Brian Souter constructed one of many world’s largest transport fortunes over the previous 4 a long time by way of Stagecoach, the UK bus operator he and his household began with a pair of second-hand autos.
Now, fueled by the proceeds from final yr’s takeover battle for the corporate, Souter’s private funding agency has launched into a significant deal spree, shifting his fortune additional away from the trade that outlined his profession.
Souter’s namesake household workplace has announced seven investments this yr in UK and Irish firms, spanning the power, development and engineering sectors.
It agreed this month to accumulate UK metals-solutions agency Premier Hytemp in its newest wager, with phrases of the deal not disclosed. Even with a world slowdown in deal making, the agency plans to proceed allocating a few of the £595 million ($743 million) that Deutsche Financial institution AG’s DWS Infrastructure paid final yr to accumulate Stagecoach in an all-cash transaction.
“The exit has given us more firepower,” Souter Investments Managing Director Calum Cusiter stated in an interview. “We’re definitely not of the camp that is risk-off.”
Souter’s agency has web property of about £400 million, in accordance with filings printed final week, representing the majority of his wealth in addition to making it one of many UK’s greatest household places of work for a British entrepreneur.
The Edinburgh-based firm has made greater than 50 offers since being created in 2006, typically specializing in established companies beneath the radar of the most important personal fairness companies. Souter Investments usually makes 5 to 10 investments a yr of £2 million to £30 million, placing 2023 on monitor to be considered one of its busiest 12-month intervals.
Souter, 69, and his sister Ann Gloag, 80, a fellow Stagecoach founder, acquired a complete of about £120 million by way of DWS’s buyout, which scuttled a merger with rival enterprise Nationwide Categorical, in accordance with knowledge compiled by Bloomberg. About £25 million from the deal individually went to Souter’s namesake basis, which oversees greater than £100 million of investments, filings present.
“We probably could write bigger checks,” stated Cusiter, who declined to touch upon Souter’s wealth. “But we are mindful of the need to diversify.”
Souter, a former Arthur Andersen accountant, based Stagecoach together with his sister in 1980 as Margaret Thatcher’s Conservative authorities started to decontrol the UK’s bus trade. These adjustments helped Souter develop by way of buying rivals whereas sustaining a give attention to inexpensive fares.
The British tycoon, whose father was a bus driver, helped lead the Perth, Scotland-based agency’s operations till 2019, when he stepped down as chairman after earlier serving as chief government officer.
By then, the corporate’s income had risen greater than 650%, with Souter receiving no less than £200 million in dividends and share buybacks, in accordance with knowledge compiled by Bloomberg. DWS’s provide to purchase Stagecoach for 105 pence per share valued the agency about 350% increased than its preliminary public providing worth in London about three a long time earlier.
Souter beforehand shared a household workplace together with his sister, however the pair cut up as a result of completely different priorities for managing their cash. His household workplace has since targeted on shopping for stakes in firms immediately by itself or alongside mid-sized personal fairness companies as a substitute of by way of a significant buyout fund.
Of the roughly three-dozen previous investments listed on Souter Investments’ web site, the agency had a consultant on about half of the businesses’ boards. It has held a number of for greater than a decade, exceeding the standard time-frame for a personal fairness fund.
“Our inclination is to ask questions and be involved,” Cusiter stated. “Giving money to a fund is absolutely valid as a strategy. It’s just not how we do it.”
Profitable bets for the household workplace embody investing alongside Buckthorn Companions for a stake in industrial-equipment enterprise Ashtead Expertise. The agency listed in London in 2021 and noticed its shares greater than double earlier than Souter’s household workplace exited in Might.
It additionally invested within the administration buyout of Esure in 2010 and exited three years later when the UK insurance coverage agency listed at a valuation about 350% increased.
Nonetheless, not all of the household workplace’s investments are large successes. Fullers360, considered one of New Zealand’s largest ferry operators that Souter Investments purchased in 2009, has reported losses for its previous three monetary years. It additionally offered Turkish transport enterprise IDO in 2020 after it confronted debt troubles.
“We don’t pretend that everything we’ve touched turns to gold,” Cusiter stated.
Cusiter, 43, joined Souter Investments quickly after its creation together with fellow managing director John Berthinussen, making them two of the longest-serving staff among the many household workplace’s dozen or so employees members.
Cusiter stated the agency is monitoring the state of affairs in Israel and Gaza for any broader macroeconomic impacts, however has no plans to cease hanging offers.
“We are still looking to deploy,” he stated.
