REAL ESTATE SPIN-OFF SEEKS VENTURE DEALS

Your core commercial real estate business hovers around a lowly five per cent, return so why not diversify into venture capital?

Maybrook Saint James (MSJ), a London-based venture capital firm, is currently seeking its first deal since being launched by family owned property company Maybrook Properties in November last year.

MSJ, which is investing £3 million (€4.5 million; $5.5 million) from the Maybrook Properties balance sheet, is targeting investments of between £250,000 and £1.5 million in venture capital deals, insolvencies and turnarounds as well as acquisitions.

MSJ has a team of six headed by Alexander Jones, a construction project management specialist who is on the Maybrook Properties board, and EJ Lawrence, who spent the last six years as an M&A specialist at Avondale Group, a business consultant, as well as owning and selling two businesses.

Says Lawrence: “We are a little different from most VCs in that we are happy to support the right business for the long term. However, we'd prefer to structure deals so we get interest on our money rather than just investing to get a capital gain on exit.”

Lawrence says the firm's focus is on property and construction; the medical sector (Jones is a qualified general practitioner); professional services and facilities management. “We like stable risk-averse businesses where we can take some security, for example through intellectual property rights.”

Because of this somewhat cautious approach, Lawrence says the firm is targeting an IRR of 22 percent after costs rather than the 30 percent target of many rivals, and/or a yield of 12 percent where the capital structure includes a loan note.

If things work out, MSJ's foray into venture capital might well catch the eye of other UK real estate investors currently looking for a way out of the doldrums.