Wednesday January 1st 2020
TVsquared | West Coast Capital | Metro Bank £195m | Smart Assessor £3m | Bio-Bean £7.5m | Homewings | Zenith | Bremont Watch Company £11.7m | Empresaria Group £270.4m | Interquest Group £158.6m
News about UK growth companies and/or accelerators + turnover in the GRID marketplace 19th – 25th February 2017:
Dealmaker Hunter takes stake in TV ads analyst | Oliver Shah, The Sunday Times. February 19
DZ profile: TVSquared Limited
Business: tech start-up that measures the impact of TV advertisements on consumers’ online activity. tracks changes in internet search rates during big advertising events such as the Super Bowl.
Investment: WEST COAST CAPITAL, which was already a backer, has taken a majority stake leading a $6.5m (£5.2m) fundraising with the SCOTTISH INVESTMENT BANK.
WEST COAST CAPITAL (WCC)
DZ profile: West Coast Capital Limited
Business: private equity firm. As well as TVSquared, WCC has stakes in DYNAMICACTION, a retail data analytics business, and ORDERDYNAMICS, which helps retailers manage inventories. Hunter also runs a charitable foundation.
Location: Dundonald, near Kilmarnock, Scotland
Founder: Scottish retail and property tycoon Sir Tom Hunter, 55, who started his career selling trainers from the back of a van. He founded Sports Division, taking it from a single shop in Paisley to Britain’s biggest sports retailer through the purchase of Olympus Sports. He sold out to JJB Sports in 1998, for £250m payday. Hunter became one of the best-known buccaneers in the boom of the early 2000s, bidding for Selfridges and taking over the housebuilders Crest Nicholson and McCarthy & Stone with backing from HBOS.
News: has become the main investor in TVSquared, leading a $6.5m (£5.2m) fundraising with the SCOTTISH INVESTMENT BANK.
METRO BANK: The only bank that loves the high street | Aimee Donnellan, The Sunday Times
DZ profile: Metro Bank Plc
Business: challenger bank - will open a further 12 branches this year, bringing the total to 60. Top-notch IT enables Metro to open nearly 90% of accounts within 30 minutes. Its app allows customers to pause their accounts if they think they have lost their cards and restart them with a click once the cards are found. Banks such as HSBC can take up to two weeks to send a new card. The upstart has the added attraction of clean earnings that are not sullied by any legacy of IT issues. Although the outlets — open seven days a week, with long hours on weekdays — cannot be found further from the capital than Newbury to the west and Cambridge to the north, there are plans to open in Bristol and Leicester.
Launched: 2010 opened its doors in Holborn, central London, as the first new high street bank in 138 years
Founders: American billionaire Vernon Hill, 71 and Anthony Thomson (who remains a Metro shareholder but now runs app-based Atom Bank). Hill’s reputation — he set up Commerce Bank of New Jersey and in 2008 walked away with 5% of the proceeds from its $8.5bn sale — has cemented a loyal following from high-profile investors.
Staff: Craig Donaldson, £859,000-a-year chief executive, who has been with the challenger since the start. Previously worked for Barclays, RBS and HBOS.
Financials: eye-watering costs - has burnt through much of the £1bn of cash put in by investors. And there is little evidence of how it will make a profit. Last year Metro spent £15m on renting branches, up 36% on a year earlier. Despite the fact that Metro doubled lending to consumers and small businesses to more than £3.4bn, it reported a loss of nearly £49.2m last year. 2016 revenue up 62% year-on-year to £195m.
Investment: FIDELITY INTERNATIONAL, the Reuben brothers and Steve Cohen of SAC Capital fame were early backers and more investors came on board for the float last March, which valued Metro at £1.7bn.
1.Such expansion goes against the grain for the big five high street banks, HSBC, Lloyds, Barclays, Royal Bank of Scotland and Santander. Phone banking, dwindling profits and the prospect of soaring business rates are forcing the sector to rethink its business model. Last year the big five closed 485 branches, leaving a total of 6,255 — 20% fewer than five years earlier. RBS and Lloyds are likely to signal more closures this week. Even Metro admits that 90% of transactions by its 900,000 customers take place online. But ….Leases for new branches such as those in Kensington, west London, and Cheapside in the City are nearly 80% paid for by the safe-deposit boxes that Metro provides.
2. Metro, whose shares closed on Friday at £35.60, seems overvalued with a market cap of £2.7bn. Rival challenger Virgin Money, which floated in 2014, 18 months ahead of Metro, has 4m customers. Yet its shares closed at 341p on Friday, valuing Sir Richard Branson’s venture at £1.5bn, and it made a profit of £160m in 2015.
3. The red ink will turn black this year, according to Donaldson, who plans to hire a further 500 staff. “We’ll go through 1m customers this.”
4. Hill and Donaldson say they are happy to sacrifice profits for expansion. “We could have been profitable a lot earlier but we wanted to grow the business,” said Donaldson. The expansion, however, has not been as aggressive as the bosses would have hoped. In 2010 Hill vowed to open 200 branches in a decade. But Donaldson accepts there will come a time when Metro will either have to buy a rival or be swallowed up by a bigger bank.
SMART ASSESSOR: Success cost me two companies and one marriage | Laura Onita, The Sunday Times
DZ profile: Smart E-assessor Limited
Business: product allows apprentices and tutors to store files online. Students on vocational courses can upload videos, photos and audio files to Smart Assessor. Today, the company licenses its platform to more than 200 colleges and training providers, charging £85 a year for each apprentice. It opened an office in Australia last year and America is on the horizon.
Founder: Fiona Hudson-Kelly, 55. Her first business, Start-Right computer training - with 25 staff who trained executives for customers such as Peugeot - came to a halt in 2005 when her biggest client, MG Rover, went into administration. A year later, she used money from the sale of the family home to set up Silver Linings, a web-based version of her first company. Customers included the telecoms giant O2. Fast growth helped her to secure £1m investment from venture capitalists in return for a majority stake. She sold most of her shares and with £45,000 inherited from her mother started Smart Assessor from her dining- room table in 2010.
Financials: posted pre-tax profits of £710,000 on sales of £3m last year.
Investment: Hudson-Kelly owns 85% of the business and the rest is held by senior management.
1. Hudson-Kelly expects revenues to top £4m this year with the help of the new apprenticeship levy, which starts in England in April. Businesses with annual wage bills of more than £3m will pay the tax — 0.5% of their total pay — to help fund apprenticeships. “We are targeting the levy-paying employers,” said Hudson-Kelly.
2. Hudson-Kelly is a winner in the latest NatWest Everywoman awards for entrepreneurs.
BIO-BEAN: Wake up and smell the rewards from recycling | Laura Onita, The Sunday Times. February 19
DZ profile: Bio-bean Limited
Business: works with waste management companies to collect coffee grounds from hundreds of shops — which it dries to make logs to burn on barbecues and wood stoves. Kay says the logs burn hotter and for longer than wood. Has already won contracts with the likes of Amazon and Ocado.
Location: factory is in the Cambridgeshire village of Alconbury
Founder: Arthur Kay, 26, a University College London architecture graduate
Financials: has reportedly seen annual revenues reach £7.5m in his fourth year.
Investment: has raised “many millions” from outside investors including British Gas. He also won £40,000 from the Shell Springboard competition, which awards funding for innovative energy projects. Also €500,000 (£400,000) from the Green Challenge competition, which is funded by the Dutch Postcode Lottery.
News: Kay is part of a growing cluster of entrepreneurs operating in the so-called circular economy. Champions of the movement turn waste into new products or design materials that can be reused again and again — straightforward recycling is not enough. Research by the Ellen MacArthur Foundation, a charity that promotes the circular economy, estimated that £271bn of government grants and venture capital backing is available across Europe for companies such as Bio-bean.
HOMEWINGS: Dutch designer who went online to shake up the cosy world of home makeovers | Clare Hutchison, The Evening Standard. February 20
DZ profile: Homewings Ltd
Business: The website pairs customers with experienced interior designers, who will create a concept — complete with a shopping list and instructions on how to bring it to life — for as little as £199 per room. “We can’t automate design — the designs can’t feel cookie-cutter — so it was about providing a platform that enables designers to focus time on actually designing, as well as collaborating and interacting with clients.” Between 70 and 80 rooms a month are currently getting the Homewings treatment. Early adopters range from young renters with a budget of £2000 to older homeowners with as much as £10,000 to spend. They include older men, who have tended to be elusive to traditional practitioners.
Example - a project she did for a Danish client looking for a modern lounge in grey hues. ….the pair refined the brief and swapped ideas and opinions on everything from paint colours to the Nina Simone print the client proposed. Within a fortnight, De Ruiter produced a to-scale visualisation for her client to approve, plus a foolproof construction guide and a list of where to buy components online.
Designers …80% cut of the price could seem low when broken down to an hourly rate, but secondary benefits include training in social media or how to deal with customers, access to a community of peers and the flexibility of freelancing.
Location: shared office next to Shoreditch House
Founders: Cornelia De Ruiter, Dutch, lawyer and later a strategy consultant for Bain & Co; plus start-up veterans Steffen Thilsted and Nicolai Watzenig
Financials: sales are growing at about 20% a month.
Investment: A small investment from a group of tech investors has helped them keep their foot on the gas …..will soon seek fresh funding to launch overseas.
1. Residential will remain Homewings’ primary focus for the time being. It has property developers in its sights after completing a project for the buyer of a rooftop property at Battersea Power Station, and thinks Homewings could form part of a home-sale package.
2. De Ruiter is keen not to diversify too quickly, but the team is also looking at office design and embedding the service in wedding-gift registries and retailers’ websites.
ZENITH: Vehicle rental company backed by Bridgepoint to announce takeover of Coca-Cola truck provider | William Turvill, City A.M. February 20
DZ profile: Zenith Vehicle Contracts Group Limited
Business: northern private equity-backed vehicle rental company has a fleet of around 85,000 vehicles.
Location: Leeds, Solihull and Wokingham
Staff: more than 500 employees
Investment: private equity house BRIDGEPOINT bought Zenith from HGCAPITAL for £750m, last month
1. Set to announce the takeover of a local rival, CVL - which stands for CONTRACT VEHICLES LIMITED. Takes Zenith into a new space: heavy goods vehicle (HGV) leasing. CVL, which has a fleet of more than 12,000 vehicles, provides services to companies including COCA-COLA, JEWSONS and LAFARGE. CVL reported a turnover of £61.5m in the year to 30 September.
2. Deloitte was adviser to CVL, while Bridgepoint and Zenith are being advised by KPMG.
BREMONT WATCH COMPANY: Meet the man making 10,000 luxury watches a year in Britain | Harriet Green, City A.M. February 20.
DZ profile: Bremont Watch Company Limited
Business: British watchmaking company which makes very high-quality pilot watches, producing between 8,000 to 10,000 a year. 20 per cent of Bremont customers are in the military
Location: manufacturing facilities in Henley and Silverstone
Founders: Giles and Nick English, who both started their careers in the City, set the company up seven years after losing their dad (see DZ profile).
Financials: in the year to March 31, 2015 turnover rose 30 pc to £11.7m and pre-tax earnings £800,000 down from £1.6m a year earlier. 2016 revenue forecasted up by over 20%.
1. Investing in people is Bremont’s number one challenge, says English – bearing in mind that this is an industry where machinery can cost half a million pounds a pop. It takes two years to make a Bremont watch. It takes seven years to train the person who makes it.
2. Building the brand hasn’t been easy – the competition is 750 Swiss watch companies. For the first five years, Giles and Nick were just making prototypes. “
3. This year, the brothers are focusing on growing in the UK and US.
Small-cap focus: recruiters. Overseas business and sectoral diversification boost small UK staffing agencies | Chloe Cornish, FT. February 24.
DZ profile: Empresaria Group Plc
Business: specialist staffing group, which comprises 21 niche recruitment firms located across 19 countries. Temporary staffing comprises around 93 per cent of revenue.
Financials: 2016 revenues: £270.4m. In the first half of 2016, 34 pc of the company’s net fee income was drawn from the UK — with Germany and Austria the second-biggest contributor at 28 pc
Investment: Aim-listed. Key shareholders: LIONTRUST INVESTMENT PARTNERS LLP 11.5%, BELEGGINGSCLUB 'T STOCKPAERT 5.6%
1. Shares in the rose from a post-referendum low of 73.5p on July 6 to £1.35 on February 21 — an 83 per cent rise, increasing its market capitalisation to £69m.
2. The group has sought to weather hiring cycles by diversifying across geographies and sectors — from executive headhunting in the Middle East, to fashion retail staffing in Japan.
DZ profile: Interquest Group Plc
Business: specialist technology recruitment business that specialises in high growth areas of the new digital economy – information security, analytics, digital, telecom and technology. IQ operate across all industry sectors with a particular focus on financial markets, retail, public sector and professional services.
Staff: Chris Eldridge, chief executive
Financials: 2015 Year on year grew revenues 5% from £150.6m to £158.6m while net income improved 51% from 2m to 3m. The group’s interim results, released in September, were gloomy — revenue was down 9 per cent year-on-year, adjusted pre-tax profit fell 44 per cent to £1.4m. The company was affected by Brexit-related uncertainty and lower levels of public sector demand.
Investment: AIM listed. Key shareholders: G P Ashworth 35%, HELIUM SPECIAL SITUATIONS FUND 9.3%, LIVING BRIDGE EQUITY PARTNERS 6.3%, Jim Mellon 5%, AXA FRAMLINGTON INVESTMENT MANAGERS 3%”
1. The share price slid 68 per cent from May 25 to December 1.
2. the group has taken a £3.2m hit on a “root and branch reform” of ECOM, the group’s underperforming digital recruitment subsidiary, which has been restructured to “counter lower than expected volume of work from the agency sector”