CIM Chairman David Hitchcock features in the Evening Standard
Growth Capital: The former Gurkha officer gearing up to bring jobs and dignity to deprived areas
26 May 2015
Picture this: you drive up from the bustle of London, park up in one of the UK’s most deprived areas, slam the car door and step into an age-old family factory of which you’ve just taken ownership.
Is David Hitchcock intimidated about doing this? “Not a bit, I’m very robust. I’m an ex-boxer and Gurkha who ran the Irish border control during the Troubles. You have to be robust.”
Hitchcock, a burly Welshman and Sandhurst alumnus, is the co-founder of Cyrus, alongside experienced engineer Ian Watkins. The growing London firm is carving an unusual niche: buying up ailing, precision-engineering companies in deprived parts of the country, hoping to revitalise them and their locality. The firms make heavy-duty kit for projects such as steel mills, power stations and oil rigs.
The factories Hitchcock strides into have usually been home to the very best — from bridge-part builders to gearbox makers — but have often been rescued from receivership after suffering the rigours of the UK’s economic woes or are ageing firms ready to change hands.
“The bulk of the companies we buy are family-retirement deals where the kids don’t want to do it and the old boy’s tired — these are small, unquoted companies that can’t grow much further,” he explains. “They need to be aggregated into a group. It’s not some private-equity asset strip and the employees are often relieved that’s not us. We just want to centralise the finance.”
Hitchcock’s background is in finance. The Cambridge University graduate spent a decade in the army before getting married and joining Goldman Sachs. “They liked the macho element of the army. When I had clients, they didn’t want to talk to me about capital-allocation pricing, they wanted to talk about what it was like in Belfast,” he says. “The camaraderie on the trading floor is the next best thing to that of the army.”
From there, JPMorgan beckoned and a 17-year career in equity sales travelling the globe followed. He was also a Gurkha captain and has been helping those whose lives have been shaken by the earthquake in Nepal.
It was through his City contacts — as well as government grants which allow the acquisition of machinery in return for creating jobs — that Hitchcock has been able to fund Cyrus, cultivating private investors when the banks’ vaults were tightly shut in 2009.
“A taxi driver in Cardiff asked me what I did the other day and when I explained he said ‘oh good, I was worried you were one of those bloody bankers’,” he says. “But I do think the City is a force for good. If you can’t access efficient capital, the economy can’t grow.”
With the money raised — Hitchcock is currently on the hunt for upwards of £10 million more from investors and is targeting £100 million under management this year — Cyrus is able to pay for the heavy-duty machinery needed to expand the businesses it acquires.
Headquartered in St James’s Square, the company has a philanthropic heart. All its profits are reinvested and Hitchcock deliberately set out to create skilled jobs in struggling areas.
“You go to areas where nobody is in work, like West Wales. No one is in real work rather than just burger-flipping. There is a dignity in labour and we give it to them,” he says.
He has completed a string of deals across the country, including sizeable manufacturers in Bradford, Halifax and Port Talbot, since going full-time with the business in 2013 and he is determined to make them thrive.
One idiosyncratic purchase was Taylor & Sons. The 124-year-old engineer went bust after a bizarre, admin error at Companies House in which it, rather than a company of a similar name, was recorded as being wound up — sucker-punching the business. “It was brute bad luck, like something out of a Jeffrey Archer novel,” Hitchcock says. “But we were able to wrap it into our South Wales business, keep the staff and market position and quadruple its revenue.”
Hitchcock, who has also chaired Grant Thornton’s banking unit, believes those left standing in Britain’s manufacturing sector after years of mismanagement and trade union pressure are the very best in the game.
He hopes that if he can build on the traditional ties between some industries and their areas — the North-East with shipbuilding or Midlands with carmaking — and get the regions to specialise in additional disciplines carried out at other factories within the group, there are strong gains to be made.
This is one business cranking into gear to guide Britain back to the top of the pile.