Business • Richard Rainwater

The invisible man behind one of the year’s biggest deals.

EVERY FEW MONTHS, I get a phone call from Fort Worth’s Richard Rainwater, one of the most powerful corporate dealmakers in the country. He tells me he has received my latest letter and, no, he is still not going to do an interview—but he has enjoyed hearing from me anyway. He always seems in the best of spirits. Once he called me from an airplane to say he was on his way to watch a drag race. Another time he called from Rome, where he and wife, Darla, a former Chemical Bank executive he calls Little Precious, were on vacation. Most recently, he called from Canyon Ranch, the exclusive spa in Arizona—he told me he had lost twenty pounds and had played golf with T. Boone Pickens.

Ah, Boone Pickens. If there was any doubt about the financial power and investment nerve of 52-year-old Rainwater, it was erased this past spring by his decision to invest in Mesa, Pickens’ once-feared oil and gas company. In the eighties, with his hostile takeover bids of such oil majors as Gulf Oil and Phillips Petroleum, Pickens became America’s first great corporate raider, ushering in the takeover mania soon to grip Wall Street. But by 1996, Mesa was swamped with a $1.2 billion debt and the company’s stock had plunged from $68 3/4 a share to $2 5/8. Because prices for natural gas, Mesa’s biggest asset, were at rock bottom, bankruptcy appeared certain.

Then Rainwater made his move, buying $133 million worth of stock (and offering to buy as much as $132 million more) in exchange for four seats on the board. Pickens agreed to step down as chairman and CEO so that Rainwater could install his team of executives. Oil and gas industry analysts were flabbergasted. They said that because no dramatic price increases were expected for the natural gas industry, Mesa’s hopes for a turnaround were slim.

But those who knew anything about Rainwater’s history were reluctant to second-guess him. He has been described in business publications as “one of the financial greats of the age,” “a dealmaking legend,” and “one of the nation’s most astute investors.” He likes to buy or obtain controlling interest in corporations that are faltering in what appear to be inherently unstable industries. He finds experts to reshape those corporations and then waits for economic cycles to change and bring those industries out of the doldrums. Samuel Moore, a vice president of the investment banking firm Goldman, Sachs, and Company, has said that Rainwater can look “several years into the future and see trends that others don’t see.”

In the seventies and early eighties, when he was managing money for the Bass family of Fort Worth, Rainwater invested $50 million into the then-listless Walt Disney Company and other risky investments. Today, that $50 million is worth an estimated $5 billion. Since striking out on his own in 1986, he has put together the world’s largest hospital chain and one of the world’s largest drilling companies. After the commercial real estate market collapsed in the early nineties, Rainwater created a publicly held company, Crescent Real Estate Equities, and bought distressed properties. Investors were so confident he knew what he was doing that they bought $350 million of stock in the company’s initial public offering.

Rainwater, whose net worth is close to $1 billion, prefers to keep his life private, dallying politely with reporters while telling them nothing. Even Wall Street insiders knew little about him until a 1986 Business Week cover story introduced him to the world, describing him as “the best-kept secret in high finance.” Rainwater didn’t talk to the magazine: About the only time he speaks publicly is when he’s specifically promoting one of his publicly held companies. “I’m just not the type who wants to draw attention to himself,” he told me during one of our brief phone conversations. In one of the few photos taken of him, for Forbes magazine, Rainwater wore gym shorts, a T-shirt with the word “amateur” written across the chest, white athletic socks, and no shoes. When he met newspaper reporters to announce his Mesa investment, he showed up in khakis and a crewneck sweater and cracked jokes about his golf game. Nearby was Pickens, wearing a dark suit and what one reporter described as a poker face. “It’s not money or pretense or wearing a tie that drives Richard,” says Darla, who today acts as the chief executive of Rainwater’s investment firm, Rainwater, Inc., screening and executing all his deals and doing a few of her own (most recently purchasing Monet, a large international costume-jewelry manufacturer with $130 million in annual revenues). “Richard was a math major in college. His great love is to study a problem, come up with an answer before anyone else does, and be proven right.” She snickers. “It’s what I call his Master of the Universe mentality.”

I finally got the chance to watch Rainwater in action one afternoon last year, when during one of our phone calls, he relented and told me I could see him for ten minutes. I raced to Crescent Real Estate’s twenty-seventh-floor office in downtown Fort Worth and was led into a small room with a cheap white desk that didn’t have a single sheet of paper on it. Instead of Sheetrock, the office walls were floor-to-ceiling windowpanes. Down the hallway were half a dozen similar offices filled with younger men, their feet thrown on their own cheap white desks, talking into phones or swapping sarcastic comments through the open doorways. Suddenly, Rainwater strolled into the office where I sat—I had assumed I was sitting in the empty office of some recently departed junior executive—and shook my hand with his right hand as he picked up the phone with his left to talk to someone else. Seconds later, Rainwater spied two men in another office. “Those are my real estate guys,” he said to me and pulled the phone from his ear to yell, “Hey, guys, this reporter needs to talk to you!” Before

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