an elite swimmer in France.
He’s near the end of a 90-minute training session at Urban Kings, a gym he owns on the edge of central London, Bloomberg Pursuits will report in its Summer 2013 issue. The sweat flies off his face as he launches his 107-kilogram, 1.8-meter frame forward one last time before dropping, exhausted, to the mat.
The next morning, Andurand, 36, is at his desk in the offices of his hedge fund, Andurand Capital Management LLP, not far from Harrods, the upmarket department store in Knightsbridge.
He shows no ill effects from the previous day’s workout. He’s traded his plain black T-shirt and shorts for a dark-blue Ermenegildo Zegna suit and an open-necked shirt, his close-cropped hair and clean-shaven face completing the look of the man of finance that he is.
A preternatural calm in the office -- two soothing 3.5-meter (11.5 feet) fish tanks, a meticulously tended Zen garden -- barely hints at Andurand’s martial arts persona. He says kickboxing and money managing go hand in hand.
“A good trader needs to be curious and experiment with things,” he says.
Andurand Capital, which started doing business on Feb. 1, provides its managing partner with an opportunity to salvage his reputation as one of London’s most talented oil traders after his previous -- and now extinct -- hedge-fund firm, BlueGold Capital Management LLP, lost 34 percent in 2011. As for kickboxing, Andurand has poured $30 million into the sport’s biggest promoter, Glory Sports International Pte, in an attempt to turn it into a moneymaker.
Andurand, who’s chairman of Glory Sports, sees it as more than a business proposition.
He’s already made his mark as the trader who called the top of the oil market in 2008. He’s got his Bugatti Veyron, the most expensive street-legal production car in the world (base price: $1.7 million). He’s got his model wife, Yevgenia Slyusarenko, whom he married in a lavish ceremony outside St. Petersburg in 2011 at one of Catherine I of Russia’s former palaces (entertainment: Elton John).
In Glory Sports, he sees a legacy.
“I know it looks like I’m a flashy guy, but I know I’m not,” he says. “I’d be very proud if Glory really took off, because it would be something that stays beyond me and then you create something real.”
He’s got a way to go. Although Glory Sports -- less than a year old and with only seven events under its belt as of April 20 -- is the undisputed leader in kickboxing, it’s a lightweight compared with rivals such as Ultimate Fighting Championship, which was created in 1993 and bought in 2011 by billionaire casino-heir brothers Frank Fertitta III and Lorenzo Fertitta.
Glory Sports has 90 fighters under contract yet still hasn’t signed a major TV deal in the U.S. and offers pay-per-view only through its website.
By contrast, UFC last year had more than 400 fighters under contract and produced 14 televised pay-per-view events, bringing in $500 million in annual sales. At London’s Wembley Arena in February, UFC filled 10,000 seats. In March, Glory drew just 3,800 fans to the ExCeL arena across town.
Glory and UFC make boxing or Olympic-style wrestling look sanitized.
Kickboxing under Glory rules is a combat sport that allows punching above the waist and kicking and kneeing pretty much anywhere apart from the groin. Kickboxers wear gloves on their hands and nothing on their feet. The sport doesn’t allow attacks with elbows or holding of any kind for more than three seconds.
UFC -- which belongs to a separate fighting discipline, mixed martial arts, or MMA -- permits a more violent combination of stand-up fighting, wrestling and jujitsu that has inured audiences to chokeholds and the bloody consequences of an elbow to the face.
Glory matches are fought at a more frenetic pace than most MMA fights. UFC contests, for example, often descend into floor-based tactical battles that for casual viewers can be difficult to appreciate unless they have a background in jujitsu or Greco-Roman wrestling.
At Glory 5 (the fifth event in a global series) in London on March 23, there were four KOs in eight fights. At a UFC event in London a week earlier, by contrast, there was one KO out of five fights on the main card.
In the featured Glory event that March evening, U.S.-based Tyrone Spong knocked out Remy Bonjasky, a three-time grand prix champion in K-1, formerly the Japan-based organizer of the world’s biggest kickboxing contests.
Spong, 27, dominated the 37-year-old Dutchman with chopping leg kicks in the first round before forcing him into a corner in round two. Spong then unleashed a right that left Bonjasky unconscious between the bottom two rungs of the rope ring and later considering retirement.
Andurand started training in martial arts after graduating in 2000 from the Ecole des Hautes Etudes Commerciales de Paris, one of France’s top business schools, with an admission rate of 4 percent.
At the time, kickboxing was popular on the Continent. By last year, kickboxing was almost out for the count worldwide. Dutch-British fighter Alistair Overeem, the biggest name in K-1, had defected to UFC, and other stars, including Moroccan-Dutch Badr Hari, were also leaving the sport.
When Andurand speaks about martial arts, his eyes light up in a way that doesn’t happen when he talks about trading.
“I think good kickboxing fights are the most exciting to watch,” he says in accented English. “My bet is that most of the fans will agree with me.”
Having seen kickboxing on its knees and possessing the means to pump money into the sport, he decided to act.
“It was so sad to see the sport in the shape it was, and I wanted to do something about it,” he says. “Kickboxing deserves to become mainstream, but nobody ever tried to put the right structure and capital behind it to make it big.”
To that end, Andurand, together with Kuala Lumpur-based sports marketing agency Total Sports Asia and a few other investors, founded Glory Sports, which is based in Singapore. Glory Sports is a privately held company, and Andurand won’t disclose details of its accounts or its inner workings.
Through its acquisition of a few European kickboxing outfits such as Amsterdam-based It’s Showtime, Glory Sports now has “most if not all the best kickboxers under its roof,” Andurand says.
The money he has invested has mostly been swallowed up by the deals. He wants to raise an additional $20 million -- probably from private investors with experience in sports -- to bolster the business until it becomes self-supporting in about 2015, he says.
Under Andurand, Glory Sports has adopted some UFC-style features, most obviously the practice of signing fighters directly to the company to guarantee the best matchups.
In traditional boxing, of the sort that made Muhammad Ali and Mike Tyson household names, fighters sign with a management company and can choose to fight for championship belts from any of several boxing associations. As a result, the best and most popular boxers often don’t get a chance to fight each other.
In February, Glory Sports’ board appointed as chief executive officer Andrew Whitaker, a former executive vice president of World Wrestling Entertainment Inc., the company that launched the careers of Dwayne “The Rock” Johnson and Terry G. Bollea, better known as Hulk Hogan.
Although WWE features story line-driven combat as entertainment, not genuine sporting competition, Whitaker, who’s based in the U.S., says WWE-style marketing such as building stories around bona fide fighters can boost Glory’s popularity and revenue.
“Fans have a deep appreciation for athletes that connect with them on a personal level outside of the ring,” he says.
Andurand says he expects Japan to be Glory Sports’ No. 2 market. Japan is the birthplace of martial arts from karate to jujitsu, and it’s the former home not only of K-1 but also of Pride Fighting Championships, a forerunner to UFC. K-1 regularly attracted live crowds of 50,000-plus during its peak from 1997 to 2005.
After graduating from business school, Andurand began his foray into martial arts with Shaolin wushu, a fighting style said to have grown out of a fifth-century Buddhist monastery in China’s Henan province.
He also trained in capoeira, a Brazilian fighting technique, before discovering Muay Thai, a form of kickboxing practiced in Thailand that includes elbow blows, clinches and knee strikes.
His training culminated in a heavyweight bout in 2007 that was cut short by a dislocated shoulder. Another injury, this time to his knee, combined with the realization that black eyes aren’t a good look for a fund manager, persuaded him in recent years to stick to hitting pads, not people.
All the while, Andurand was making a name for himself as an oil trader. He launched his career in 2000, when he went to work in Singapore at J. Aron & Co., a unit of Goldman Sachs Group Inc.
Remaining in Singapore, he took a job at Bank of America Corp. and then at Geneva-based Vitol SA, the world’s largest oil-trading company. In 2004, he moved to London as a partner for Vitol. Four years later, he co-founded BlueGold.
It’s the Zen side of martial arts that Andurand displays on the trading floor, says Stephen Jen, a former foreign-exchange trader at BlueGold who’s managing partner at SLJ Macro Partners LLP in London.
“He may be the calmest risk taker I’ve seen,” Jen says. “Oil is a relatively volatile financial product, so you have to see the sometimes violent daily swings as noise. He’s really good at putting on a position early and sitting through the volatility.”
Andurand’s reputation as an oil trader was such that, in 2010, BlueGold raised the fees it charged new investors to 2.5 percent of assets and 25 percent of profits, above the industry norm of 2 percent and 20 percent, respectively.
His biggest year was 2008, when he correctly wagered that Brent crude had peaked at a record $147.50 a barrel in July. BlueGold raked in revenue as the benchmark contract tumbled 78 percent during the next five months.
Andurand’s firm was No. 12 in the Bloomberg Markets ranking of the world’s most profitable hedge funds that year and No. 13 in 2009.
“He made us a lot of money,” says Gabriel Garcin, a portfolio manager at Paris-based Europanel Research & Alternative Asset Management, a $550 million fund-of-hedge-funds firm. “When he became too big, we took the decision to redeem. We had some reservations about the way he wanted to diversify his portfolio through equities and other types of commodities, and not only the oil markets, which are his edge.”
Assets under management at BlueGold slid from $2.4 billion in early 2011 to $1 billion by the time it fell apart in April 2012.
BlueGold’s problems began in May 2011 when crude prices dropped almost 10 percent after Andurand had bet they would rise. Because of the size of BlueGold’s fund, it was difficult to adjust quickly, and attempts to control the damage pushed him further into the hole, Andurand says.
At the same time, Andurand’s relationship with his co-founder, Dennis Crema, deteriorated. Andurand keeps any lingering bitterness to himself.
“With any divorce, even if you have a good relationship before, it’s never too easy,” Andurand says.
With Andurand Capital, the celebrated trader is getting back to basics.
His new firm will charge investors the going rate of 2 and 20. To honor investors who stayed with BlueGold until the end, he says he’ll charge them no performance fees until they’ve recouped any previous losses. Andurand Capital’s focus will be mainly on oil, along with some other commodities and foreign exchange.
The fund had attracted more than $200 million from investors as of March 31. Andurand says he expects assets under management to rise to $500 million by year’s end. Keeping his trading and fighting sides in proper balance will be his priority, Andurand says.
Having outside pursuits isn’t necessarily a bad thing for a fund manager, says Odi Lahav, CEO of Allenbridge Investment Solutions LLP, which, though not itself an investor, advises others on investing in hedge funds. It’s something to be aware of -- “an amber flag,” he says.
“Just because you are funding a business, it doesn’t mean you are running it,” Lahav says. “You can hire someone else to do that.”
That’s where Whitaker comes in. Andurand says that while he’s providing most of the money for Glory Sports and will step in to veto decisions if necessary, he’s handed the day-to-day control of the business to his CEO.
“The key is that your hedge fund is your main focus, because you’re looking after other people’s money,” he says.
Andurand Capital returned 16 percent in its first two months of operation through March 31 as Andurand correctly guessed that the prices of crude in the U.K. and the U.S. would converge.
Reflecting on his trading returns, Andurand says: “I had such a good run for so many years, I thought, why doesn’t everybody do that? Then you take a big slap and you remember why. No one does well all the time.”
He says he knows that he’ll take a few hits in the markets during the coming months and years -- just as he will, no doubt, as he tries to turn Glory into his legacy.