Profile: Steve O’Hare

Equistone is in talks about Yorkshire deals, according to partner Steve O’Hare. He spoke to Deputy Business Editor Greg Wright
Steve O'HareSteve O'Hare
Steve O'Hare

WITH its vast collection of lean, efficient, fast-growing companies, Yorkshire has been a happy hunting ground for many private equity firms.

As the UK economic recovery gains momentum, there’s a strong chance that more global private equity firms will be looking to snap up Yorkshire companies and form partnerships with management teams who believe their firm could make an impression on a global scale.

Hide Ad
Hide Ad

Private equity group Equistone Partners Europe could be among those taking stakes in firms who have survived the worst slump in decades and are now hungry for growth.

In recent years, Steve O’Hare, the Manchester-based head of Equistone Partners Europe in the North, has been involved in deals which have helped Yorkshire firms to grow. When I spoke to him, during a rain-lashed trip to Leeds, he was bullish about the prospects for the region’s corporate community. He also had words of encouragement for the region’s manufacturing and services sector. Equistone has got around £1.26bn to invest, so it’s not short of firepower if the right deals come along.

“The Yorkshire and Humber has been a very productive region for good businesses in a wide variety of sectors,” Mr O’Hare said. “It remains a strong production ground for talent.

“I still see a strong opportunity in manufacturing business. There are lots of good businesses that are really globally competitive.”

Hide Ad
Hide Ad

Mr O’Hare confirmed that Equistone was in discussions in Yorkshire, but declined to say more.

Earlier this year, the group closed the Equistone Partners Europe Fund IV after winning the backing of 42 institutional investors including pension funds, sovereign wealth funds and insurance companies.

It is Equistone’s first independent fundraising since it was spun out of Barclays at the end of 2011. It has wide-ranging contacts in Yorkshire. Equistone has invested more than £290m in northern businesses over the past six years.

A finance graduate from Manchester University, Mr O’Hare moved into private equity after initially working at KPMG’s corporate finance department.

Hide Ad
Hide Ad

“I didn’t have a great life plan, or a desire to work in private equity,” he said.

He almost “stumbled across” private equity when he started working at KPMG.

“I thought, ‘Wow, what a great industry this is’,” he recalled.

He wanted the thrill of getting closer to management teams, and relished the prospect of “putting your money where your mouth is” by investing in a business.

Hide Ad
Hide Ad

“On the advisory side, a transaction would happen and your involvement would cease,” he said. After the “little clink of champagne glasses your involvement was done and dusted”.

“In private equity, you are involved in the destiny of the business,” Mr O’Hare said.

So he joined Barclays Private Equity in 2004, which was keen to invest in northern companies.

The UK was about to enter a frenetic period of deal-making. For example, Barclays backed northern discount retailer The Original Factory Shop in 2004. The company was sold in 2007 to Duke Street Capital in a £68.5m secondary management buyout.

Hide Ad
Hide Ad

Barclays changed its name to Equistone following a management buyout in 2011, and its high profile investments include Yorkshire-based Allied Glass, which makes bottles for Smirnoff vodka and Grant’s whisky.

Earlier this year, it was reported that Equistone had hired advisers to “consider options” for Allied Glass’s future. There was speculation that the Leeds-based firm could be sold for as much £150m, twice the amount it was bought for in 2010.

When it comes to corporate deals, timing is everything. It has proved to be an astute investment. Allied Glass has benefited from soaring demand for premium Western brands in emerging markets such as China, India and Russia.

Back in May, it was reported that Equistone had hired advisers at Rothschild to look into options for Allied Glass, which makes bottles for drinks giant Diageo and Napolina, the olive oil firm, The company has continued to enjoy rapid growth with Equistone’s guidance. Allied Glass has completed a multi-million pound investment at its manufacturing site in Knottingley, and it recently reported annual sales of more than £100m. Mr O’Hare is full of praise for Allied Glass – but declined to comment on speculation about its future.

Hide Ad
Hide Ad

“Allied is a wonderful business with a talented management team who have the potential to take the business onwards and upwards,” he said.

In June, Equistone exited its investment in AFI, the Wakefield-based firm which provides safety-training and machines for people who work on tall buildings.

Equistone invested in the business in 2006, and backed AFI when it decided to make a series of bolt-on acquisitions. During its time as an Equistone investment, AFI’s turnover grew from £20m to £30m in 2012.

According to Mr O’Hare, private equity firms have got to show confidence in the ambitions of the management teams they support.

Hide Ad
Hide Ad

“One of the common themes with our investments is that we work with talented people,” said Mr O’Hare. “We’re about the continuity of growth, and giving a business the firepower to do acquisitive growth. We try to spend as much time as possible in face-to-face meetings with management.

“What is their vision and the things that drive them? Working with a private equity firm should be a partnership. You need to understand what makes people tick.”

The most important factor is always the strength and capability of the people at the top, he said.

One firm which blossomed under Equistone’s guidance is Zenith, the Leeds-based fleet hire firm. It invested £40m in a management buyout of Zenith in 2007. Equistone sold its stake in Zenith to Morgan Stanley in 2010.

Hide Ad
Hide Ad

According to Mr O’Hare, Zenith prospered due to the nimble nature of private equity firms, and benefited from having a “hugely scaleable” business model. Although there are no plans for Equistone to establish a Yorkshire office, Mr O’Hare is a frequent visitor to the county from his base in Manchester.

He believes that there has been a flight to quality in recent years, and good firms will find support through a trade buyer, flotation or private equity deal.

Equistone was far from idle over the summer; completing a deal to take a majority stake in Whitworths, the UK’s largest supplier of dried fruit, nut and seed products. Yorkshire firms with strong management teams and robust business plans may soon appear on Equistone’s radar.

“Every business battened down the hatches and rode out a very tough storm, but good businesses have continued to grow and succeed,” said Mr O’Hare.

Steve O’Hare Factfile

Name: Steve O’Hare

Date of birth: February 1975

Title: Partner at Equistone Partners Europe

Hide Ad
Hide Ad

Education: Manchester Grammar School and Manchester University.

First job: Various part-time jobs at school, KPMG after graduating.

Last book read: Why England Always Lose

Favourite film: The Godfather

Favourite song: Too many to think of just one – music covers many areas of my life.

Car driven: Aston Martin BD9

Holiday destination: Any-where warm with my family.

Thing he is most proud of: Not an original answer, but it would have to be my three children.