The Casino Where Private Equity Was Invented Has Been Sold
At £23M, its sale is not the biggest property deal in the world. But the Clermont Club casino in Berkeley Square in London could lay claim to being the most significant address in modern finance — it is where the concept of what is today called private equity investing was dreamed up by a group of British gambling buddies.
In 1962, gambler and members club owner John Aspinall opened the Clermont Club in the Grade I listed 44 Berkeley Square in Mayfair, a townhouse built in 1740. The private casino and members club was frequented by myriad members of the British aristocracy; the James Bond holy trinity of Ian Fleming, Roger Moore and Cubby Broccoli; and Lord Lucan, the British peer who disappeared after his family’s nanny was murdered.
But it was also the social hub for a group of businessmen who changed the face of investing in finance and property, men who were drawn to the club by their taste for risk and the high-stakes games that took place there. The group and their influence is explored in the 2000 Adam Curtis documentary series "The Mayfair Set".
The group included Jim Slater, the accountant and finance columnist-turned investor, who pioneered the concept of buying listed companies because they owned assets like property that were held at cost on the balance sheet, but were actually worth much more.
His company, Slater Walker, borrowed heavily to take the companies private, sold off assets to pay back the debt, then sold the leaner, more efficient companies at a profit. At the time it was called asset stripping, and was despised by the financial establishment, which until that time had been something of a sleepy club. But the template was drawn that would go on to form the basis of the private equity industry.
At the Clermont Club, Slater became friends with Sir James Goldsmith, who after undertaking a similar strategy with multiple companies in the UK took the idea to the U.S., where he was in the vanguard of “corporate raiders” that established the leveraged buyout industry that spawned the private equity giants of today. At one point he was one of the biggest owners of timberland in the U.S., owning forests worth more than $1B that had been held on the balance sheet of Crown Zellerbach for just $12.5M.
Private equity firms like Blackstone and Carlyle got their starts investing in real estate when they realised that the companies their buyout teams owned had hugely undervalued property assets.
“Some people actually seek risk, and they put themselves at risk voluntarily,” Aspinall said in 1971 of gamblers and investors like Goldsmith and Slater. “I think this is a spirit to be admired, and it is the spirit that built the prosperity that everyone in this country [Britain] is enjoying today. This country was created by adventurers, by merchant adventurers, by pirates if you like.”
Curtis’ documentary said the form of capitalism created by Slater, Goldsmith and fellow Clermont regular Tiny Rowland, the mining magnate, deeply influenced politicians like Margaret Thatcher and Ronald Reagan, and led to politicians ceding control of politics, markets and society more generally to market forces.
In a quirk of fate, the UK headquarters of Blackstone is about 50 metres away from the Clermont Club at 40 Berkeley Square.
The club was closed in 2018, and has been bought by Mayfair Casinos Limited, which owns the Horizons Casino on Leicester Square. It plans to refurbish and reopen the casino. It was sold by GL Limited, a company which owns 17 hotels in London including several operated under the Thistle brand. It bought the Clermont for £31M in 2006.