Rumours have been circulating about PAI Capital submitting a bid to buy West Ham United. But who are they, how likely is this to go through and what are the risks? Here’s everything we know so far.
How it started
After rumours broke that PAI Capital were planning a takeover bid for West Ham, David Sullivan put a stop to them, stating: “They never produced any proof of funds. They had zero interest in the football side and saw it as a property move.”
Philip Beard of PAI Capital quickly responded, saying: “I can confirm a formal offer was made which was in fact the figure David Sullivan had initially asked for. At no point were we asked to produce further information about our football strategy.”
Then, Tom Skinner posted a video adding fuel to the fire, confirming that he had spoken to the team at PAI Capital and that the £500 million bid from them represented a serious investment that would take the club to the next level. He also explained that as well as buying the club, they would also be buying the stadium.
Who are PAI Capital?
Profit Access Investments Limited, or PAI Capital, is a private investment and asset management company.
They were incorporated in 2021 according to Companies House but have deals listed on their website dating back to 2020. Pai.Capital lists their headquarters in the UK, however Bloomberg and HKcorporationsearch list their headquarters as being in Hong Kong.
With clients’ assets under their management, they work mainly within financial services, healthcare, retail and technology sectors.
Their website lists nine names of members of their ‘senior management’ team, one of which is former QPR CEO, Philip Beard. Beard also played a role in London’s successful Olympic and Paralympic bid team. Another is Nasib Piriyev, whose father has reportedly been charged for financial crimes in the past (although nobody wants to be judged for their parents’ decisions!)
How could the consortium work?
A consortium essentially means that no individual has the finances required. Instead, a group of individuals or businesses work together, in this case, to buy the club. The challenge with a consortium is that all stakeholders need to agree on any decisions made. Based on their list of senior management, this could mean that 9+ people must make decisions harmoniously in order to deliver a successful project.
Having multiple stakeholders is not such a challenge if there are less active decision makers. The phrase ‘too many cooks spoil the broth’ springs to mind here. Obviously, every individual or business involved will be looking out for their own best interests, however trusting a strategic approach would be key to the ongoing success of this takeover.
Where we stand
Currently, very little is known about PAI Capital’s intentions with the club, aside from wanting to buy it and buy the stadium. Personally, I’m a firm believer in making sure you know exactly what this takeover would entail as once the club is theirs, there is very little forcing them to follow through on promises to fans.
Buying the stadium
PAI Capital have clearly understood that the only way that the stadium can be brought up to standard is by buying it. It’s important to remember that this purchase would be completely separate to any club takeover as it is owned by the E20 STADIUM LLP, not the club.
As we know, the stadium makes a loss every year and is costing the taxpayer, meaning it could be a good time for them to sell, meaning this could create an opportunity to make more significant changes and improve the matchday experience.
When could Gold and Sullivan sell West Ham?
It’s common knowledge that if the club is sold before March 2023, there are significant financial implications for Gold and Sullivan. In fact, any sale over the value of £300 million would result in 20% windfall tax being paid to the current owners of the stadium.
Separating emotions from the club, it would be a non-sensical move to end up losing £59.37 million on a £500 million sale instead of waiting 17 months.
For this reason, if PAI Capital are deemed fit owners of the club, the timeline of sale could depend on PAI Capital’s willingness to wait until March 2023, or financially contribute to the cost of them selling early.
Simply put, if Gold and Sullivan are unwilling to sell before 2023 due to the financial penalties, a long-term agreement could be formed to get plans in place ready to kick in when March 2023 arrives.
Why now is the perfect time to buy West Ham
In my opinion, now is a fantastic time to begin planning to sell the club. Having finished 6th in the Premier League and qualifying for Europa League, there is a lot of promise.
We’re at a stage where financial investment is key to continuing to improve the club and given the fact that Gold and Sullivan are now 84 and 72, now is the perfect time to start the wheels in motion to initiate a successful takeover that the fans have been calling for.
There’s an opportunity for an investor, or investors, to bring the club and fans closer together while facilitating success on the pitch, as well as off it. From an investor’s point of view, this means there is a lot of potential.
I don’t think we should jump at the offer from PAI Capital. If there’s one thing that West Ham fans know, it’s that promises and reality can be very different. For this reason, you need to be incredibly careful of who you do business with.
It’s easy to get excited at the prospect of a huge investment and claims of taking us to the next level, however without explaining how this is happening, it doesn’t mean much.
My hope would be that PAI Capital would come back with an in-depth plan and strategy, detailing their intentions and actions, as well as getting an agreement to buy the stadium. Once they have these, it becomes a lot easier to understand whether they would be the right owners for us or not.
Questions for PAI Capital
While they have identified key issues, such as not fulfilling the needs of the club, its fanbase or the local community, sweeping statements have been made about improvements with not much detail. The following questions are those that I’d like to see answered.
How transferrable is their expertise to running a football club?
With their skills lying within financial services, healthcare, retail and technology sectors, it’s a big difference to running a football club. While Beard has experience in a football environment, he also resigned with QPR 17th in the Premier League (as well as facing FFP issues).
How will PAI Capital improve the experience for fans and visitors to the stadium?
While this has been mentioned as their goal, it would be interesting to see what this entails. It first relies on buying the stadium and then would depend on which changes that they intend to make. There has also been talk of using ‘West Ham legends and prominent personalities in sport’ to help the club’s development, however the role they will play is unclear.
Where is the money coming from and what role does everyone have?
While PAI Capital manage clients’ assets, this is not their money. It is their client’s money that they invest with the goal of making profit. As such, any money invested will be done with the goal of making profit for their investors. This means we don’t know how much of the proposed £500 million is owned by which parties, which could play a part in determining how many decision makers are required to work together.
How much reinvestment will there be?
This is the key question. Realistically, no takeover bid is done with the purest intentions, particularly for a consortium, and it will be seen as a money-making investment by the potential new owner/s. The real question lies within their ability to spend money upfront and willingness to sacrifice profit at the beginning to get the club into a more profitable position. Buying the stadium itself will put them into debt, meaning this must be recovered but not at the expense of club performance. If it’s their clients’ money being invested, they will have to deliver profit, meaning the club could be the second priority when it comes to funding.
How much would they change the stadium?
Anybody that has been to the London Stadium can see that improvements need to be made. The changes needed to make fans happy would be significant, however the ability to do this structurally, as well as the cost associated with this could limit PAI Capital’s ability to make fast changes.
PAI Capital’s efforts look set to continue with Philip Beard saying “We remain committed to purchasing opportunities to purchase the club.”
I look forward to learning more about this potential purchase of the club if it materialises to be something that is beneficial for West Ham. Supporters will be fully behind the decision providing it brings positive change, so it’s certainly an exciting time.
So now we wait. I’d absolutely love PAI Capital to share more information about the ideas they have for the club, the strategy behind it and the ways that they plan to truly take the club ‘to the next level’.
One thought on “Everything you need to know about PAI Capital”
A balanced assessment given the limited amount of information currently in the public domain.
The underlying issue here is the fundamental nature of PAI’s business. Based on this review it suggests that its core aim is to deliver a profit to third party entities via managed investment strategies of their assists & funds. If this is the case, & in the absence of any alternative declared business aim, then any purchase of WHU would be geared to fulfilling that obligation to investors.
The concern for fans must be what are the implications for the club, as it will effectively be being used as a vehicle to deliver those profits.
Investors, by their very nature, want returns to be delivered in a couple of ways, either a quick “get in & out” and move on, or more medium to long term strategies delivering annual returns at levels that justify their initial investment.
The quick return option is unlikely to be viable, which leaves an analysis of how the business can deliver the longer term ongoing return to investors. The success of the club on the pitch is key to that delivery, as that is absolutely the only way to provide the level of return that those investor clients of PAI will demand.
Fundamental to that will be an investment in both the stadium & the type of players that will deliver success on the pitch, and entry into the big money European tournaments. That will deliver the knock on external increased levels of advertising & sponsorship required to bolster the return for investors. This arguably represents a high risk strategy from an investment perspective though as the ROI (return on investment) is directly linked to the success on the pitch, which as all fans know is not guaranteed.
Ultimately, any deal structured by PAI will be geared to delivering for 3rd party clients. That is something that cannot be ignored from a fans perspective. PAI appear to be a relatively newly established business, in which case searching questions need to be asked as to the track record on delivery for their clients. Will they meet the criteria for fit and proper owners of a club.
Based on the limited amount of information about the company and the people behind it, I would urge a high degree of caution. We should all be careful what we wish for ⚒