For years Scotland has been powered by its whisky, but now it's the stuff left over from distilling that could light us all up. One Scottish entrepreneur, Angus MacDonald, has acquired such a taste for the whisky waste that he now owns a quarter of the Aim-listed company Helius Energy, which plans to turn these residues into electricity.
Helius is building a £60m plant at Rothes, on the River Spey, as a partnership with six whisky distilleries including those of Chivas Brothers, Glen Grant and Diageo. It's from these that it gets the waste – pot ale (used for animal feed) and draff (for the electricity). When the nine-megawatt plant is up and running next year it should be exporting enough electricity to the National Grid to power 7,000 homes. But Helius has other plans too, for a 100-megawatt, wood-fired, £300m plant at the docks in Avonmouth, Bristol – as well as other new sites.
If past form is anything to go by, MacDonald could be on to yet another winner; the 48-year-old former Army man has been buying and building companies since his early twenties, starting with the sale of Edinburgh Financial, a firm which published brokers' estimates, for millions to Barra. But his masterstroke was investing in, and turning around, eFinancialNews, the specialist City newspaper and website, and its sibling careers service, eFinancialCareers. Eleven years after MacDonald's first investment, he sold the publishing side to Dow Jones, now owned by Rupert Murdoch's News Corporation, for £29m, and eFinancialcareers.com to Dice for £50m.
It was at the Financial News where we first met – I was one of the founding editors – and the way he nurtured and grew the company was genius. How he persuaded the heads of the top investment banks in the UK and the US to advertise with the paper, while the reporters took their pot shots, is still the stuff of legend.
MacDonald made £20m out of the sale but helped make many of his big shareholders small fortunes too. So it's no surprise that his fan club – which includes investors such as Rupert Pennant-Rea, former deputy governor of the Bank of England and chairman of The Economist, as well as arts supremo David Gordon, and his former business partner, John Benson – is following him again at Helius. Another new investor is Alastair Salvesen – scion of the great shipping family, who runs Dawnfresh, the seafood business; he has just bought a 2.5 per cent stake. As one said: "We're a bit like children following the Pied Piper; he's just got that entrepreneurial gene – never stops."
Spend five minutes in MacDonald's company and you'll know why; there's something of the schoolboy in him and it's refreshing. He can't hide his enthusiasm, which, with his grasp of numbers and facts, is pretty lethal. It's clear that going to work is not work for him, but one of life's pleasures.
Most people with his cash in the bank would retire to a long season of shooting and walking in the Highlands where he lives with his wife and four boys, aged 21 to 11. But no. MacDonald still commutes every week on the ScotRail sleeper to London from Perthshire, as he has done for 17 years. Why? There's that grin again: "Because I love it and would hate to ever retire. At 85 I still want to be doing this."
He explains: "I do it because it's fun and I get to do the fun bit – the sales pitch and door opening – and leave others to do the hard work. I'm also great at hiring good people, that is vital."
What MacDonald does best is network, put the right people together. But he's also brilliant at picking the right business, and sticking with it. "Most start-ups or turnarounds take about five to 10 years; you've got to look at the long term. There are no easy fixes," he says.
He's taking the same approach at Helius; he's on the board and working with its chairman, John Seed, and the chief executive, Adrian Bowles, on getting the finance in place for the next big project at Avonmouth. It's being built by the docks to be near the ships bringing imported wood to fire the plant (there's no whisky industry here). Waste wood is also used, from felled forests; about four million tonnes of this "brash", the twigs and broken branches on the forest floor, is wasted in the UK; it's just sent to landfills.
So can he work his magic again at Helius? He's sure he can: "There's such big potential – it's got the technical knowledge, the sites and the expertise. Biomass is particularly attractive as it's deliverable – not like wind or solar. Electricity is going to be in short supply by 2017, when carbon-heavy coal-mines are run down and nuclear-power capacity is decommissioned."
For now, shares in Helius are trading at 16p, valuing the company at £14m, yet analysts at Numis, Ambrian and Novus Capital forecast a target price of 40p to 63p, on a sum-of- parts basis. They may be right. There's £9m of cash due in from the sale of an earlier project – the Stallingborough power plant that was sold to RWE Innogy for £28m – in the business, and the company, which employs 20 people, is applying for consent on other big biomass projects.
MacDonald has gone green in other ways too; he sees a competitive advantage. As he puts it: "Britain is bad at recycling waste and building renewables because most businesses are run by 55-year-old male bosses who don't believe in global warning."
So the first big investment after the publishing sale was recycling his proceeds into SWR, a waste-recycling business which works with car dealerships, hotels and garden centres to maximise their recycling and minimise their costs. In three years, under his chairmanship SWR has grown from 20 people to 85 and has 20 Daf trucks whizzing around picking up waste from car dealerships like Inchcape and from hotels such as the MacDonald chain (no relation) and the Langham, Sanderson and St Martins.
Turnover has increased to £10m and is growing fast. Investors such as Pennant-Rea and Gordon have also become Angus angels. "I can see [SWR] growing to turnover of £50m to £100m over the next decade, with some acquisitions. Recycling waste becomes more crucial as the cost of landfill goes up and the dumps fill up."
Another MacDonald fancy has been forestry; he owns 1,500 hectares of sitka spruce in south-west Scotland. Owning trees is a terrific business, he says, without capital gains or inheritance tax. The trees grow at about 4 per cent a year, which matches inflation, there's no one else in it, and, because of biomass technology, even the brash can be used for firing factories, like the ones to be operated by Helius.
Indeed, it's the money from the forests that MacDonald lives from as he never takes out too much from his own companies. There's a lesson there.
When he's not doing deals, MacDonald can be found poring over biographies of businessmen or walking the Highlands: "I read anything I can lay my hands on to learn about how to run a business. My hero of all time is Warren Buffett, but someone here in the UK who is an unsung hero is Rupert Soames of Aggreko. He's built the most extraordinary business. We do have some very talented business people around us to learn from."
There's one extravagance he has allowed himself and that's buying the most stunning, derelict, Roshven House; it's set on a beach, on the west coast of Scotland, near Fort William. Like all such projects, he spent more than double – £5m – what he planned. And even this he's turned into a semi-business, renting out the 14-bedroom house, and its staff, for £11,000 a week.
MacDonald may have made good money, but he's also put his energy to good works; he set up the Caledonian Challenge – a 50-mile walk for charity – and ran this for eight years, raising some £12m, and an OBE.
He also wants to spread his "entrepreneurial gene" to the young. He insists they should be encouraged to make their own way in business, and often visits schools to talk to teenagers about how they can achieve this. His best advice is that, by 30, they should start up on their own after learning all they can about reading a balance sheet.
Any tips? "Read all the business and finance pages in newspapers. It's where I got all my good ideas from – it was in the [Financial Times] that I learnt that the Financial News needed an investor, and in another newspaper I read about SWR. Read everything."
MacDonald's favourite quote is from Buffett, and is particularly apt today: "We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful."