Ben Gray moving from Myer float riches to David Jones bid?

Blum Capital and TPG did well by selling their shares in newly relisted Myer in 2009 for a $1.5bn profit. Picture: NCA NewsWire / Dan Peled

Ben Gray made a sizeable fortune off the float of department store Myer in 2009, much to the distress of the Australian Taxation Office and the shareholders who have watched their investments crater in abominable fashion ever since.

So is it possible that Gray is now heading back to the well for a play at David Jones, the well-known brand that has been placed on the market by its South African parent, Woolworths Holdings?

Ben Gray is best known for TPG’s Myer buy in 2006. Picture: Britta Campion

As Margin Call revealed last week, Goldman Sachs is negotiating the sale of the 184-year-old store with prospective buyers that include Andrew Forrest’s Tattarang investment arm and Anchorage Capital. Flagstaff Partners is said to be advising one of the bidders.

Multiple sources close to the process say BGH Capital – founded by Gray, Robin Bishop and their dealmaking associate Simon Harle – has also shown interest in the company, although the firm’s current level of involvement remains unclear.

People on the BGH side poured cold water on the idea, saying there’s no interest in DJs because it remains difficult to envision how the store could work to a profitable model. Either they are telling the truth or someone’s playing possum.

Gray, formerly a managing partner at TPG, is known for closing a number of deals but none more memorable than TPG’s acquisition of Myer in 2006, in which the loss maker was subsequently beaten and kicked into financial success.

All was trending quite well until the infamous relisting of its shares on Melbourne Cup day, 2009. Investors who paid the $4.10 issue price have never recovered their money. Myer shares closed on Monday at 54c.

Well, it didn’t go so poorly for everyone. Blum Capital and TPG did quite well by selling their shares for a $1.5bn profit.

When the tax office froze TPG’s accounts to claim unpaid taxes, only about $45 was said to be remaining, with the rest having been siphoned to Luxembourg and the Cayman Islands.

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Turnbull case mess

It speaks to a perplexing intra-family dynamic that Alex Turnbull’s evidence to the NSW Supreme Court was contradicted by none other than his own father during a lengthy and disastrous legal pursuit of fund manager Russel Pillemer. 

That Alex was undeterred from persisting with this doomed legal endeavour is not all that surprising; he was bent on saving face even at the risk of a substantial costs order, which appears likely given the calibre of silks involved (anything less than five figures by the hour gets you Dennis Denuto these days).

Russell Pillemer in 2004.

Far more surprising is that Malcolm Turnbull didn’t handcuff his son to an antique chair in order to stop this fatuous, ill-fated gambit from proceeding.

As we canvassed last weekend, Justice Kate Williams’ took a lash to Alex Turnbull’s evidence, branding entire sections “wholly unconvincing”, “inconsistent”, “highly implausible” and “self-serving”.

None of which was helped by how starkly father and son seemed to diverge over their recollection of a meeting with Pillemer in December 2017.

It’s not just that Malcolm’s evidence didn’t bolster his son’s case; it was found by the judge to partly corroborate Pillemer’s account.

As memories go, Pillemer recalled advising Alex at the meeting that he’d wanted the Turnbulls to stay invested in Pengana Capital, the firm he founded with Malcolm in 2003. This conversation transpired well after Pengana had already merged with another investment house, Hunter Hall, in a deal that vastly improved the value of Pengana shares.

By the time of the meeting, Alex had already redeemed his share in the company – held in the form of a loan – and thus deprived himself of millions of dollars in prospective gains. Those losses provided the catalyst for the court case and allegations that he’d been deceived by the Pengana chief executive.

Alex Turnbull in 2018. Picture: Hollie Adams

Pillemer claimed that he had said to Alex: “But you said that Malcolm had told you to exit,” prompting the former prime minister to say to his son: “I did not tell you to exit.”

Alex denied this account in its entirety, including the way his father reacted.

But as Turnbull Sr told the court: “I recall telling Mr Pillemer that I had not advised Alex to accept the cash payment … I said these words … to emphasise that Alex’s decision to accept cash … was a decision which Alex made without reference to me in any way.”

Notwithstanding this glaring contradiction, Alex Turnbull’s case was generally found to be so flawed and so riddled with inconsistency as to result in the matter being roundly dismissed.

But where was Malcolm as the cool-headed adviser to his son in all of this? How could the illustrious former barrister of Spycatcher fame have permitted such a blundering pursuit in the courts when it was clear their evidence was at odds and the case a mess?

We suspect the former prime minister might have been too busy smashing the crystal urns of the Liberal Party to have been paying attention to his son’s court proceedings.

That, or Alex never consulted his father. It’s also possible that Turnbull Sr deliberately avoided any involvement in the case.

What is clear, however, is that the former prime minister was not prepared to lie for his son.

Less clear is why he let this matter proceed in the first place.