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Lunch with the 2017 Rich List: Radek Sali's search for the next 'Project Gold'

John StensholtFormer Rich Editor
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Radek Sali is leaving no stone unturned searching for his next "Project Gold", the turnaround strategy that led to a huge payday from the $1.67 billion sale of his Swisse vitamins company last year.

Sali, a member of the Financial Review Rich List, has formed his own investment firm Light Warrior, to invest his proceeds of about $400 million from the Swisse sale to Hong-Kong based Health and Happiness International (formerly Biostime) in a two-stage buyout.

The deal capped a stunning turnaround for Swisse, which teetered on the edge of collapse only a few years ago before riding the huge demand from Chinese buyers for its vitamins and healthcare products and receiving an offer for the business that was too good to refuse.

Radek Sali is investing the fortune he made from Swisse. Josh Robenstone

Sali, 40, tells the Financial Review in a special Rich List lunch series, that since leaving Swisse last December he has received pitches from at least 105 start-ups or early stage businesses looking for funding to grow.

"I'm kind of the 'yes' guy but I've got a lot of 'no' guys around me that keep things honest. But the profile we look for is a business that's in growth in an industry that has got some good tailwinds. But we don't mind if there are some challenges because sometimes that creates an opportunity."

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Light Warrior has stakes in education company Republica, crowd-funding platform OurCrowd, technology company Unlockd and it recently led a $10 million fundraising round for Melbourne genetics company myDNA.

Sali says his best investment so far is buying 33 per cent of George Calombaris' Jimmy Grants food outlet chain, though that too has some challenges given Calombaris was recently named and shamed for underpaying staff by $2.6 million.

He and Calombaris have plans to expand the business overseas, something that Swisse did with huge success. Sali also wants to pass on the lessons he learnt from the trials and tribulations he experienced at Swisse to the businesses he is investing in.

"We know we can share some more stories and help them get through some of the challenging times because you can bet that you're always going to go through cycles. Things will be good and there will be the hard times as well. And the hard times define you."

Swisse's big success came with the targeting of Chinese buyers, both in China and in Australia, but it was a strategy Sali and his management team arrived at out of necessity after an ill-fated expansion into the United States.

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"We got a big result out of it but we took a lot of risk and had a $70 million debt happened as a result of us launching in the US and us losing a bit of focus in our home market while we did that. We were growing too fast.

"Our back was to the wall. We needed to create a runway of how we were going to get into a situation where we were able to create profit that was going to pay for the debt that we had created."

Sali was alerted to a trend in local Australia sales, where about 30 stores were outperforming compared to the rest of the country. And in those stores the majority of the buyers were either Chinese-born locals or visitors.

"Our national sales manager kept telling me that there was this huge opportunity with the Chinese market. And, serendipitously, at the time we hired a sales and marketing director who was from a watch business and he had a great specialty in selling to the Asian markets. So we saw this opportunity.

"And, thankfully, by focusing on these stores with point-of-sale [signs] in Mandarin but with our ambassadors like Nicole Kidman or Olympic [athletes] in those stores with that heavy Chinese demographic we started to grow the business and we could see that we could sell to the Chinese community."

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Swisse went from a company that turned a profit of just $2 million in 2013 to one that had revenue of $146 million alone in three months in 2015 thanks to the Chinese focus.

"We called it Project Gold." says Sali. "We had a team focused on it and it delivered gold for us."

"I think the basis of business is always to understand what is happening with your customers and if you're seeing any kind of aberration, whether it being positive or even negative, it's really important to delve in and to ask questions as to why and what's happening."

Watch next: A Seat at the table with Radek Sali, in partnership with BMW.

This content was created in partnership with BMW.

The Financial Review Rich List is published on Friday, in The Australian Financial Review Magazine and online at afr.com.

John Stensholt is a former editor of the BRW Rich 200 and Young Rich Lists.

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