The Nation’s Business

Peter Munk: a dreamer who became a king

Peter C. Newman December 9 1996
The Nation’s Business

Peter Munk: a dreamer who became a king

Peter C. Newman December 9 1996

Peter Munk: a dreamer who became a king

The Nation’s Business

Peter C. Newman

A few years ago, after one of my Maclean’s columns revealed that Peter Munk had acquired a key piece of real estate on the strategic Ring, the superhighway that encircles Berlin, and was about to build Europe’s largest industrial park there, he phoned me with a bitter complaint.

This was just after the great Reichmann real estate meltdown, and in a front-page Financial Times feature, the paper had accused Munk of becoming too self-centred, just like the Reichmanns, by throwing up buildings that would become his monument. More seriously to Munk, the Times complained he was moving into real estate even though it was an industry he knew nothing about.

Munk, whose Barrick Gold Corp. then owned the world’s most profitable gold mine—Goldstrike in Nevada’s Carlin Trend—was furious. “God damn journalists,” he told me. “Did you see that?

They’re writing that I don’t know anything about real estate. Hell, I don’t know anything about gold either.”

Despite the indisputable fact that, with last week’s pending acquisition of the Bre-X property in Indonesia, Munk will become owner of the world’s largest gold operation, he has never really felt or behaved as if he were in the gold business. Unlike most gold bugs who breathe and dream about the stuff, he is supremely uninterested in the day-to-day fluctuations in gold prices and doesn’t even wear a gold ring.

Nor is he particularly taken up with real estate, even though a few years after our conversation about Berlin, he acquired Trizec, which with its 53 million square feet of prime North American holdings is one of the world’s largest property developers. (He bought control of the firm in 1994 for $620 million from the Bronfman boys who had run it into the ground, and has since made it profitable. Trizec’s assets are now worth $4.6 billion; and since it began trading on Nov. 1 as TrizecHahn, its stock has gone from $18, to $27 last week.)

If, with that track record, Munk doesn’t feel that he’s either in gold or real estate, what business is he in?

Peter Munk is in the business business. Munk’s personality is exactly the opposite of Donald Trump’s—he is introspective, moody and intellectual, something of a dreamer in the land of hard sell. Yet there is one similarity. Both men are obsessed with the art of the deal.

Unlike most successful tycoons, the 69-year-old Munk has never stuck to one line of work. He made and lost his first fortune in Clairtone, the Canadian company that led the world in sophisticated home stereo sets in the 1960s before it collapsed, then went on to earn the seed capital for his mineral ventures by running a chain of hotels in the South Pacific. In 1984, he took over Camilo, a gold mine that had a tiny producing shaft 13 km west of Val d’Or in northern Quebec. Munk paid very little for the mine, but was saddled with the

He moves in on his corporate prey like a skilled swordsman, knowing precisely when to feign and when to thrust

$ 100-million debt Camflo’s former proprietors owed the Royal Bank. The Royal gave him only a year to repay what then seemed like an enormous amount. How Munk raised these funds from virtually a standing start may well have been his greatest achievement. Even though Camilo was insolvent at the time, its stock was listed on the Toronto Stock Exchange at $1.75. By persuading 50 Canadian investors to pay $2.10 each for 14.2 million Camilo shares, which they could have bought for 35 cents less on the open market, he closed the deal. Even in retrospect, that seems the most questionable of bargains, but those investors have exhibited blind faith in Munk. And he has never let them down.

Along with Camflo’s modest cash flow, Munk obtained the services of its three key executives, mine manager Bob Smith, and geologists Brian Meikle and Alan Hill. Meikle retired three years ago, but Smith, a compact, muscular hard-rock miner who grew up in Haileybury, Ont., has been president of Barrick since 1985. He is the mining brains of the outfit and is fond of giving credit for Barrick’s success to his two favorite women, Mother Nature and Lady Luck.

The key to Munk’s success has been the faith he inspires in international bankers and among his shareholders. At his company annual meetings, he sometimes sounds like a pope expecting worship. His off-the-cuff speeches tend to contain more ecclesiastical pronouncements than corporate buzzwords. There definitely is something vaguely supernatural in the astonishing bond with his shareholders. Yet there is at the same time a wide streak of endearing self-deprecation about the man. “We’ve become the most valuable and most profitable gold company in the world,” he told me after taking over Lac Minerals in 1994. Then, as though we were sharing some great secret, he winked and added: “Nice, huh? I sometimes wake up pinching myself.”

Munk is lucky, but he also has a sixth sense about timing, moving in on his corporate prey—Goldstrike, Lac, Bre-X—with the sophistication and precision of a skilled swordsman, knowing precisely when to feign and when to thrust.

What separates Munk from the usual run of successful tycoons is his humanity combined with a touch of humility. “Whenever we complete a large deal,” he once told me, “I always tell my executives not to get too euphoric. I remind them not to get caught up in the deadly sin of hubris. I keep drumming into my people—and I make them repeat it back to me, so I’m sure they’ve got it—that we’re still the same human beings we were 10 years ago, when we were struggling. Balance sheets may change, but people don’t. We’ll never get too big for our britches.”

Maybe not. But a decade later, Peter Munk is plying his fiscal magic with grace and good humor, an entrepreneur firmly in command of his worth.