‘More than just cautious’

Pi Capital was founded in the late ‘90s and was the inspiration of two extremely successful private equity godfathers. Michael Stoddart, who was the founder of Electra Private Equity, called his good friend Roger Brooke, who was the founder of Candover. They were both retiring from their firms and said, “Hey, we know a lot of smart wealthy people. Why don’t we put together an investment club and do deals at the smaller end of the market?” That was how it was born. They then brought in two other very senior and successful non-executive partners: Peter Cawdron and Simon Oliver as chairman.

And when did you get involved?

In the process of evaluating whether to join the club – which was an immediate yes on my part – I thought one step further: that the potential of this idea was so significant that I actually wanted to try to get more involved as an owner/operator. In 2002, I persuaded the ownership of Pi Capital to sell to me and a partner, the head of a family office. Together we acquired 85 percent.

When did the club last make an investment?

The very last deal we did was in December, when we took an institutional allocation in [Pi member] Jon Moulton’s Better Capital. A group of between 15 and 20 members invested in the block. I won’t tell you how much was invested, but our sweet spot is between £1.5 million (€1.7 million; $2.3 million) and £5 million, and this was within the normal range.

Did this end something of a two-year investment drought? 

It did, but I wouldn’t call it a drought. I would call it a period of time in which we evaluated hundreds of opportunities and chose not to transact, as none of the deals we looked at represented a risk/reward dynamic that we were comfortable with. 

And are more opportunities presenting themselves?

Only slowly. It’s still pretty tough out there to get deals done. I do see some very good companies. However, they are attracting extremely full prices. Because we are individuals with our own after-tax capital to invest, we’re more than just cautious; we are in a position where we’d like to invest our money, but we don’t need to invest our money.

Are these sorts of opt-in deal clubs becoming more prevalent?

I don’t think we’ll see more Pi Capitals emerging, because it is an incredibly difficult and challenging undertaking to attract one-by-one hundreds of high net worth and ultra high net worth individuals, who are serious about what they do with their time and money. We are not a transaction shop where you put your name on a list. These are named, known individuals, who – besides having to go through all the normal money laundering checks and requirements – pay £4000 per year to be part of the club. 

What’s the rationale behind turning your attention to Asia and the Middle East?

While the value proposition of Pi is currently mostly UK-centric, opening up clubs and propositions and partnerships with locals in some of these key emerging financial centres is extremely attractive, both for people in those markets and Pi members in the UK. 

How would you react to being described as ‘the best-networked man in London’?

I am definitely not the best-networked man in London. I would say, though, that I do have in the club 300 members, among whom are some of the smartest and most successful entrepreneurs, operators and investors. We have founders and managing partners from some of the best private equity firms, not just in the UK, but in the world. That can be said for the areas of hedge funds, real estate, investment banking, healthcare, retail et cetera. The truth is, my network and my reach is significant by virtue of the club, because I know these members well and over time have developed meaningful relationships.  n