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Promontory Financial; Scalene Capital Management; USPowergen; Recovery Partners; Schechter & Co; Van Oss

Promontory Financial | Scalene Capital Management | USPowergen | Recovery Partners | Schechter & Co | Van Oss

Promontory Financial
Spreading small bank risk

Gene Ludwig might just have created the perfect boutique. It sells a wonderful product in demand across the nation, nobody else sells it, and the barriers to entry are enormous, especially considering Ludwig's first-mover advantage. Its name is Promontory Interfinancial Network (PIN).

Ludwig is no stranger to setting up companies that cater to banks. Comptroller of the currency from 1993 to 1998, he founded Promontory Financial Group after a short stint at Bankers Trust during the period when it was taken over by Deutsche Bank.

Promontory Financial, based in Washington DC, is essentially a firm of bank doctors. Medium-to-large-size banks call it in to help provide expert strategic advice on everything from M&A to Basle capital-adequacy standards. Ludwig can rattle off an impressive list of clients and says that his services normally work wonders for their stock prices.

Two key selling points drive Promontory's consulting business. The company is packed with experts from all sides of the financial-services industry: its employees have been regulators, heads of risk-management departments, sometimes both. And Promontory has become skilled at applying lessons drawn elsewhere to its new clients.

Very few banks can have state-of-the-art risk-management systems at all times. What's more, says Ludwig, "it's the lightning bolt that you don't see that kills you". Risk management is largely about managing tail risk - the unlikely occurrences that can have devastating effects. Promontory, because it has seen so many banks in so many different situations, is able to worry on its clients' behalf about a whole list of things that most bankers might not normally consider.

Ludwig's happy for Promontory Financial to stay relatively small. "Every new client you take on, you've got to do an A+ job everywhere," he says, which means that "we've turned down just about as much business as we've accepted".

Promontory Interfinancial, on the other hand, is definitely a company with growth potential. Although it was only founded this year, it's already got some 80 employees, has set itself up in an office building in Arlington, Virginia, and has signed up more than 500 financial institutions: some 10% of its target market in the US.

Deposit insurance revolution

The newer company specializes in smaller banks and thrifts, and is not a consultancy shop. Rather, PIN has developed a product called CDARS (Certificate of Deposit Account Registry Service). It is designed to help these institutions strengthen their client relationships, get solid, low-risk funding, and provide a brand new service for their depositors. Generally, it helps them compete with the mega-banks and brokerage houses.

The idea behind CDARS is simple: while a deposit at any given bank is insured by the federal government only up to $100,000, many institutions and individuals would like to deposit more than that while keeping the federal guarantee.

So the different banks join together. While the depositor deals with only one bank, his money is in fact spread out over as many different institutions as is necessary to ensure that all his principal and interest remains fully insured.

PIN's computers do most of the hard work, making sure that for every dollar a bank farms out to one of its rivals, another bank will deposit a client's extra dollar with it. PIN also smooths out interest-rate fluctuations between banks, making sure that each bank can offer as much or as little interest on these deposits as it likes.

The CDARS service seems set to be a huge success, made possible through the combination of some very sophisticated computer technology and a board of directors and senior management that comprise a who's who of former regulators. The vice-chairman of PIN, for example, is former Federal Reserve vice-chairman Alan Blinder. In fact, PIN is doing a job that almost seems as if it should be performed by the Federal Reserve, or some other branch of the government.

"It's a wonderful example of how the private sector can solve a government problem," says Ludwig. After all, the chances are that PIN's costs are much lower than they would have been in the public sector.

PIN should also act as a conduit for Promontory Financial mandates, since it will familiarize hundreds of new banks, many of them pretty big, with Promontory's brand name. And PIN is also likely to bring Ludwig into contact with a number of new banks that might be prime candidates for his next venture - a private-equity fund specializing in smaller US banks.

Ludwig notes that the typical regional bank in the US is likely to know a lot more about, say, the farming industry than it does about the financial-services industry. He saw many good investment opportunities around 2000, he says, but couldn't offer investors in private-equity funds the 40% returns that they were demanding at the height of the technology bubble. Now, with the greed gone, the time is right to provide smaller banks not only with capital but also with Promontory's expertise.

Ludwig has another new plan about to launch. He calls this "a real third-party conduit in terms of offering to the market commercial paper and credit-card receivables". He won't go into much more detail, but it's clear that Promontory's narrow financial-sector focus isn't preventing him from branching out into all manner of new businesses. Before long, Promontory Financial looks set to be little more than one arrow in quite a full quiver.
Felix Salmon

Scalene Capital Management
The long and short of forex

Left to right: Andrews, Greenwald and

Dave Greenwald misses his "base salary, bonus, stock options and fancy office". But that is just about all the former managing director and head of US foreign exchange trading at Bank of America in New York misses.

Greenwald is now one of the three founding partners of Scalene Capital Management - a foreign-exchange hedge fund that he set up with fellow ex-Bank of America staffers Ken Kristensen and Todd Andrews in May 2002.

They have abandoned big-bank politics and pressure, as well as the cold New York winters and long commutes to work in favour of running a small business in Newport Beach in sunny California. And now the big banks are scrambling to offer the very best and most efficient services available.

The three colleagues quit Bank of America as a group in March 2002. Greenwald had been in his MD position since 1998, having been at the bank since 1995. Kristensen was a BofA lifer, having started in the Los Angeles office in 1989. Andrews had arrived at the bank in 1996 from college.

They had considered leaving the firm for about two years. The merger with NationsBank in 1999 began to push that firm's staff into top roles from around 2000. "At Bank of America I would think I was having a good day and then some of our senior managers would get fired," says Greenwald. And he didn't have confidence that the bank had the right new people for the job. They had run some successful businesses in derivatives and elsewhere but they could not necessarily replicate that in forex.

This sort of political manoeuvring is typical of a large organization - Bank of America employs about 180,000 people. And it is especially characteristic of an organization that has recently been through a merger.

A lightning-quick start

It's also a lot easier to set up shop on your own than it was even as recently as six or seven years ago. Scalene was up and running within two months of the team having left Bank of America. All you need to get going, apart from the money to trade with and the knowledge of how to make money out of a market, is a standard internet connection. That's straightforward enough, fluke accidents aside. On Scalene's first day of trading in its original office in Connecticut, a car hit a pole and cut off the electricity. At times like those, new firms miss the infrastructure and support of a bigger organization.

Scalene uses UBS as a prime broker, and its dealer group comprises UBS, Barclays Capital, ABN Amro, SG, Deutsche Bank and Dresdner. "The coverage by the banks is outstanding," says Greenwald. "Their focus is on funds with the potential to grow. Each bank has made a decision that they would like to be a partner with us. They have offered a lot of things that they wouldn't normally offer to a $32 million hedge fund. But they hope that we will be a $320 million hedge fund in future."

Competition has made prime-brokerage services cheap, nearer to $20 per million dollars traded than the $80 or $100 that was the norm 10 years ago. Scalene has no back-office staff; the banks' straight-through processing technology handles that. Even costs such as legal and accounting fees are coming down. These firms are more familiar with hedge-fund start-ups, and are willing to offer low fees at the initial stages in return for higher charges later on.

All of this leaves Scalene to worry about trading rather than about anything else. It runs an intra-day portfolio, with hourly volatility measures, exiting 90% of trades by 4pm EST. It deals in G10 spot only, combining model-based trading, which is run by Kristensen, and discretionary trading, which is handled by Andrews, although in such a small team the roles are interchangeable. "I take a blended approach, as well as getting the coffee and doing the marketing," says Greenwald.

The fund follows a low volatility strategy, aiming at 12% to 15% annual returns, with 1% drawdowns. "We are not a sexy hedge fund generating 100% in a good year, but we also don't lose 40% in a bad year." Generally, investors are institutions looking for fund-of-fund exposure, but some are high-net-worth individuals who are lucky enough to live comfortably off the modest annual returns.

Some other investors are banks. They are increasingly outsourcing their proprietary trading to funds such as these, as it is a cheap alternative to paying a trader's salary, benefits, pension and overheads. And if things go wrong, it is easier to fire a hedge fund than to fire an in-house trader.

Scalene is planning to close to new investment when it reaches $100 million to $150 million under management. Then it will focus on developing its track record and proving that its returns are not the result of chance. From there, the strategy will become more interesting - it will have to decide whether to open new funds.

For now, though, the team is happy to build the business and adapt to the new location and California's glorious weather. "At the moment the weather here and on the east coast is pretty similar," says Greenwald. "But in November, December and January we are expecting a lot of due-diligence visits."
Katie Astbury

Plugging into problem projects

Jay Worenklein likens the initial stages of setting up his new company to the classic children's book Are You My Mother? It's the story of a baby bird that has fallen out of its nest and approaches animal after animal asking whether they are his mother until finally he finds her. "I was going around seeing various companies in Houston to see if they would be interested in working with me, basically asking them if they were my partner," he says.

Worenklein's nest was French bank Société Générale, where he'd worked since 1996, in the bank's New York office, as global head of project finance. Rather than falling out of the nest he decided to flee, leaving in April this year after announcing his resignation a month earlier.

It's been tough going for banks involved in project finance in the US in recent years, and there had been rumours at the start of this year that Société Générale was planning to follow the lead of some of the US banks and exit the business. But that's not why Worenklein left.

"After 30 years, it was time to do something different," he says. Before joining Société Générale, Worenklein had held a similar role at Lehman Brothers, which he joined after 20 years at law firm Milbank Tweed where he set up the project finance group.

His new business, USPowergen, is a restructuring company, but that description hardly does justice to Worenklein's lofty ambitions. "The strategy is to make the single most volatile commodity, namely power, more stable," he says. That's no small task. The power sector in the US has had a difficult two and a half years, starting with the energy crisis in California and then the fallout from the Enron crisis and culminating in a power blackout for 50 million residents of the northeastern US and Canada last month.

And Worenklein has chosen as his target what he refers to as "the bloodiest part of the sector, the uncontracted merchant power assets". This is where most of the distressed projects in the US are to be found. Large losses have sapped both investor and lender confidence, and that has led to virtually all merchant power projects that have not started construction being cancelled - and even some that have.

Companies that are involved in the sector are in a poor financial state. Also, says Worenklein: "Investment banks' research departments are writing reports recommending that such companies dispose of these subordinate assets, often by handing them to the bank syndicate, because they'll see an improvement in their stock price. But that's counter-intuitive, because these are essentially sound assets."

There's no bid from power companies that previously stayed out of the sector, either: they are generally reticent about getting involved in an area that has fallen out of favour.

All this has created a set of assets in various states of construction with loans outstanding that their owners don't want, for which there is no bid from other power companies. These assets often end up, by default, in the hands of the lending banks, which also don't want them.

Powerful returns

And that is where the opportunity lies for Worenklein. He can, he notes in his business plan, buy "power projects and companies as an equity investment that is, in most cases, not more than the debt originally raised for the projects or companies and typically less than the debt, reflecting a market in which the equity value of the original investors has generally been eliminated". The ideal exit situation would, he tells Euromoney, "get as close as possible to returning to the banks the value of the loans, and get private-equity style returns for the shareholders".

He's keeping the company small. At present it has three members of staff, and he expects to have two more by the end of the year. He has set up an office in mid-town Manhattan, in space leased from another firm.

He's partnered up with Tyr Energy in Kansas City, a firm set up by former executives from power company Aquila. It has around 20 employees and will provide power marketing, trading management and other asset management services for assets Worenklein successfully bids on. And he says he has already talked to many of the major strategic players, such as BP, about supplying oil and gas.

Worenklein had already bid on one set of assets by early July, less than three months after leaving Société Générale. It consists of four projects, all gas-fired power projects, in separate areas of the US, with a combined original capital cost of $2.5 billion. The assets are in the process of being taken over by the lending banks, and it's to them that Worenklein, with Ripplewood as his private-equity backer, submitted the bid.

He's waiting to hear on this bid, and in the meantime has put in bids on two other individual projects, with a combined original capital cost of $1.5 billion.

The toughest part of the past few months, he says, has been to make sure he stays focused. "I was shocked and delighted at the number of calls from people with ideas and offers for work and consulting. And I know there's a lot of money that can be made as a freelance adviser. But this was what I wanted to do and it demands a sharp focus, although I must admit that intellectual curiosity makes it very tempting to look at other issues."

There's only one that he's allowing himself to pursue, though, and it's one that's been a passion of his for more than 25 years - getting an Alaska gas pipeline built. "I got involved in 1977, and represented the banks in the plans to build one back in 1978."

It was uneconomic back then, he says, "but there's 20 trillion cubic feet of gas there, equal to what the entire US uses in a year". It would, he estimates, cost $15 billion or more to build. Given the speed at which he has got his new venture up and running, it might not be as impossible as it sounds.

Once he's done that, maybe he could fix America's ailing transmission network.
Antony Currie

Recovery Partners
Helping cope with Basle II

In a downturn you sack junior people to reduce headcount and senior people to cut costs. Large banks worldwide have done both, in spades, since the boom ended three years ago. That has helped protect margins through the downturn in which many banks have continued to generate decent earnings.

What's the potential downside in all this bloodletting? It's the wholesale departure of a generation of experienced managers one or two levels below CEO who won't be there to guide banks through tumultuous regulatory and accounting changes that are transforming the industry around them.

Certainly that's what Alex Jurshevski, CEO of Recovery Partners, says he has found in the past year or so as he has built a specialist advisory business guiding banks through the process of becoming compliant with Basle II.

Jurshevski has concentrated on the troublesome issues for banks of operational risk and credit risk management. The new Bank for International Settlements rules will require them to set aside capital at a substantial multiple of their historical annual rate of loss arising from operational failure - everything from computer crashes to rogue traders to fraudsters passing dud cheques and bank robbery. Jurshevski claims to have developed templates for dealing with Basle II operational risk issues - he describes them as "replicable work-flow processes" - which he and his team will roll out at banks to an agreed timetable given adequate resources of internal staff and senior management backing.

His firm operates on a retainer and fee basis. It will review banks' existing procedures, make recommendations for new systems and, if retained, project manage their implementation. He has also put together some benchmark studies on industry best practice in the area.

An absence of best practice

Not that there's a lot of best practice around, apparently. Jurshevski has found that only a very few banks are well up to the mark on operational risk and credit risk. Most are not and some, including a few very large ones, are way off the pace. Some are not even capable of accurately measuring their annual loss from operational risk, let alone implementing systems to manage operational exposure. It's a similar story in credit risk.

Failure to meet this challenge will come at a large cost in terms of extra capital tied up and will drive wide swings in enterprise value among banks, Jurshevski argues.

Now, Jurshevski may be talking his own book - he had to re-engineer his boutique, having launched Recovery Partners in 2000 with the idea of investing in and fixing new financial technology companies that had themselves been launched in the internet boom and then lost their way. He didn't find it particularly remunerative and switched tack.

But Jurshevski's background suggests he is a man to be taken seriously. He entered banking as an econometrician at Bank of Montreal in the early 1980s and soon found himself running its futures and options business at a time when those markets were growing exponentially. He later switched to Wood Gundy and had a stint running capital markets in Japan. But he really made a name for himself in a famous period at the New Zealand debt-management office where he restructured the country's obligations and eliminated its foreign debt in the early 1990s.

It was a time of great intellectual excitement and also great practical successes. He recalls fondly his dealings with the New Zealand military over hedging contracts to buy two new frigates. This involved long-term supply contracts up to 12 years exposing New Zealand to the risk of heavy foreign currency payments if the New Zealand dollar weakened against 17 currencies. The Kiwi dollar did weaken and Jurshevski reckons his hedges saved New Zealand taxpayers $50 million on that transaction alone. "I told the ministry of defence that when those frigates arrived I wanted them to arrange for me to water-ski behind them in the Cook Strait," he laughs.

In 1996 he returned to London and took charge of portfolio risk management in investment banking at Nomura before he had the misfortune to join Frank Newman at Bankers Trust 17 days before it was bought by Deutsche Bank. He and his team were cut immediately. He faced down the human resources people who delivered the bad news, refused to recognize their authority and flew to New York to see his immediate superior, Gene Ludwig, a BT vice-chairman. But nothing could be done. He vowed to take a break from big organizations and struck out on his own.

Jurshevski has an interesting take on developments in banking throughout his career. His generation, he suggests, grew up at a time when there was little infrastructure around growing markets in new financial instruments. In futures and options, there weren't even agreed standard legal contracts. The market pioneers wrote them themselves. In the 1990s, banks and financial markets became more comfortably framed and structured. Now that cosy framework is being dismantled by new regulation and accounting treatment.

And banks lack the expertise to cope because so many have left the industry.

He insists: "Believe me, Basle II is the biggest thing in banking in 20 years. But there are many senior people in banks who have no conception of its importance and in some cases who lack the experience to cope with it. Many banks don't have a proper budget for Basle II compliance and they don't have a senior Basle II champion." When Basle II first came out the BIS suggested a global compliance cost of $100 billion - about $100 million per bank on average. Jurshevski suggests that for most banks the real figure will turn out to be much higher. "But some banks seem to think they can get through with even less - with, say, $20 million. Some people I know thought they could build an operational risk measurement database for $100,000. These are pipe dreams."

He throws out some other worrying thoughts. "The latest BIS quarterly impact survey (QIS) suggests median annual operational losses of about e30 million for respondent banks. Depending on what types of operational losses we're talking about - that might require e600 million of capital. A minority of banks is now discovering that their operational loss profile might be in excess of e100 million annually. Now that implies a huge capital requirement that will be mandated by the new accord." He concludes simply: "This is life or death now for banks."

If it's all a sales pitch for his new company, it's a powerful one. A year ago he was hammering on banks' doors. Now, after a few successful assignments including in his native Canada, banks are coming to him. That's partly because what he provides is precisely measurable in terms of lowered capital requirements. Having set out to launch a value-investing fund he's also learnt the trick of building customer relationships. "You have to demonstrate predictability to the client. You have to say 'I can get you these deliverables by this date' and then do it. If you deliver, that builds trust. Once enough trust accumulates, then you have a relationship."
Peter Lee

Schechter & Co
More goals than football

"There is a void that the big banks just can't fill for direct debt placement on a smaller scale," says Stephen Schechter. "Ergo there's a vacuum. Ergo Schechter & Co."

The eponymous firm he founded is the latest home for Schechter, an American who started in investment banking 40 years ago. Ex-Schroders and Lazard, he is now his own boss and espouses the theory that big banks have lost the personal touch that guarantees the senior attention and level of service that clients want. For private debt placements, sale and leasebacks, or financing £20 million to £50 million buyouts of rolling stock or corporate aircraft or whatever else it needs, Schechter feels that your average medium-size company can get a better service from a smaller outfit.

"The big banks want to do M&A. Private debt deals, leasing, or small buyouts are greeted with a loud yawn in the boardroom," he says. "We want to provide a high-quality investment banking service on deals that their statutory bankers don't give a damn about."

Football fanatic

Schechter enjoys a high profile in the UK because of his work on UK football club ticket sale securitizations. On the walls of his office, just off Berkeley Square in London, hang replica club shirts commemorating deals where he was exclusive placement agent at Schroders and Lazard for Newcastle United, Southampton, Leicester City, Ipswich Town, and Leeds United.

Schechter belongs to a small but very influential group of non-native businessmen - think Rupert Murdoch or Roman Abramovich - who have revolutionized the financial structure of England's national game. When he makes the newspapers, he's just as likely to feature on the sports pages as in the business section.

For example, when both Leicester and Ipswich hit financial trouble after relegation and the collapse of the ITV Digital broadcasting deal, Schechter had to explain their securitization deals to the press. The American does so with the passionate insight of the life-long season-ticket holder who doesn't use the word soccer.

"Before 1997, no English football club had long-term financing," he says. He points out that Leicester's problems were with its bank lenders, not Teachers Insurance, the US pension fund that bought the bonds that financed Leicester's new stadium. "With Ipswich, neither the stadium company nor the finance vehicle went into administration. And look at the Southampton model. Because they effectively got another £10 million to spend, they could upgrade their players. They got to the FA Cup Final, that got them into Europe, they finished eighth in the Premiership, and they got back-to-back victories over Tottenham, which was great after Glenn Hoddle had left Southampton to manage Tottenham." All of this is delivered in a thick Queens accent.

Since he left Lazard to set up Schechter & Co in the spring of 2002, Schechter has worked on a £15 million, 15-year note issue by Norwich City FC. He's picked up business from Manchester City, previously a client of Bear Stearns. And he's taken private-placement technology into the Bundesliga with a e85 million private placement for German club Schälke 04.

But there's more to Schechter & Co than football. "We still do the football club deals, and they are the high-profile part of the business, but we do lots of other stuff too," says Schechter's eldest son, Larry, who joined the firm in December last year.

As well as working at Lehman Brothers, Schechter Jr has studied film and television at the University of Southern California and produced and directed his own movie, a black comedy called One Hit Wonder.

The firm has been exclusive placement agent on a £22 million equipment lease for Dutch B2B distribution services group Hagemeyer, and a $20 million facility to fund the December 2002 buyout of small-arms manufacturer Heckler & Koch from BAE Systems, among other deals.

Schechter & Co was never part of a grand plan. Schechter has retired twice before. In 2000, aged 55, he quit Schroders, which had brought him to London five years previously to help build its cross-border debt practice. After all of two weeks off, he joined Lazard, where he stayed until 2002.

"Bruce Wasserstein had come on board and the whole character of the place was changing," Schechter says of his decision to quit. During another stab at retirement, Schechter kept getting calls from clients and contacts who wanted his help structuring and placing deals.

He decided to go it alone. After a few months as a one-man band testing demand, Schechter hired Luke Reeve, a second-year analyst at Lazard. Schechter's former PA followed. Along with the two Schechters, they make up the four-strong team that is Schechter & Co.

For a small outfit, Schechter & Co is not short on ambition. Schechter Sr insists that if it wants to, it can go head to head with what he dubs "the balance-sheet banks", for nine-figure deals as well as smaller transactions. Indeed, because of its diminutive size, Schechter maintains that his firm can do all sorts of things as well as, if not better than, its larger rivals.

"We don't have their conflict problems," says Schechter. "And we do everything in-house - the banking, the structuring, the placement. The big banks pass that around between three different teams, and it doesn't work."

There are no targets for future growth in terms of staff numbers or turnover; there is one simple goal. "I want to be the best boutique in the debt market," says Schechter.
Mark Brown

Van Oss
A one-man M&A house

Van Oss
Tom Van Oss seems to have his work/life balance sorted out. "I would like to do two deals a year and have 25 weeks holiday but I'm fine doing five and taking 10," he says.

Having worked for progressively smaller organizations through his career, the logical move was to end up working for himself. Since launching his one-man M&A business in 1998, he has never had a single regret.

Van Oss is a corporate-finance adviser who specializes in small financial services deals, principally in asset management. These are garnered from a powerful contacts book that filled up during his time learning the ropes at one of the City of London's big success stories of the late 1980s and early 1990s - Phoenix Securities.

He worked at the boutique from 1985 to 1996, with such people as John Craven, Martin Smith, David Reid Scott and Philip Sears and says he learnt everything he knows about M&A during this period.

His path to Phoenix started out in very conventional fashion - leaving Oxford to take up a graduate traineeship at Kleinwort Benson in 1978 in international corporate finance. "It was a rather grand name but nowadays it would be debt capital markets," he says. He had joined what was then the elite division of the business: "You could tell the best departments because you were higher up the building". But he realized it was not where he wanted to spend his life.

"I found quite quickly that it was a big place and I felt that it was going to take a long time to make a mark," he says. Van Oss left to join his first boutique, Stephen Rose and Partners, in 1981. The firm arranged private placements in the UK and Europe for North American technology companies.

Although this was not a million miles away from what he had done at Kleinwort Benson, in his new job he discovered he had a knack for something. "What really interested me more than selling the new issue or raising the finances was telling the story and actually negotiating the terms of the investment with the institutional clients which we had," he says. "I found I was much better at getting involved in the detail and getting to know and understand the underlying businesses we were raising money for than just flipping stock."

Four years later an opportunity came to join Phoenix, where his career really took off. "It was August 1985 and I remember because I had just got engaged and I had just had my wisdom teeth out so it was a painful experience all round," he jokes. "Fortunately the engagement turned out to be a good thing, as did joining Phoenix."

He says Phoenix was in the right place at the right time. "We were in the lucky position, post Big Bang - all the changes that followed the deregulation of the stock market and stock-exchange membership meant that a lot of stockbroking partnerships wanted to be part of a larger capital base. We put together Barclays de Zoete Wedd, which became BZW."

Phoenix was well set as few conventional investment bankers were in a position to advise on such deals as they all wanted to make acquisitions themselves. "We were the only house in London at that time that could give independent advice," says Van Oss.

Life after the boutique

He describes the time there as "a lot of fun" during which he built up his knowledge of the asset-management world which was to stand him in good stead.

At this point the senior figures at Phoenix really cashed in on their good fortune. "We did very well, we had a lovely time," Van Oss explains. "Phoenix was bought by Morgan Grenfell. It was sold back to us three years later because Deutsche Bank bought Morgan Grenfell and we developed it as a partnership and then eventually sold it to DLJ in late 1996."

Then, however, approaching his fortieth birthday, Van Oss faced a crossroads. "Phoenix was growing and about to become part of DLJ but I could predict that Phoenix would lose its special cachet as it would be required to do bigger and bigger deals because that was the American style," he says. "We would become transaction-based and not client relationship-based."

So, he decided to change tack and join a Phoenix client, Aberdeen Trust (later Aberdeen Asset Management) as its group development director, working with its chief, Martin Gilbert. However, although Van Oss did a couple of acquisitions with Gilbert, he found that there was not enough room for him to operate and so at the end of 1997, amicably, he decided to leave, with some prescient parting advice from Gilbert.

"He said to me that I should go back to what I had done at Phoenix - M&A at the lower end of the asset management sector," says Van Oss. "He also said 'who knows? I might even throw you some business', which, funnily enough, he did." Indeed three deals in his first four years as a solo operator were to involve Aberdeen.

He got a call from another old Phoenix client, private-client broker NCL. Its chairman, Chris Middleton, asked him to help out on an acquisition. In the end the deal did not happen but Van Oss received a fee and realized there was a future for him.

He then inherited a transaction from a friend, for the sale of a small fixed-income fund management firm, Whittingdale, to Alliance Capital in 1998. "A friend of mine had decided to take a job with Goldman Sachs rather than staying solo," he says. "But the deal she was working on hadn't finished so she handed it over to me. We split the fees and I helped finish the project."

Van Oss was away. "I thought, 'this is great'. I banked 10 times as much as I had for my first assignment and I thought I had better get regulated," he says. By the end of 1998 he had a couple of projects on the go.

"It just went from there. It's a network and you meet new people in every transaction. I could trace a line between all of my deals, explaining how they've come about," he says. "I'm not a big, grand investment banker who knows the chief executives and chairmen of big companies but I wouldn't have much to add at the top level anyway."

Van Oss says he sticks to a few rules. He only works for people he likes and only takes on projects he thinks he will be able to do well.

He says: "You will be found out very quickly if you're on your own. There's no point in bluffing."
Julian Marshall