Vincent Tchenguiz sees collapse of status-quo

Vincent Tchenguiz Photo: Christopher Ratcliffe

The British billionaire, who has investments worth $200 million in Israel, warns on an imminent economic crisis caused by the US-China trade war.

When you hear the name Vincent Tchenguiz, the first association that comes to mind is real estate, not the Israeli medical technology sector. The British billionaire, of Iranian origin, made his fortune mainly in the British realty industry and has become famous because of his fondness of spectacular yet risky financial plans, currency bets (he once lost $80 million in one night), luxury vehicles and boats and spending time with beautiful models.

Investments in technology in general and in biomed in particular form only a small part of Tchenguiz's portfolio. However, this small part could play a significant role in the Israeli medical sector because of the financial scope, but just as importantly, because of Tchenguiz's connections and financial-strategic creativity. Tchenguiz’s current investment in Israel totals $200 million, of which $100 million is in med-tech, and he is planning to raise the total investments to $200 million.

In recent years, Tchenguiz has invested, via the Consensus Business Group he owns (estimated at $1.25 billion), in funds, incubators and companies in Israel. The Group has also established a relationship with several medical centers, including Assouta and Tel Hashomer. These relationships gave rise to TPCera, a company focused on treating autoimmune diseases with worms. The company was founded at VLX, an incubator in which Tchenguiz has invested. Other investors in TPCera include the IBF Fund, with which Tchenguiz is associated too. Tchenguiz’ connection with the local capital market has been managed by Cybele Holdings for many years.

“We’re not the classical angel investors”

“We always invest in collaboration with an investor who has specific knowledge in the area, someone we can trust in terms of product and market understanding,” Tchenguiz told "Globes." “But we can build a financial model for the company and help it connect with a range of professional and financial experts. We are not the conventional angel investors who are focused on the finance only.

“We seek to build a model for the companies, in which we create a mutual relationship with the hospital. While the company is holding a pilot on its technology in a particular hospital, they may become exposed to other technologies that have evolved in the same hospital and are suitable for their portfolio. After completing a proof of concept in various hospitals and building a portfolio, we could try connecting the company with the NHS, the National Health Service of the UK.”

A model like this one, says Tchenguiz, would be suitable for example for this model is PolyPid, which developed delayed release mechanism for antibiotics, which is implanted inside the body, for example for surgery wounds. He believes that the hospitals with which the company is working, are using additional technologies to fight severe infections and that these technologies are waiting for a platform that could take them to the next step.

“We are very active in connecting our portfolio companies because collaborations give rise to new ideas for new technological applications, new sources of funding and marketing channels. We encourage our companies to collaborate in marketing.”

The imminent crisis with China

According to Tchenguiz, his investment model is based on the belief that “the global economy as it is today is not sustainable and that once the status quo collapses, everything will change. We have been saying already since 2013 that the trade relationship between the US and China is far too tense and the US debt to the East is too deep".

The economy as we know it will enter a vortex, continues Tchenguiz. The first outcome of this process will be a trade war between US and China. "We are developing an economic model that adapts itself to this dynamic, and we examine investments opportunities in almost every field," he says.

Tchenguiz predicts that US regulation will become tighter and he invests in companies that would help other companies address the tighter regulation. While he does not say that in so many words, it seems that Israel will ultimately have to pick the Americans as an ally, a situation which might prove problematic for companies that received large investments from China.

“Everything is connected,” he adds. “Military technology finds its way into medical instruments; cyber security is required to protect medical instruments; buildings need to be sustainable and roofs are becoming solar energy plants.”

Tchenguiz shows a flowchart that describes how multiple investment disciplines - cyber, transportation, cleantech, real estate and of course biomed are affected by these processes. Moreover, they impact one another. One of the examples is what made him invest in biomed and cleantech in the first place.

“To protect their interests, nations ‘penalize’ companies that export in large quantities and demand of companies that win large infrastructure tenders to invest part of their gains in the country that gave them the tender, in riskier ventures. These ‘penalties’ are called offsets. One of my ideas was to propose companies to manage the offsets for them. In other words, they give me money and I take care to invest it. When large foreign companies win major tenders in several countries worldwide, they commit to reciprocal procurement of products manufactured by that country. The product range is endless but many countries encourage procurement of “environmental” products or specific technologies such as medical equipment, they are prepared to award far reaching discounts to this end. Tchenguiz is the one who takes the reciprocal procurement upon itself and executes it in return for a handsome commission through a long list of cleantech companies in which he has invested. Complete realization of this model lets him hold the stick at both ends: reinforce his cleantech ecosystem with every deal while laying the foundations for the next deals in a fast growing industry.

“This is how I started investing in pharmaceuticals, medical equipment and sustainability, because these are the projects that governments favor and they are also attractive investments.” Tchenguiz is already making handsome profits on a similar investment in Holland.

“If you have apartments, you have people”

Tchenguiz’ fortune is estimated at $1.25 billion. While the 2007-2008 real estate crisis left its mark on him, he came out of it and out of the lawsuit filed against him as a very rich man. His real estate business focuses mainly on long-term lease of apartments, students’ dormitories, commercial space and infrastructure real estate such as hospitals. He is looking into ways of combining real estate and healthcare.

“Our portfolio comprises some 300,000 properties, of which 10,000 are residential buildings,” he says. He adds that he has concluded that when you have apartments, you also have people, which are just as valuable because they form the information source for many commercial companies. “People form audiences for advertising and they consume services for a fee. Some of our group’s investments are in artificial intelligence, healthcare and environment and they are based on implementing innovations in these fields also to residential spaces.”

Naturally, the group is also interested in lease management solutions, such as the one developed by Israeli Renting, which offers a mechanism for automated collection of rent and reporting malfunctions and issues; or the predictive analytics solution of Shoodoo, which grew up in the VLX incubator. If these tools help identify plumbing leaking issues while they are still small, the saving for the landlords may be huge. Other companies of interest are Roby-AI, which collects complaints and alerts for workplaces, but could easily be adapted to the residential field, or iAgree, which facilitates the guarantor signing process on a lease contract.

These are not medical companies, but they demonstrate that the leaser-leasee relationship is evolving from a one-time meetup when handing over the money to interactions over issues and continued connection by digital means. “We connect real estate and life technologies,” says Tchenguiz. A model of this type opens opportunities for ventures that look after the health and wellness of the tenants.

The Iranian immigrant turned magnate

Vincent Tchenguiz was born in Iran to a Jewish family of Iraqi origin. His father was a jewelry merchant and he tells that money was very appreciated in his family. Already as a child, he remembers acting as the gambling banker of his classmates. He says that dealing with money helped him make friends and overcome his low self-esteem.

Tchenguiz arrived in Britain in his 20’s after his family, which was associated with Shah, was forced out of Iran in the wake of the 1979 revolution. His completed his education in North America: he studied economics in New York and Boston Universities and completed a master’s degree in business administration at McGill University. At the end of his studies, he returned to Britain.

Early in his career, he was involved in financial, gradually honing his real estate expertise. By the time the sub-prime crisis hit, he already had properties worth billions of dollars and $11 billion in debt. He does not conceal being seriously hurt by the crisis, but compared with other tycoons, including Israeli ones, he came out safe with his current fortune estimated at $1.25 billion. Either way, the crisis has motivated him into protecting his businesses by diversifying into additional areas.

During the crisis, he faced a claim from the Serious Fraud Office of Britain. However, following several years of being deliberated in courts, the Office has dropped the charges. Tchenguiz has then placed a counter-claim against the Office, arguing they have not been honest with him. The dealings ended with a compromise that included an apology by the Office,

The crisis and the claim have not destroyed Tchenguiz’ business and have not impacted his conspicuous life style, which includes splendid shows of wealth, fancy cars and yachts, parties and good time with many women and not even one wedding (although he does have children).

One of his best known technology investments is probably the investment in the parent company of Cambridge Analytica, which was accused of unethical data mining and use during the US presidential election campaign in 2016. Tchenguiz disposed of his holdings in the company already in 2016 and was not involved with it at the time of the suspected irregularities.

His name has also come up in connection with Israeli intelligence company Black Cube, whose investigations played an important role in his dispute with the Serious Fraud Office. However, as stated above, the mutual claims ended with a compromise and the parties are said to be on good terms again.

Tchenguiz’ investments in Israel

Funds

Accelmed (Uri Geiger and Mory Arkin)
IBF (Prof. David Sidransky, Iddo Tsairi and Yuval Cabilly)
RMGlobal, which invests in FutuRx projects
Pontifax

Incubators

HBL - Haddasit Bio Holdings (the technology transfer company of the Hadassah Medical Center)
Xenia VLX in Jerusalem
Peregreine’s fund Incentive-IL in Ariel

Companies

PolyPid, developer of delayed release antibiotics
Minovia, developer of rare disease drugs, which seeks to enter the antiaging field
TPCera, developer of therapies for autoimmune diseases
BioMix, which develops selective antibiotics

Published by Globes, Israel business news - en.globes.co.il - on January 10, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Vincent Tchenguiz Photo: Christopher Ratcliffe
Vincent Tchenguiz Photo: Christopher Ratcliffe
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