Pinault empire makes California return with A-list agency acquisition

The next time François-Henri Pinault shows up in Hollywood he will no longer be seen simply as film star Salma Hayek’s billionaire husband but as the owner of the talent agency that represents her. 

The Frenchman on Thursday unveiled an agreement to take a controlling stake in Creative Artists Agency — whose other A-list stars on its books include Brad Pitt and Margot Robbie — from private equity firm TPG in his family holding company Artémis’s biggest ever deal. 

The venture into entertainment is a new direction for Pinault and Artémis, having spent most of the past decade building a $40bn portfolio focused on luxury through its stakes in Gucci-owner Kering and auction house Christie’s. 

The deal, which values CAA at more than $7bn including debt, also marks the latest investment in California by Artémis, which was embroiled in a long and bruising legal battle in the 1990s over the fate of a junk bonds portfolio bought from insurer Executive Life.

“The way I see it, this is more of a personal investment of the Pinault family than anything related to Kering or the luxury business,” said Luca Solca, luxury analyst at Bernstein. “Pinault’s wife, Salma Hayek, is a first-level movie star, plugged in on what goes on in Hollywood.”

The idea was echoed by a banker in the industry. “I’m not sure it has anything to do with Kering but having control over such an influencing crowd can be useful,” they said, adding that the deal was “more likely to have crossover implications for his wife” than for Kering.

People close to Pinault say he has been looking for businesses in the US or Asia that are not tied to luxury cycles for the past two years, and insisted Hayek was not involved. 

“The deal has absolutely nothing to do with pleasing Salma Hayek, this is a business decision,” said one of the people. “She didn’t know he was involved in this deal until he told her . . . she wasn’t even particularly happy about it.”

Talks between Artémis, CAA and TPG started at the end of 2022, with the French group’s team travelling to Los Angeles in April to meet key staff at the 3,000-strong agency.

Pinault was involved throughout, especially in initial conversations with the CAA’s three top executives and the process of assessing the business. However, the bulk of the negotiations were led by Artémis deputy chief executive Héloïse Temple-Boyer and super-agent Bryan Lourd at CAA, according to two people involved in the talks. 

Lourd eventually broached the idea of Artémis buying a part of CAA from its private equity owners, which had not been actively looking to sell the business, and talks heated up this spring.

While the link with the luxury side of the business is not expected to be direct, people close to Artémis think there are overlaps in the knowhow needed to run an agency and managing a large luxury group.

“We know how to manage complicated, demanding, creative personalities and to make intangible assets prosper [but] we have not thought at all in terms of synergies or complementarity” with Kering or its brands, said one of the people involved in the talks. 

Artémis was attracted by the opportunity of working with Singapore’s Temasek, which the French group believes shares a similar long-term outlook and which will remain a minority shareholder in CAA. The agency’s low overheads and profit margin of more than 30 per cent were also attractive, people close to Artémis said, as was the diversified nature of the business. 

The high-profile motion picture division at CAA only accounts for about 15-20 per cent of revenues, with television bringing in roughly a quarter. Its sports business is the largest division, accounting for about 30 per cent, and includes not only talent management but also advising teams and consulting on major sports infrastructure projects such as Yankee Stadium in New York.

“What reassured [Artémis] is that the agency is very diversified. Everyone focuses on the Hollywood star agency and it’s not even 20 per cent of the turnover,” said the person involved in negotiations.

On CAA’s side, “I think what interested them is that they didn’t want to go from fund to fund any more . . . so when they were approached they were responsive and quite receptive,” the person added.

That variety gave Pinault comfort in making the investment, according to the person. But the deal comes at a time of upheaval in the entertainment industry with a broad actors’ and writers’ strike paralysing production just as streaming platforms begin to curb their spending on content.

Longer term, the rise of streaming is fundamentally reshaping the way the industry operates while the extended shut down of production and cinemas during the pandemic dealt it a blow. 

CAA was founded in the 1970s by Michael Ovitz and other agents fleeing the William Morris Agency. It is home to some of the biggest names in entertainment, from Zendaya, Reese Witherspoon and Lady Gaga to George Clooney and Steven Spielberg. Lourd, who was in a relationship with Carrie Fisher, is a huge figure in Hollywood and acts as a consigliere not just to talent but also studio chiefs.

TPG took a minority stake in the agency in 2010 and gained control four years later, seeking a way to bet on the exploding value of sports and entertainment rights in the belief that talent agencies were far more stable businesses that the broader market understood.

Its equity investment was used, in part, to transform CAA away from a law firm model where top rainmakers focused on their books of business to one where most key employees owned equity stakes in the business and were incentivised to increase its overall value.

No single client represents more than 1 per cent of CAA’s revenues, according to people familiar with the matter, and apart from a drop in 2020 its revenues have grown consistently for about three decades.

The last time a Pinault ventured to Los Angeles, it did not end well. In the 1990s Francois-Henri’s father Francois purchased a portfolio of junk bonds from Executive Life, a now defunct California insurer that had been bought by Credit Lyonnais. Allegations of fraud in the Executive Life transaction led to Pinault being caught up in years of legal proceedings in the US that only ended in 2015.

The CAA transaction is the second foray by French investors into Hollywood in a year after Mediawan, founded by French telecoms billionaire Xavier Niel, struck a deal in December to buy Brad Pitt’s sought-after production company Plan B Entertainment. Prior to that, the last major Gallic venture into the US entertainment industry was in 2001 when Vivendi bought Universal Studios. 

With Pinault’s Hollywood bet, there is a new Frenchman in Tinseltown whose star is on the rise.