How James Packer’s bromance with Matthew Grounds ended

James Packer and Matthew Grounds.

It is arguably corporate Australia’s most talked about bromance: the complex relationship between gaming billionaire James Packer and his go-to investment banker, UBS boss Matthew Grounds.

And now, thanks to the epic ­efforts of our esteemed colleague Damon Kitney in his leave-no-stone-unturned biography of the late Kerry Packer’s only son, The Prince of Fortune: The Untold Story of Being James Packer, Margin Call can reveal the untold story of the breakdown in Packer’s and Grounds’ decades-long personal and professional bond.

Not to mention just how much the Swiss bank has extracted in mega fees over the past 10 years from the now 51-year-old, Los Angeles-based businessman.

READ | James Packer: “All wasn’t what it seemed”

The Australian’s Victorian business editor, Kitney has travelled the globe over the past year for the 420-page unauthorised tome, which is to be published on Monday by News Corp’s Harper Collins. The must-read work chronicles Packer and Sydney-based Grounds’ rollercoaster relationship.

Kitney reveals the extent to which their lives were intertwined, with the pair for decades “inseparable”.

UBS chief Matthew Grounds. Picture: Britta Campion

Packer turned to the now 49-year-old investment banker for his private and business affairs, including the break-up of his second marriage to Erica Baxter, with whom the businessman shares three children, in 2013. Our respected now former-colleague Pamela Williams wrote a few years ago that Grounds was executor of Packer’s will (at last count he was worth $5.25 billion) and godfather to Packer’s son Jackson, now eight.

But since then relations have cooled, driven by a series of scenarios that has left Packer hurt.

The casino operator was frustrated with the work of all his ­advisers, including Grounds, in the execution of negotiations between himself and his sister Gretel Packer in 2015 over the separation of their father’s estate.

Illustration: Rod Clement.

Grounds was also part of a group (including Baxter, Nine director David Gyngell and Seek co-founder Paul Bassat) advising their friend to cool his expansion into Hollywood and Israel in 2013-14.

And Packer still harbours anger towards advisers (read Grounds) for talking the billionaire out of bidding for the Cosmopolitan Casino in Las Vegas in 2014.

The fallout? Grounds is no longer executor of Packer’s will.

Slippery slope

Like any self-respecting billionaire, peripatetic James Packer has homes all over the world. Until last month and for most of the past year his official residence has been in Aspen, Colorado, in a home he happily co-owns with former wife Erica Baxter.

In his ripper read, Kitney reveals that in January this year Packer and UBS boss Matthew Grounds went skiing together on the slopes of the ski resort before sharing lunch the same day.

But Packer was still stewing and not long afterwards asked his long-time financial lieutenant Mike Johnston to tally up how much Packer had paid his banker in fees since 2006.

Margin Call recommends that Grounds’ market rivals look away now.

Johnson’s count came in at a whopping $115 million, spread across more than 20 transactions, of which $87.6m was paid by the listed Crown Resorts (of which Packer owns 44 per cent) and $28.3m through Packer’s private Consolidated Press.

Kitney reveals in the biography that the biggest payment was by Crown in 2013, a $20m-plus fee to help the casino group secure regulatory approval for its Crown Sydney development. But there was also a bunch of work UBS executed for Packer that it didn’t charge fees for.

Yet the book reveals that Packer was incensed by the numbers, which he sent on to Grounds.

Weeks later, from his villa atop the exclusive One & Only resort in Mexico’s Cabo San Lucas, Packer ended the pair’s exclusive arrangement when he engaged Goldman Sachs’s Andrew Rennie to sell more than $100m worth of Crown shares for CPH.

Grounds was effectively publicly sacked.

Buried hatchet

So where does that leave the troubled James Packer and his substantially enriched former adviser Matthew Grounds from UBS today?

Kitney tells us they have agreed to put their differences aside. “Matthew is a lot more important than me these days,” Packer says in the book. “And I was stupid to fire him the way I did. Matthew has been a good friend to me.”

But Packer, it seems, has a long memory.

“But on the whole, I think I gave more than I got,” the billionaire goes on. “And I like now being non-exclusive (meaning Crown and CPH are no longer wedded to UBS) with Andrew Rennie at Goldman’s. Hopefully the inbox will be busier.”

Still waters run deep.

“The fact Matthew never put CPH into one ECM [equity capital markets] trade hurts as I look back,” Packer says.

“Making money for CPH was clearly never a priority for Matthew.

“I am sure UBS have clients who paid them a lot less, who made money from the ECM desk.”

Ouch.

Kind last words

And Matthew Grounds?

As one of Australia’s most powerful corporate advisers, he is diplomatic on the subject of his former bestie. Just.

“James has been very good to me and we have shared many happy and fun times together,” Grounds tells Kitney.

“James has been an extraordinarily loyal client for many years, and while he hasn’t necessarily always been the easiest client we have always tried to do our best for him.

“He’s not your everyday traditional corporate client, let’s say, and so things often get interesting and you do have to stay on your toes, as he is usually a step or two ahead.”

And there is acknowledgment that Packer has been more than just a client.

“James can be seriously funny,” Grounds goes on.

“He does have a brilliant mind and there’s not many topics he can’t cover or have a relevant statistic on.

“So over the years he’s been great company and of course very kind to my family.”

Packer would agree, very kind indeed.