Bernard Ginns: Our corporate finance players kick their rivals into touch

NORFOLK might have a football club in the Premier League, but it can’t compete with Yorkshire when it comes to professional services.

That’s why a deal to buy a company in Great Yarmouth was advised entirely by professionals from this region.

Here’s the background. Private equity firm Phoenix Equity Partners bought Gall Thomson Environmental, from Lupus Capital, in a £75m deal. On the buy side, John Rastrick, who leads Phoenix’s Yorkshire operations, put the transaction together.

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He raised the debt from bankers in Yorkshire – Santander, HSBC and Royal Bank of Scotland – because he wanted to work with people he knew and trusted and would deliver for him.

The Leeds office of Eversheds gave legal advice to the banking club. Mr Rastrick introduced lawyers from Leeds – Addleshaw Goddard and Squire Sanders – to the management team at GTE who were happy to work with them because they were impressed with their reputation for completing successful deals. On the sell side, Rothschild in Leeds had an existing relationship with Lupus Capital.

Lupus is based in London and had the pick of the capital’s talent, but it chose Rothschild in Leeds and asked Pinsent Masons in Leeds for legal advice. It’s pleasing to note that Yorkshire firms beat rivals in the City.

So, what does this all mean for our region?

Mr Rastrick said: “For me, it says the Yorkshire corporate finance community has the winning credentials to support and advise the City plcs and the mid-to-large private equity market even when the vendor and target companies are based elsewhere.”

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It also confirms what another leading dealmaker told me last week; Yorkshire plc does not produce enough corporate finance activity to support the region’s professional services community.

In other words, the sector has a lot of spare capacity. Hence, our lawyers, accountants and financiers have to go elsewhere to find work and pay their Golden Triangle mortgages.

That’s not a bad thing. On the contrary, it is good for the regional economy. The Phoenix deal shows how one or two relationships led to a whole host of Yorkshire professionals earning fees off patch.

Yorkshire advisers are very good at relationships. Yorkshire might be the biggest county in England, but its business community is sufficiently compact for all the main players to know one another. As the Phoenix deal demonstrates, this sense of community plays a very important role in sustaining the economy. That same sense of community also makes Yorkshire a welcoming place to live.

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With better transport connections (and some football clubs in Europe), the world really would be at our feet.

I wonder if any members of Yorkshire’s wealthy elite will be shifting uneasily at the prospect of the Government’s clampdown on stamp duty tax avoidance, promised in tomorrow’s Budget statement.

Chancellor George Osborne said on Sunday: “People have had their warning – they have got to pay stamp duty on the homes they live in. And we are going to deal with that in a very aggressive way.”

That is likely to include targeting of people who use companies to buy residential properties, thus avoiding having to pay hundreds of thousands of pounds in stamp duty. I suspect though that its inclusion is purely political. It’s a great tactic for grabbing headlines and demonstrating that the Conservatives meant business when they said “we’re all in this together”.

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It might also lead to some extra work for Yorkshire’s most creative lawyers and accountants if they need to rearrange the tax affairs of their wealthy clients.

On the serious issue of growth, I’d like to see a pro-Yorkshire Budget focusing on simple things that the Government can do to spur activity in this region.

The first concerns infrastructure, of course. Imagine how quickly the economy of Yorkshire would grow with better road, rail and air links. But promised improvements to infrastructure in this part of the world seem years or even decades away, while London seems to operating in an austerity-free growth zone.

For an example, look at the £547m upgrade of King’s Cross. Leeds, meanwhile, is still waiting for a new southern entrance at its train station. So, as the Yorkshire Post has been calling for since last summer, a Fair Deal on investment please and the acceleration of such schemes.

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The second aspect of a pro-Yorkshire Budget would boost private investment in manufacturing.

Many SMEs would love to see a capital allowance scheme that let them offset investment in plant and machinery. This might persuade firms to start spending more money. Otherwise, the recovery will be flatter than Norfolk.