Theo Paphitis, one of Britain’s most famous entrepreneurs, has been holding on to cash for the past two years but he now plans to start investing following last week’s “positive” budget.
Best known as a judge on BBC’s Dragons’ Den, he has recently finished filming the eighth series, which is due to start broadcasting next month.
More recently, he presented Adventure Capitalists, also on the BBC, which followed entrepreneurs in emerging markets.
He is ranked 405th in the 2010 Sunday Times Rich List with an estimated wealth of £160m, up £15m from the previous year.
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He famously made £100m from the sale of La Senza, the lingerie retailer, after buying it for £1 when it was in financial difficulties. He remained on the board until last year. He also has a majority stake in Ryman, the stationery chain, worth about £60m.
Cyprus-born Paphitis, 50, lives in Weybridge, Surrey, with his wife Debbie and their three children, Alex, 23, and twins Annie and Hollie, 14. He has two other children, Dominic, 31, and Zoe, 29.
How much money do you have in your wallet?
About £500. I like having some cash. It reminds me of the value of money — I like feeling those crisp £20 notes in my hand.
What credit cards do you use?
I have an American Express and Barclaycard. In my younger days, all my cards were maxed out. I make sure I pay back in full today to make up for that.
I reckon I’m still down, though. I worked out that it would take 52 years for me to make up what I paid in interest by adding up the benefit of the free credit I get by paying off my bills in full.
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Are you a saver or a spender?
I’m a shopaholic, although I make use of my tax-free saving allowances each year — I have people making sure I do that.
What did you think of the emergency budget?
Generally very positive — I’d give it an 8½ out of 10. There’s no question that lower corporation and small business taxes will boost confidence and encourage entrepreneurship. I’ve always said that if [chancellor George] Osborne can maintain confidence in business, he can get away with the cuts.
I have one bitter disappointment, though. He’s raised capital gains tax (CGT) to 28% [from 18%]. I think that was a mistake. There should be two levels of CGT — one for long-term investors and a higher rate, perhaps even 40%, for those who want to make a quick buck.
A good way to do this would be to bring back taper relief, which encourages people to stick with their investments for the long term.
Will the rise in Vat to 20% affect retailers?
People will get used to it very quickly. If we can keep confidence in the job sector, people will return to their spending patterns. Besides, it’s not coming into effect until next year so we may see a rise in sales in the short term.
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How much did you earn last year?
We did very well last year, even though we expected not to. It’s partly because people have had more disposable income due to low interest rates. Overall, I made well into seven figures.
Are you looking to invest now?
Other than investments in Dragons’ Den, I’ve been out of the market for the past two years. I wanted to wait for the election and to see what came out in this budget. Now I know the new rules, I’m happier to commit to new ventures — I’m like a coiled spring waiting to be released.
I hope to invest tens of millions over the course of the next parliament. I’m planning to launch a new lingerie business in March called DNA Lingerie. We’re busy buying shops and recruiting people.
I’m looking to start with outlets in Europe. I’m talking eastern Europe and not just places like France or Germany. The Middle East also looks like a good place because of low tax rates and fast-growing economies.
Have you ever been really hard up?
I got married at 18 and my first wife was pregnant when I was 19. We really had to watch what we spent. I remember having to put stuff back at the checkout in the supermarket and wondering whether we could afford fish and chips.
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Do you own a property?
I have a family home in Surrey. It’s a modern detached house with 12,000 sq ft on three acres of land. It has seven bedrooms, an indoor swimming pool, a games room and a gym. We’ve lived there for about four years. It cost a bit more than £2m. I also have a holiday home in Marbella, which I’ve had for about 10 years. It used to be two separate properties but we’ve converted it into one. The whole thing is worth about £1m or so. It has six bedrooms and six bathrooms. I sail my boat from the port nearby.
What was your first job?
I was a tea boy at Lloyd’s of London when I was 16. I was paid £20 a week.
What has been your most lucrative work and did you use the money to buy something special?
Probably selling La Senza. I bought it when it was in trouble — it was on the verge of receivership — for something like £1 and a few packets of Benson & Hedges. I sold it for more than £100m nine years later. I put that windfall into other businesses.
I kept about 10% of the company and was a non-executive until last year. There was a change in strategy and I didn’t want to start arguing about the direction I thought the company should go.
What has been your most lucrative Dragons’ Den investment?
A good one was Magic Whiteboard. It’s a simple static whiteboard, that comes in the form of a tear-off roll. You can stick it on any wall. It’s selling well round the world and is turning over several million. I paid £50,000 for a 20% share about two years ago. If you get one in ten right in Dragons’ Den, given you only get a three-minute pitch, you’re doing well.
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Are you better off than your parents?
Yes. They were first-generation immigrants to this country in 1956. My mother was a seamstress and my father was a musician.
Do you invest in shares?
No, but I’m hoping to get in by September next year when hopefully we should see a strong recovery. There are lots of quality companies out there that look cheap — I’ll probably build up a balanced, long-term portfolio.
What’s better — property or pension?
Property has historically done very well and I think it will remain a good place to invest long term. I have several commercial property investments, such as retail outlets and offices.
What’s been your best investment?
Other than marrying Mrs P, it’s investing in businesses. On a purely financial basis, it was buying and selling La Senza.
What about worst?
In Dragons’ Den, I invested in a ski firm called Satski, a satellite navigation system for skiers. I lost at least £150,000 on that.
Do you manage your own financial affairs?
I have an accountant and a wealth advisor.
What’s the most extravagant thing you have ever bought?
My boat. It’s a 58ft Sunseeker, which I bought for just over £1m about four years ago. It costs about £100,000 a year to maintain. I make up some of the money by chartering it when I’m not in Spain. That can earn me anything up to £40,000 a week.
What is your money weakness?
Gadgets. I got the iPad — it’s fantastic. If you could have babies with anyone other than your wife, you’d be having it with an iPad.
What is your financial priority?
Preservation of wealth.
What is the most important lesson you have learnt about money?
If you run out of cash you’re in trouble.