“You might not know this about me, but I have been through a lot of shit,” says Patron Capital founder Keith Breslauer. “I grew up pretty poor – but with good parents. I’ve been in a couple of accidents, in an avalanche where I almost died. So I believe I was put on the earth to do something different. That’s what I have tried to do with the business and that’s what my team has been really great at helping me do.”
Speaking with Breslauer is a bit like an extreme sport. He operates at 100 miles an hour. A warp-speed New Yorker who doesn’t mince his words, regularly drops an expletive and seemingly uses every cell in his brain. It is tiring keeping up, but the speed coupled with the brutal honesty is refreshing.
If Breslauer believes he was put on this earth to do something different, he is certainly doing that with Patron Capital. This is a man who seems to comfortably straddle the chasm between profit and purpose; who can talk a language that investors and businesses understand; and makes sure that he puts the importance of social impact front and centre of his business.
It’s not an easy path to tread, but easy would be dull for mountain-sport-loving Breslauer. If it’s not a challenge, is it even worth it?
Breslauer founded Patron Capital in 1999, following a career at Lehman Brothers which saw him dealing with distressed real estate across America and, in the early 1990s, in London. Patron has to date raised more than £4bn from institutional and high-net-worth investors through a variety of funds. It has invested in European shopping centres, UK care homes and equity release portfolios, five-a-side football pitch business PowerLeague and pub group Punch Taverns among others. Its focus is on value-add and opportunity-driven investments and on generating “superior, absolute and risk-adjusted returns”.
And, of course, on doing something different. On doing something good.
Charity forms a big part of what Patron and Breslauer are about. The business has helped raise more than £1.5m through its Patron Armed Forces initiative for the Royal Marines Charity, which supports ex-servicemen in overcoming the physical and mental challenges suffered as a result of combat; its Patron Schools Initiative supports the Prince’s Teaching Institute, which supports the development of state school teachers; and more recently it has launched WISH – the Women in Safe Homes fund – an investment vehicle with the aim of providing affordable homes for women who are homeless, survivors of domestic abuse, or ex-offenders.
The fund, on which Patron is partnering with social impact investment company Resonance, has a target size of £100m and hopes that it can provide around 750 affordable homes for women in need. It has already formed its first partnership with the Preston Road Women’s Centre in Hull, Yorkshire, but Breslauer says there is an “absolute critical need” for this fund to work and to team up with more charities across the UK.
He is concerned, however, that the slowdown in business as a result of the coronavirus pandemic could all but wipe out his ability to continue with the firm’s charitable endeavours.
“We’re nervous that we are going to be 60% down in fundraising, which could have a major impact on our ability to support people,” says Breslauer. “We face a potential [charitable] deficit of £2.5m this year. We budgeted for £1.2m from major events, now we will raise £200,000; we budgeted £700,000 from community fundraising, now we probably won’t get £200,000. We budgeted £360,000 from corporate support, now we’ll get £10,000; and we budgeted £400,000 from major donors and we may now only get £120,000. We are talking about a major hit… if we don’t top this up then we won’t be able to continue our support beyond mid-2021.”
In my operation, as a simple rule, if you want to act as a lawyer, accountant or do any service for me the following year, you have to help charity directly or you have to support our charities, otherwise we won’t pay you anymore
Breslauer is matter of fact about it, but it is clear the threat of not being able to help the 10,000-plus military veterans the Royal Marines Charity frustrates him. The fact that humans, generally, won’t give up money or time for charitable causes, for critical needs, is a source of annoyance.
“Most people are sheep,” he says, “in the sense that they rarely take their own initiative. They very rarely – despite the fact they may say a lot of things – will actually directly help. And only a small proportion of society, as a general rule of thumb, will proactively help either financially or with their time.”
But Breslauer, of course, has a solution for that. If you are a service provider for Patron Capital and want to continue to collect fees from the business, you have to commit to charity.
“You need to lead,” says Breslauer. “In my operation, as a simple rule, if you want to act as a lawyer, accountant or do any service provided for me the following year, you have to help charity directly or you have to support our charities, otherwise we won’t pay you anymore.”
“We are focused on the S of ESG and not the E, and the difference is important,” he says. “We have a focus on environmental but we are not a core real estate fund, so it’s not like we have 200 buildings in one portfolio, rather we have indirectly 400,000 people we employ. So to me, the social impact that we have on society becomes a far bigger dynamic.”
“That is why I got involved in the WISH fund,” he continues. “We won’t make any money, but the reality is that it is an important thing to do. What I want to do, which is very important to me, is make sure that it actually works.”
While it would be easy to assume that Breslauer commits the lion’s share of his time to social impact initiatives, he points out that he has a very strict 10-hour rule when it comes to charity work. He will give up 10 hours a week for his charities, the rest of the time – weekends too, often – is for clients and his businesses.
And as the world comes to terms with the impact of Covid-19, Breslauer wants to make sure that he and his business has not just been “f*cking around” and has used its time in lockdown wisely.
With investments including PowerLeague and Punch Taverns, lockdown has undoubtedly brought its challenges for Patron Capital. Staff have had to be furloughed but no-one has been made redundant, says Breslauer, and he is thankful for the government support in that regard. He says, like most firms, Patron is working on the assumption that the business can deal with shutdown for three to four months before things start getting messy and is working on the hope that if things do get worse, government will continue to step in and help.
Breslauer reckons that the world might begin to get back to something that looks like normal from next year, that Q1 2021 might start to look like we are coming out of the current situation, and that there will be continued improvement through Q2 and Q3.
And with a business that is sitting on a lot of capital – cash that it didn’t get to invest in its latest fund (Fund VI) and investment in Fund V that was allocated but not deployed – he is keen to make sure he doesn’t miss any potential opportunities in the market.
“Our responsibility today is to be aware, to be hungry and to chase and then see what opportunities there might be,” he says. “It might be that we just did a lot of work and we couldn’t identify anything, but at least we had a try.”
He is certainly not convinced that the market will offer up anything particularly cheap in the recession that follows lockdown, as businesses generally have less debt and are sitting on a lot of cash this time around. But that is not stopping him making sure his team are doing their market research and are ready to pounce if and when the time comes.
“I am trying to make sure that anyone who is also seeing opportunities or might need capital remembers that I’m here, sitting on cash and can therefore have a shot,” says Breslauer. “It’s a tricky time, but I think we have a responsibility to deploy our capital for our investors and be sensitive. The hard bit now is navigating what the government is going to do or not do.”
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