Nicola Horlick talks to Rachel Bridge at Drax about family businesses, private equity and restaurants.
Nicola Horlick is perhaps best known for being an institutional investment manager, investing funds in large publicly listed firms on behalf of UK institutions and unit trusts.
She was the managing director of Morgan Grenfell Asset Management and the CEO of SG Asset Management before setting up her own investment management firm, Bramdean Asset Management.
But in recent years Nicola has become increasingly interested in the role that private equity can play in building private businesses and creating value. In 2011 she co-founded a private equity firm Rockpool, which has so far invested more than £250 million in private companies.
Then in 2013 she started Money & Co, an online crowdfunding platform which often partners with small private equity firms to provide debt finance for transactions such as management buy outs.
She says: “I was inspired to set it up because I could see how difficult it was to get bank finance in place for smaller private equity-backed deals. Often banks don’t want to get involved or are slow to respond, so a lot of smaller private equity firms would prefer to work with a firm like us which can be more flexible and nimble. We have completed transactions within two weeks and funded them in five days.”
Money & Co works by auctioning the debt to high net worth individuals via its online platform. They can either pick and choose their own investments or opt for a managed portfolio service.
Since starting up, the business has provided the debt finance for more than 40 deals, with the largest loan to date being £1 million. Investors currently get a net annual return of 7.6% and so far there have not been any bad debts.
Nicola says that private equity can play a key role in unlocking the value of family owned businesses in this country.
She says: “Private equity is a very useful exit route for family businesses. When the owners come to the end of their working life it enables them to release some capital and have a nice retirement, while the business can be passed onto a new generation that might be able to take it forward and grow it. So everybody wins.”
This role is particularly useful now small businesses are no longer able to list on the stock exchange to release cash. She says: “In a bygone age there used to be lots of very small listings on the stock exchange but that doesn’t really happen now. You can’t really list a company worth £10 million unless you have a big story to tell, and those opportunities are rare.”
Indeed Nicola herself now only invests in private companies, having sold all her shares in stock market listed companies in 2007. She has invested in all the deals that Rockpool has ever done and many of the Money & Co transactions too.
She says: “I don’t like investing in stock market shares because I have no idea what is happening in the businesses, and I can have no influence on what is happening. Whereas with a private company I know everything there is to know. I have no desire to just be a third party investor, even though I did it professionally for a very long time. Over the years I have become disillusioned by it because companies have tended to hide behind the regulatory requirements. As a result it has become harder and harder for investors to know what is going on and I am not prepared to invest on that basis. I much prefer to invest in private companies.”
Having spent so much of her career dealing with money and investment, Nicola did briefly try her hand at a different industry a few years ago when she opened a restaurant in Barnes. But it closed after 18 months and although her second venture, a bar in Battersea, was more successful, she did not enjoy the experience of running it and so passed it on to her daughter.
She says: “It was a nightmare. The restaurant industry is a terrible business, especially in London, where you have a very high turnover of staff and you have to stay out very late just to make sure the business is ok. It was just awful. It was fun to start with because we could get all our friends to come and have dinner and drinks, but in the end it became really boring. My view now is very much that I should stick to my knitting, to what I know I can do. I should primarily be an investor rather than trying to run a business, because that is what I really enjoy doing.”
Drax sector lead: Rob Lanham
Tel: 0203 949 9563