Fund Manager Focus 27/10/2014
David Thorpe peers into the mind of Georgina Brittain.
Keith Harris, the football fan and investment banker, tells Robert Tyerman how he is negotiating the carve up of stockbroker Seymour Pierce
Keith Harris, the football fan and investment banker negotiating to carve up stockbroker Seymour Pierce, which he chairs, knows all about corporate deal-making and its attendant dramas. He once tried to sell Manchester United to BSkyB before politicians stymied the deal.
Harris also advised pornographic magazine publisher Richard Desmond on buying Express Newspapers and helped the entrepreneurial Chris Akers sell Sports Internet to Sky for £220 million. He spent two 'very frustrating' years as chairman of the Football League and has worked since October on the future of Seymour Pierce, where he hopes to play a key role in a buy-out of the broking group's investment banking arm.
From his roomy office overlooking Cornhill in the heart of the City ('It's handy for Eddie George to pop over for advice,' he quips), Harris has developed a strategy for Seymour Pierce, which lost £30 million last year. He has been hoping to divide a slimmed-down group into two parts, which would be sold.
First would be an investment banking company, backed by himself and his old friend, venture capitalist John Moulton ('we go back 14 years') of Alchemy Partners. The second would be fund management, which mercurial ex-Jupiter investment chief John Duffield's New Star Asset Management has been negotiating to buy for a rumoured £20 million.
Harris, who envisages staying with the investment banking company, expects Seymour Pierce's broking operations in Crawley, where veteran player Clive Mattock holds sway, could go in a 'niche' management buy-out. He thinks there may afterwards be a future for the Seymour Pierce corporate entity as a cash shell. (Another 'good pal' is Manchester United director, Mike Edelson, a prolific, if controversial, shellmeister).
Harris has also taken the mandate to float City dealer John Jenkins' currently bombed-out Ofex private share market on Aim. Some outsiders speculate whether Seymour Pierce should buy Ofex itself.
As far as the present Seymour Pierce is concerned, 'my game plan is to be out by Easter'. Non-executive chairman of the broker since 2000, Harris took over the executive reins last autumn when the then-chief executive John Mackay resigned.
'That resignation came as more of a surprise to him than the rest of us,' recalls Harris. Faced with mounting bear market losses, cushioned by a still-substantial cash pile, Mackay favoured a more aggressive approach, while Harris opted for caution and cash conservation.
Harris became non-executive chairman when Seymour Pierce bought his private company for an eight per cent stake. He aimed to improve its corporate client list and seek new opportunities.
Last autumn's crisis — and tentative bid approaches — persuaded him to take over as executive chairman. 'I wanted to be in charge of this firm and I did not want to delegate.
'We cleared out the skeletons, as the last results show.' Then the serious talking began.
This is familiar territory for Harris, 50 this year. He 'retired' in 1999 after 25 years in investment banking, which culminated in 1994, when he became head of HSBC-owned Samuel Montagu.
In that role, Harris 'became the most travelled executive on BA' and saw profits rise from £40 million to £400 million in the stock market boom. He founded the Altium group with backing from Apax.
Harris became adviser to Manchester United and later consultant to Glasgow Celtic and other clubs. With sporting friends, including combative boxing promoter Frank Warren, after leaving HSBC, he accepted non-executive posts, 'at media and sports companies'.
He was then asked to become chairman of a Football League grappling with structural and financial problems. 'There were plenty of good parts to my time, but it was awful at the end.'
Claiming football at boardroom level is marked by ingratitude and short-sighted self-interest, Harris urged structural changes. These included trimming the First Division and replacing the Second and Third Divisions with regional divisions.
Harris did not want an executive role at Seymour Pierce. 'It sounds glamorous, but in a regulated business the workload is enormous.'
But he accepted the challenge. Fund management had been thought a more stable revenue source than investment banking, but the bear market changed that and Seymour Pierce has sold its asset management and private client arms and its independent financial advisory subsidiary.
Harris, whose own stake has fallen to 3.25 per cent, argues Seymour Pierce, with 17 per cent of Aim companies on its books, should command a good price. 'Aim and Ofex remain the best and most resolute ways to raise money in the public markets.
'It may be a steep hill. But history shows the cycle will be repeated.'
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