Polly Peck: the South Sea Company of the 1980s
Asil Nadir’s firm conjures up memories of decade when investors wanted piece of the action without caring what the business did
Asil Nadir’s Polly Peck International was the company that captured the 1980s in all its garish, tin-plated glory. Every boom throws up a rogue’s gallery of financial villains to provide living proof of Warren Buffett’s maxim that it’s only when the tide goes out that you learn who’s been swimming naked. The 1980s was no exception.
It was the era when Peter Clowes was conning investors, when Robert Maxwell was raiding the Mirror pension fund and all sorts of skullduggery was happening at BCCI. But, despite this competitive field, it is Polly Peck – with its slightly ludicrous name, its rakish chief executive and its meteoric rise and fall – that best conjures up memories of the yuppie decade.
With perfect symmetry, Nadir took a controlling stake early in the 1980s for less than £300,000, saw it balloon in value while Wham! were at the top of the charts and England were regularly hammered by the West Indies at cricket, and fled to Northern Cyprus in 1993, accused of having had his hand in the till.
In that period, Britain had de-industrialised, deregulated and de-unionised. The economy’s centre of gravity shifted from manufacturing to finance, particularly after the big bang reforms of the City in 1986.
Financial stories moved from the business pages to the front page, but it was only really the exploits of the deal makers and the financial engineers that mattered in a get-rich-quick era.
Building a business organically or, heaven forfend, making things, was viewed as old hat. What set the financial pulse racing was the takeover, the merger, the leveraged buy-out. And those were Nadir’s specialities.
Polly Peck became the South Sea Company of the 1980s. Investors wanted a piece of the action, even though they did not know – or seem to care – what the business did.
Nadir expanded through acquisition, buying textile and electronics companies before securing the Del Monte canned fruit business from Nabisco in 1989.
This, though, was one leveraged deal too many for a business now capitalised at £1.7bn and included in the list of the UK’s biggest companies. By this time, the 1980s boom was coming to a rapid and painful end as interest rates were tightened to combat rising inflation. It was payback time for all those who had borrowed too much in the expectation that the good times would go on for ever, and Nadir was one of them.