Ian Petts on the whims of the rich & finance ‘headaches’

opinion

by Rob Hodgetts

29 February 2024

Ian Petts is a partner at Jaffa Prive.

His dream is to become the second person in his family to develop a British royal yacht, but Ian Petts says he hasn’t “found someone crazy enough to build something really wild like my ancestor”.

Petts, a partner at Jaffa Privé, is related to Peter Pett who built the 100-gun battleship Sovereign of the Seas for British monarch Charles I in 1637, based on designs by Peter’s father Phineas Pett.

The powerful ship was one of the largest of the day and hugely expensive, funded by Charles I’s controversial Ship Money taxes. “Charles spent one quarter of the British tax take on this yacht which effectively started the English Civil War, and he eventually lost his head because he spent so much,” says Petts. “That’s not good, but it’s in the blood.”

He adds: “What gets me out of bed are the technical possibilities when you get that rare owner who really wants to push the boundaries. It would be great to do a foiling yacht or the fastest ever sailing yacht.”

Sovereign of the Seas, launched in 1637 for English king Charles I.

‘Stickiness’ and ‘bean counting’

Petts and lawyer James Jaffa, founder of Jaffa & Co., set up Jaffa Privé in September 2023 to act “a bit like a multi-family office” and “create stickiness”, advising clients in jet and yacht ownership and management.

“It’s to be that trusted point of contact and getting more involved in the family than just being a cold lawyer,” says Petts, a chartered accountant by trade.

“It’s often the same clients but the jets and yachts are for very different purposes: yachts are selling quality time, while jets are buying you time. You have to be an expert in both.”

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The Briton has made a career of advising ultra-high net worth individuals and has worked on some notable boats, including “bean counting” on the three-year build of the 126m Katara for the Qatar royal family (“A lot more beans than is ever published”) and the ocean exploration vessel Falkor for the Schmidt Ocean Institute, one of the philanthropic ventures of Eric Schmidt, former CEO of Google.

“I met Eric briefly when he came into our office once,” says Petts. “He took one of my crisps. Nice guy.”

‘Scratching our heads’

Petts began his career as a business adviser to the British government in northern Pakistan, managing a portfolio of start-ups and female-led businesses until the terrorist attacks of 9/11 forced him back the UK. “You’ve got to be ready for change,” he says.

He joined accountancy firm Deloitte and Touche and worked on the financial management of big farming estates in the UK before “drifting into jets and yachts”. “One minute you’re talking about the farm, the next you’re discussing the villa in St Tropez and the Sunseeker,” he says.

His first of several experiences working for family offices came in Monaco, where he dealt with property, investments, art and luxury assets, including a yacht and a jet.

“We were all scratching our heads over how to manage these things, and why they took up 80% of our time whereas the investments that were worth a hell of a lot more only took up 20% of the time,” he says. “But the yacht and jet were emotionally important to the UBO [ultimate beneficial owner].”

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Katara, built for the Qatar royal family.

Petts worked on the build of Katara for the Qatar royal family.

‘There was so much money involved’

Petts’ varied career has also taken in a series of finance directorships at yachting firms Y.CO, Hill Robinson, Yacht Fuel Services and Yachting Partners International. He has also been a consultant finance director at Jansen Maritime Services and Private Jet Charter and was more recently head of Yachting and Aviation at professional services provider Equiom.

His experience over the years has taught him a few skills for working with the ultra rich. “God gave you two ears and one mouth, but the ratio should probably be four to one – listen, listen, listen,” he says.

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Recognising the difference in the value of money is another key trait. “One of my family offices spent €380m euros in one year … but at the same time you have to consider every euro as if you were spending your own money,” says Petts, who is an expert in accounting software Microsoft Dynamics.

“I’m probably the only person to call Microsoft to ask to extend a field [in the tool] because at one family office, there was so much money involved we couldn’t put enough zeros in,” he adds.

‘€15,000 for one cup’

Petts has also become acutely aware how “precious” time is to the uber wealthy. “They have five minutes to talk about a €10m refit to one of their villas, or you’ve got an hour to cover a couple properties, a jet and a yacht refit,” he says. “That one hour meeting could be two to three weeks of preparation.”

Then there is dealing with the whims of the client. “I’ve had 10 lawyers all lined up to buy a company, and the client says, ‘Ian, let’s not go into Monaco today, I want to go and get my haircut’. It’s their money, they can do what they like, but that bit I really struggle with.

“But you have some fun, too. I’ve had 15 individuals, all earning between 500 and 1000 [euros per hour], at the table talking about why a stewardess broke a cup and didn’t replace it, and I’m thinking, ‘We’ve spent 45 minutes and we’re up to about €15,000 so far on one cup’. So you’ve got to have a sense of humour. But that one cup is important to the madame.”

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Superyachts in Monaco.

‘Big headaches’

From his vantage point in Monaco, Petts has a good view of the headwinds affecting his corner of the industry. One of the issues causing him “big headaches” is the “lack of people willing to finance very big yachts”.

“In jets, 50% are financed but in yachts it’s a tiny amount,” says Petts. “All the banks say they’re doing it but very few actually are. It’s a bit of a nightmare at the moment.

“By the time you can afford a jet or a yacht you’ve got some colourful history and the compliance officers in the banks just don’t want these clients, it’s too high risk. But it’s constraining the yacht market a lot. We’re shooting ourselves in the foot.”

Yard liquidity is another issue, he says, making due diligence on the yard “super important”. “How liquid is the yard, what is its pipeline and is it going to be able to finish your yacht?”

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‘Look her children in the eye’

Then there are sanctions clauses for charter, to protect funds in case an individual is sanctioned between payment and the charter; the VAT status of yachts, which is a lingering hangover of Brexit; and the increasing KYC [Know Your Client] requirements, which are “getting very heavy” and demand proof of funds.

“Five years ago, you knew the client because you had a couple of glasses of rose with them, you knew they had a yacht, a wife … you intimately knew your client and how they got their money,” says Petts. “It’s changed a lot.”

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Environmental awareness is an increasing trend with some of Petts’ clients, if not necessarily all. “I had a client recently who could have bought a new €6.5m Sunseeker, but instead she bought an old one for €1m and put €3m into it but she said, ‘I’ve recycled a boat’. That’s quite interesting,” he says. “She couldn’t look her children in the eye and build a new boat.”

Petts is still dreaming of meeting that “crazy enough owner” or that call from the palace so he can emulate Peter and Phineas Pett.

“They’re my ancestors, we have to stick to it,” he says.