Gamble on old boys' network pays off for survivor

Business Profile: Christopher Stainforth, chief executive of Durlacher
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The Independent Online

If any company's fortunes symbolise the frenzy of the boom and bust, those of Durlacher do. The sleepy stockbroker turned itself into an investment bank for technology companies and was on the brink of entering the FTSE 100 when the tech bubble burst, causing its shares to crash and its business to dry up.

In an attempt to rebuild, Durlacher turned to the incongruous choice of Christopher Stainforth, old Etonian, City veteran and fully paid-up member of the old boys' network, who was hired as chief executive in April last year. The gamble seems to be paying off.

It might be the eight generals in his family history - there was a Stainforth in the Indian army from 1780 to 1947 - that gave him the wherewithal to get the business back into shape.

"If I had thought when I arrived 18 months ago that we would be here now I would have chucked my hat in the air," says Mr Stainforth.

The banker is entering his fourth decade in the City, having gone straight from Eton to the accountancy firm Peat Marwick Mitchell, forerunner to KPMG, in 1972. One event stands out in the career of Mr Stainforth, described by some contemporaries as one of the most able men of his generation in the City. That is Blue Arrow - a recruitment company that in 1987 launched an £837m rights issue for an audacious takeover of bigger American rival Manpower. UBS, where Mr Stainforth worked, was one of its two financial advisers.

The share offer sparked an investigation by the Department of Trade and Industry and in November 1989 Mr Stainforth, with nine others, was arrested on charges of allegedly misleading the market over the outcome of the rights issue.

The investigation and trial - which led to Mr Stainforth's acquittal on Valentine's Day 1992 - took three and a half years. Such an experience, he says, "tells you a lot about yourself and about your marriage, which either gets much weaker or much stronger - in my case it got much stronger. You grow up if you have not already".

Since then, he has worked for several well-known and not so famous establishments in the Square Mile, including Guinness Mahon, which was bought by Investec.

Since joining from the small German investment bank Ermgassen, Mr Stainforth has set Durlacher in a more solid direction of being an investment bank for smaller companies, offering a rounded service from corporate finance advice to broker research. He has sold most ofits investments and offloaded the private client business to Charles Stanley, the brokerage, because it lacked the size to make serious money for Durlacher.

The balance sheet has been spring-cleaned, with a £6m cash-raising and a consolidation of the shares, removing them from the list of penny stocks.

Mr Stainforth says he is by nature "a builder rather than a cutter", but at Durlacher, which lost £45m in 2001, he had to cut first. He reduced the headcount from 170 to 7 and then built it back to 70 with his own hirings.

These include some high-profile names, including Zoe Appleyard, the banker from NM Rothschild who used to dine out with tennis star Boris Becker. He has also taken on Simon Hirst from Commerzbank and his twin Julian from UBS.

An illustrious list of investors has also been brought in - many of whom, Mr Stainforth says, are "backers of me" rather than the business. They include the property millionaires David Rowland and Anton Bilton, and Michael Spencer, chief executive of the money broker Icap. Tony Ryan, chairman of budget carrier Ryanair, has taken a stake after being introduced to Durlacher by its chairman, Tony Caplin.

Mr Stainforth says he and his team have been helped by some excellent timing. "I had a year before the market bottomed out, which was fine because it gave me a chance to build the business," he said.

That has included luring clients from larger banks. "It is at this point in the cycle when ambitious companies need to change because if an investment bank raised money for you when markets were higher, it is very difficult for the same salesman to go back and say 'I know you put in money when the price was this, but would you like to put money in when it is that?'"

Durlacher has taken on nearly 40 clients, and is adding them at a rate of one a week. It is also working on 35 deals. When Mr Stainforth arrived, the firm had just eight clients and was working on just two transactions.

There are challenges ahead - chiefly a shake-up being considered by the Financial Services Authority in the way investment banks conduct company research.

The end of so-called soft commissions - where fund managers give business to particular brokers in return for research and other services being provided for free - could be tough for niche players such as Durlacher. Mr Stainforth says he is "consulting actively" with the FSA and the Treasury.

By his own admission, Mr Stainforth "likes to win, perhaps more than most" in life. "My children describe me as competitive. My daughter [17-year-old Isabel] is worried about my son [14-year-old Charles] because she thinks he is nearly as competitive as I am," he says.

People who have worked with him say he is straightforward - though some say rather arrogant. "I thoroughly enjoy what I do and I do it very well," he says.

His working week reflects his enthusiasm for the cut and thrust - he is usually in the office just after 7am and frequently does not get back to his Holland Park home until 9pm. Mr Stainforth and his wife, Juliet, only go back to the family pile near Cirencester, Gloucestershire, for the weekend.

There he indulges his passion outside work - shooting. The activity is "great networking", he says, though it is also "being outside, seeing all sorts of different places, and the challenge - very fast high birds are difficult".

Mr Stainforth is a contributor to the Countryside Alliance and marched into central London to support fox-hunting, though he does not do it himself. "Militant I am not," he adds.

It is old-fashioned "relationship investment banking" that Mr Stainforth loves and is obviously good at. One colleague said: "He is this old Etonian, who goes shooting - clients like to think that world still exists."

Mr Stainforth says success is also a product of serving your time in the City: "The world gets smaller as you get older, and those still standing at the end are better." At 50, Mr Stainforth is one of the survivors.


Title: Chief executive

Age: 50

Career history: Joined Peat Marwick Mitchell from Eton in 1972. Then Philips & Drew until he left in 1989 after the Blue Arrow affair. Joined Guinness Mahon, which was bought by Investec. Left and went to German investment bank Ermgassen, before going to Durlacher last year.

Passions: Shooting, tennis, military history.

Salary: £308,000 basic plus share options and bonus.