Firing Line: David Hitchcock – FT Adviser
David Hitchcock did not take the most conventional route into the world of finance.
Just under 30years ago, Mr Hitchcock, executive chairman of Cyrus Investment Management, was embedded in Ireland during the IRA unrest in 1986 and 1987 to combat the terrorist threat, and later served as a captain in the Brigade of Gurkhas.
Prior to this, he obtained a history degree at Cambridge University and joined the Royal Military Academy Sandhurst.
His experience in the armed forces has helped him in his current role, he said, adding: “The army teaches you how to be very organised and honest. It has also taught me how to get on with people.”
Months after leaving the army in 1992, for family reasons, Mr Hitchcock embarked on a career in finance spanning more than two decades, first in equity sales at Goldman Sachs, then at JP Morgan where he was managing director for 17 years.
He has since been appointed executive chairman of UK banking at Grant Thornton and has become non-executive chairman from January 2015.
“Fighting terrorism in the armed forces was perfect experience for running a finance company”
Since leaving JP Morgan, Mr Hitchcock has become an investor and director of British precision engineering companies, acquiring stakes in the Cyrus-RW Group and Bradford Cylinders and has been actively involved in the refinancing and management of both companies.
Now, Mr Hitchcock is directing his attention on his first major fund, called the Cyrus Secured Loans Precision Engineering EIS Fund – which has been approved by HMRC.
It will be managed by himself, Peter Schwabach and Ian Watkins who are managing partner and chief investment officer at the firm respectively.
The fund aims to take advantage of the manufacturing industry in the UK, which is the 11th largest in the world, employing more than 2m people and contributing £140bn to the UK economy, according to Mr Hitchcock.
He hopes to secure between £20m and £40m worth of investment before the fund closes on 3 April this year, to invest in British precision engineering businesses and build manufacturing plants in deprived locations across the UK, including south Wales – which makes the firm eligible for EU grants.
He said: “Most of the businesses we buy out are third or fourth generation family-run companies. They want to sell it to us because they know that we will take care of their businesses and we genuinely want to help build them up even further.”
All businesses acquired by the fund will operate under a uniform managing structure in which synergies across companies in the fund will be prevalent, Mr Hitchcock said.
Mr Hitchcock is no stranger at acquiring new businesses. In 2009, the Cyrus-RW Group, bought out Taylor & Sons from administration.
A blunder over a single letter by Companies House resulted in the demise of the Welsh engineering firm, which had been operating for more than 120 years.
In late January, the high court ordered Companies House to pay £9m in compensation after it erroneously recorded the company had gone bust.
It was, in fact another entirely unconnected business, Taylor & Son Ltd, which had been wounded up.
The firm has has since become profitable again, according to Mr Hitchcock. He added: “Two-hundred and fifty employees lost their jobs, but we managed to rehire most of the workersovernight, following our acquisition.”
He added: “One of the good things of doing what I do is hiring people back. Morally, it is a good thing to do and you also get loyalty from the staff.”
A school of thought goes that the new pension freedoms, which come into effect in April, will result in many people at retirement age opting to put their money into enterprise investment schemes as a substitute, or in conjunction with an annuity.
Stating that this could be a possibility, Mr Hitchcock added: “I think you need to be in a safe scheme. People are desperate for high yields, and regular funds are not necessarily the way to go because of the charges in asset management could prove to be quite costly.”
EISs will face some testing times going forward according to Mr Hitchcock.
In his 2014 Autumn Statement, chancellor George Osborne announced that new investments into renewable energy companies will no longer qualify for EIS and venture capital trusts reliefs.
EIS films schemes have also been tarnished by partnership arrangements deemed aggressive tax avoidance by HMRC.
Mr Hitchcock said: “I think the biggest challenges come when people lose confidence in the financial services industry. Film schemes are the biggest example of that.”
He added: “Renewables were the biggest honey pots, but now that is gone. I think investors want to make sure these schemes particularly are not going to be attacked in the future in retrospective action by HMRC.”
Outside the office, Mr Hitchcock, who is fluent in Nepalese, serves as a trustee on the Gurkhas Welfare Trust, which provides relief to many elderly Gurkha soldiers and their dependants or widows who were living in destitution in Nepal.
January 2015 – present
Executive chairman, Cyrus Investment Management
Non-executive chairman, Grant Thornton UK LLP
May 2013 – present
Executive Chairman, Cyrus RW Group
February 2014 – January 2015
UK Chairman of Banking & Securities, Grant Thornton UK LLP
July 1996 – May 2013
Managing director, JP Morgan
August 1992 – June 1996
Institutional equity sales, Goldman Sachs
September 1985 – June 1992
Captain, British Army Officer