Although still just 28, the bundle of energy that is Damien Bombell seems to have packed more into his life than many people in their 40s. Before coming up with the idea for buyingpower – an on-line “energy procurement service” for small and medium-size enterprises (SMEs) – he spent seven years as a commodities trader in Sydney, New York and London. He then wrote The Copper Club (under the nom de plume Patrick Bell), a thriller about a rogue copper trader, which drew on Bombell’s experiences as a base-metal trader at Merrill Lynch at the time of the Sumitomo copper trading scandal. Bombell left Merrill shortly after the Sumitomo scandal broke. Although he himself will not be drawn on the whole affair, well-placed sources say that it was Bombell’s whistle-blowing evidence to the US Commodities&Futures Trading Commission that formed the basis of the subsequent case against Merrill Lynch. Merrill loans had funded much of Yasuo Hamanaka’s trading activity at Sumitomo. “I really can’t say anything about all this,” says Bombell. “You know what American lawyers are like.”
The eldest of three children, Damien Bombell was born in Sydney in 1971. His father, an entrepreneur in the IT business, started Nova Systems in the Asia Pacific region. Damien went to St Aloysius’ College, a private Jesuit school whose view, across Sydney harbour, must be the best of any school in the world. “During maths classes I would count the ferries going in and out of the harbour,” he recalls.
He did well in the classroom – eventually graduating in the top 5% in New South Wales – and on the sports field. He also captained the school debating team. During school holidays he did work experience on the swaps desk at Bankers Trust, which soon gave him “an intense interest in the financial markets”. So much so that he began attending night classes in finance while still at school and took all the Australian Securities Institute exams within a year, compared with the average of two to four years.
After leaving school, Bombell was sponsored by Price Waterhouse to study for a business degree at the University of Technology in Sydney. “I told them [Price Waterhouse] in my interviews that I had no interest in accountancy whatsoever, but that I just wanted a way into finance.”
Eighteen months into his degree, Bombell began dividing his time between his course and a job as a 19-year-old trader on the bullion desk at UBS in Sydney. After four weeks a vacancy occurred for the “graveyard shift” (from 3am Sydney time, when New York closes, to 2 pm when Tokyo goes to lunch) and Bombell grabbed it. “It was a sink or swim opportunity,” he says. “I swam.”
He continued to attend university in the afternoon and evenings, getting by on five hours’ sleep a day in two blocks. “I was perpetually jet-lagged at weekends,” he remembers. “But I was still young then. I’d die if I had to do that now.”
Given a free rein, he did well, but then he says that “quoting spot markets is really quite simple”. At the same time he opened his own futures trading account, trading Aussie interest rates and foreign exchange. “I was told that it was OK so long as I wasn’t trading the same commodities as I was trading for the bank, he says.”
In the final year of his university course, aged 22, Bombell was offered a job at Goldman Sachs in Hong Kong trading commodities, and decided go for it despite not having completed his degree. He went to New York for training and ended up staying there as the youngest trader on the commodities desk by four or five years. “A lot of my colleagues were Harvard MBAs,” he recalls. “I was known simply as ‘the Australian’.” Being at Goldman Sachs and able to trade 40 commodities simultaneously was for him, he says, “like being a kid in a candy store”.
After a year, in 1995, Bombell was offered a job at Merrill Lynch in London, as a vice-president and senior trader. He was still just 23. “I didn’t want to go at first,” he says. “But they met my guarantee, and I knew they had a significant presence in the copper market. It was also going to be easier to trade for my own account, which had been effectively prohibited at Goldman.”
After leaving Merrill in 1997, Bombell researched his book in New York and Tokyo, while continuing to trade futures on his own account. The Copper Club was published by Minerva Press at the end of 1998 and is now into its third print run. “I wrote it so that my mother could understand it,” he says.
At the beginning of 1999, after deciding that the internet was going to be the next big thing, he wrote a series of business plans for such ventures as an online sports betting shop and a free online lottery that would enable companies to collect market research data.
The idea for buyingpower came from research that told him that SMEs often got a bad deal on utilities. “From my days in trading I understood that an auction was the way to get the best price at any one time,” he says. After talking to a friend, a utilities consultant, Bombell came up with the idea of auctions where electricity providers would bid to supply “powergroups” of SMEs, saving them as much as 33% on their electricity bills.
The idea met with a cool reception from venture capitalists, however. “In 1999 internet ideas were expected to be cool and sexy,” says Bombell. “Ours just wasn’t.” Eventually though he was backed by Les Hayden, an old business partner of his father, who seeded the business along with some angel investors.
The company has so far brokered electricity contracts worth £4 million. Bombell hopes soon to stage monthly auctions, and then to do the same thing in Germany and the Netherlands, and the company is seeking to raise e10 million to finance this expansion. “I’m generally very bearish on technology,” says Bombell, “but regardless of technology, this is a good business. We’re looking to achieve operating profitability in the first year.”
As far as exits go, Bombell has no plans to do an IPO, but thinks that before too long his company would be an attractive takeover target “to anyone who wants to interact with the SME community”. Potential buyers could therefore range from a water utility to a bank.
And then what for Bombell? “Well, I would eventually like to have my own hedge fund.” It would take a brave man to bet against him achieving this goal.
