Part one of Mediapart's investigation into the boss of Free showed how Xavier Niel had begun to amass the beginnings of a fortune thanks, in part, to his investment in sex shops in Paris and Strasbourg. At their peak these shops were earning Niel around 15,000 euros a month in cash.
But this was only the start of the entrepreneur’s money-making success story. The big money – the kind of money that has made him France's 12th wealthiest man - was to come not from the sex shop industry but from new technology, and most importantly from his stewardship of Free, which is today France's second biggest interest service provider and now a successful mobile phone operator too.
As with the rest of his early professional career, Niel, who is an indirect shareholder in Mediapart (see box marked boîte noire at the foot of this page), is not keen on discussing how he came to have almost total control of the company that spawned Free and made the businessman’s fortune. But thanks to court documents from the time, Mediapart has been able to piece together some of the most important details. The story behind how he became a billionaire goes back to one crucial day, March 13th 2002.
It was on that landmark day that Xavier Niel went from owning an already sizeable 58.94% controlling share of the company Iliad, the parent company of Free, to a huge 77.93%. To put this into context and to underline the dominance of Niel's position after the transfer of shares, the next biggest individual shareholder had just a 2.42% stake while all the institutional investors put together mustered only 6.9% between them.
Niel's stake in Iliad gave him near-total control and a chance to develop the business further in the future, to become the success story that it is today. But not everyone was to prove satisfied over the transfer of shares that took place on March 13th 2002. One man who became disgruntled was Xavier Niel's former business associate, Fernand Develter.
It was Develter who had introduced Niel to the world of sex shop investment back in the early 1990s. It was Develter, too, who had set up Fermic, the company that in 2000 was to be rechristened Iliad. Fermic had been created by Fernand Develter and his old colleague from banking days Michel Artaud - the company name came from the first letters of their names. However by 1990 Fermic, which offered a mixture of stock price information services and dating services on the Minitel network, was performing poorly and losing money. Xavier Niel was thus able to buy a 50% stake in it for a nominal fee, and began to develop the firm. After 1993, when business in dating services began to decline, he focussed Fermic on other areas, such as producing a reverse telephone directory service.