Phoenix now taking flight

As introductions go, few have been more high-profile to the orbits of racing and breeding than that of Phoenix Thoroughbred.

Let’s start with the numbers. An outfit that didn’t even exist at the start of last year now owns or has interests in upwards of 160 horses worldwide. It has already spent close to $60 million, and has set aside $10 million for buying yearlings at elite auctions in 2018.

Before too long it aspires to own or be partners in 25 stallions, with which it hopes to challenge the global breeding hegemony of Coolmore and Darley. It wants to buy breeding farms in Australia, Europe and the US. All in all, it amounts to a bold statement of intent.

Phoenix Thoroughbred has also taken a flyer from the gates on the racing front. In the US it has seen Dream Tree, a $750,000 purchase at last year’s Fasig-Tipton Florida two-year-old sale, land a pair of Graded stakes races, notably the Grade 1 Starlet Stakes.

And there’s Gronkowski, the former Jeremy Noseda trainee who ran second in the Belmont Stakes, and who was due to contest the Travers Stakes at the time of going to press.

It has been a similarly gilded beginning on the racetracks of Europe, too. Phoenix’s purchase of horses in training leaves it hugely in credit. Signora Cabello, in whom Phoenix bought a 75% share before Royal Ascot, has since landed the Group 2 Queen Mary Stakes and Prix Robert Papin – in which Pocket Dynamo, another recent purchase, finished fourth.

It was like winning the Derby for us, if not better

But Phoenix’s totem purchase in Britain to date is Advertise. The colt bought on Royal Ascot eve chased home Calyx at Royal Ascot before adding the July Stakes and Phoenix Stakes to his resume. Advertise’s triumph in the latter race heralded a maiden Group 1 victory for his new proprietors.

“I couldn’t be much happier,” says Amer Abdulaziz Salman, Phoenix’s Chief Executive Officer. “To go to Royal Ascot for the first time and have a winner and a second was a great feeling, especially in our first year.

“It was like winning the Derby for us, if not better. And now our two-year-olds in Australia are stepping up in class after winning their maidens.”

So who, or what, is Phoenix Thoroughbred? Details have emerged sporadically ever since the company – an investment fund geared towards attracting financial institutions, pension funds and high-worth individuals – made a splash at the two-year-olds-in-training sales in the US 18 months ago.

The fund is registered in Luxembourg. Abdulaziz maintains it’s the only equine fund of its kind to have successfully completed the process, for which clearance was finally received from the authorities in July.

Its financial administrators and fund managers are based there, while the Luxembourg annexe of Ernst & Young have been appointed auditors and EFG Bank (Luxembourg) the fund’s bankers.

Achieving registration was an arduous process of financial checks and due diligence. But why bother when such official endorsement seems to be just about the last concern of so many other equine-related outfits? According to Abdulaziz, that is precisely the point.

“Unfortunately, you can get cheated by people in this business,” he says. “We wanted to register the fund with a jurisdiction that is very strict, and where financial transparency is required 200 per cent.

“We want to be transparent ourselves,” he continues. “We don’t want people investing in horses, only to have no knowledge of what is going on. That has happened to me before. That is why we have taken the most difficult route of all to set up the fund.

“We worked hard for the last four years to make that happen. We talked to the authorities, explained what we wanted to do, and I think it is a great achievement to have completed it.”

The boot will now be on the other foot. Each potential investor is subject to stringent financial checks and due diligence tests before the Luxembourg authorities will consent to them joining the fund.

The fund itself will run over five years with the option to extend it for a further two, although that scenario is thought unlikely. The fiscal target is to accrue $250 million for investment.

As an act of good faith, and to help Phoenix hit the ground running, Abdulaziz and his family have committed $25m to the venture.

I think the perception of Phoenix has changed in the last 18 months

The five-year duration is designed to allow Phoenix to make investments in stallions, which is where the real action is. In November it bought a 50% stake in Aclaim, who started his innings at the National Stud in Newmarket three months later. In February it bought 25% of Invader, the stallion prospect who commences duties shortly at Aquis Farm, in New South Wales.

“Having a five-year plan means that we will have the chance to assess whether a stallion we are involved with is any good,” Abdulaziz says.

At the end of year three, Phoenix’s assets will be aggregated, after which Abdulaziz will put the launch of the second Phoenix fund before those who invested in the first.

His financial projections are as ambitious as the project as a whole. He has targeted an annual return of 8%.

“I guarantee you that if we hit those figures, 60% of the people who invested in the first fund will invest in the second,” he maintains. He also envisages a seamless transition between the two funds.

“Monies raised for the second fund will be used to purchase the assets of the first fund.”

Inevitably, the racing community was unsure what to make of Phoenix when it first surfaced. Next to nothing was known about a new entity that was suddenly outbidding Sheikh Hamdan Al Maktoum’s racing manager, Angus Gold, for the €1.4m top lot at Arqana’s breeze-up sale in May last year.

However, as Phoenix extended its high-profile presence over time, certain aspects spoke for themselves. In a business where rumours of non-payment are part of the fabric, global sales companies are more than happy to see Abdulaziz and his advisors on the grounds, which suggests that all sales dockets have been settled.

Furthermore, Phoenix continues to pursue horses in training both in Europe and the US; Abdulaziz was expecting to close two more deals during our hour-long conversation in London. No such deals would be in the offing were there any qualms.

The racing community being what it is, speculation also surrounded the identity of Abdulaziz’s investors. But Abdulaziz smiles when he is asked whether he encountered any early scepticism. “I didn’t,” he says, “although I understand what you are saying.

“Racing people love the gossip but we are very open with everyone, especially potential investors. But there has to be discretion about individuals in the fund.

“It’s the same with any investment vehicle of this type.”

Abdulaziz then smiles even more broadly when an irony occurs to him. “You know, if it was common knowledge who was in the fund, bloodstock agents would go directly to them and try to take away our business.”

A personable and engaging character, Abdulaziz has long had an affinity with horses. The 54-year-old was born and raised on a farm where his parents bred Arabian horses in Bahrain.

He was champion owner there for four years when just out of his teens before he enrolled at the University of California, Berkeley, having also studied in England.

According to his profile on the website of Auxilia Homes, in which he is described as the person behind an investor-driven venture that builds homes for vulnerable adults with complex housing needs, Abdulaziz worked for an array of investment banks before deciding to set up Phoenix.

His involvement with Auxilia makes an attractive statement. He has recruited investors to build special-purpose homes for people with conditions like autism, in addition to elderly and retired people.

Racing people love the gossip but we are very open with everyone, especially potential investors

Documents filed at Companies House signal his involvement in a raft of umbrella companies but Phoenix preoccupies him most. He developed a passion for thoroughbreds in California, where he spent many an afternoon at Golden Gate Fields racetrack.

Abdulaziz was bitten by a bug that never left him. He is now living the dream and wants to share it with others, convinced in the financial efficacy of his project. The minimum level of investment in Phoenix has been set at $500,000, although Abdulaziz makes the odd exception to embrace lesser sums.

Investors acquire shares at a nominal value of $1, which will be recalibrated after an imminent audit. Each investor buys into the entire breadth of Phoenix Thoroughbred’s operations, which includes pin-hooking ventures in Australia and the US. By diversifying as much as it can, Phoenix is constantly hedging against itself.

Abdulaziz wants Phoenix to play at the top tables of Australia and Europe, especially given the opportunities to shuttle stallions between the two territories, although its main focus will gravitate towards the US.

The appointment in December of Tom Ludt, formerly President of Vinery Farms and Chairman of the Breeders’ Cup board, as Phoenix’s Vice-President telegraphed that ambition.

“It took us some time to get Tom on board,” Abdulaziz says of Ludt, a much-respected figure in the industry. “He asked us lots of questions and in the end he wanted to join us. His reputation and credibility are very important.”

Despite its short gestation period, Phoenix has come a long way. At last year’s US yearling sales it forged racing partnerships with some of that country’s biggest entities, among them Gainesway, Three Chimneys and Stonestreet.

And of course, Rob Gronkowski, the New England Patriots tight end, bought into the colt named after him in April. Gronkowski was on hand to watch the colt chase home Justify in the Belmont Stakes, in the process showering some of his glitter upon the sport.

“I think the perception of us has changed in the last 18 months,” Abdulaziz says. “At first we were spending a lot of money; people wanted to know who we were. Now they want to partner with us. That’s a great feeling.”

Given Phoenix’s status as an investment project, and its scrutiny by the authorities in Luxembourg, Abdulaziz is acutely aware of the need for all in his employ to act scrupulously.

We are in this business to stay

He would not comment on the decision to cut trainer Jeremy Noseda and his estranged wife, Kerri Radcliffe, from the Phoenix retinue earlier this year, although the dope test failed by Walk In The Sun when he was in Noseda’s care was a likely contributing factor.

Walk In The Sun was subsequently moved to Martyn Meade, from whose stable Phoenix bought Advertise. Meade also trained Aclaim; his son-in-law is the bloodstock agent Dermot Farrington, who is now aligned with Abdulaziz as he scours the horizon for further investments in bloodstock.

Meanwhile, the trainers’ roster continues to expand, with Bob Baffert, Todd Pletcher, Chad Brown and Steve Asmussen in the US complementing the likes of Meade, Andre Fabre and Sir Michael Stoute in Europe.

It’s not the first time that bloodstock has been the chosen vehicle for significant investment. Much of the 1980s bloodstock boom was fuelled by funds from beyond the sport’s traditional sources.

It’s a difficult platform from which to generate profits, yet what has become clear from Coolmore’s evolvement into the dominant global entity is that the best chance of success lies in buying the best and dealing with the best.

Abdulaziz believes firmly in that philosophy. Buoyed by recent successes on the track, he is about to embark on an aggressive marketing campaign to recruit investors from domains beyond the Middle East, where Phoenix’s head office is sited.

His long-term vision is to fly Australian investors to totem races around the world, where they will engage with other Phoenix investors who share his passion for horseracing.

He wants to take Americans to Europe and Australia. He also believes he can open doors of opportunity beyond racing in Dubai, where he is now resident.

“We have a lot of strengths in a lot of jurisdictions,” he says. “We want it to be like Capital Club. Yes, we are living the dream at the moment but the fund needs to do well so that we can move on to the second fund. We are in this business to stay.”

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