Barings man eyes fresh fields

THE WEEKLY INTERVIEW; Christopher Heath; Newly launched investment bank is targeting the fast-growing economies of the Third World

Not too many international financiers would describe the recent emerging markets crash as a heaven-sent gift. Especially not when their business is dedicated to emerging market investment banking.

But then, as Christopher Heath, former Barings executive and founder of Caspian, a new banking venture, intoned: "In this world, everything is about timing." And he was, as he freely admits, damned lucky in this respect. He had been touring around the world's capitals since 1993 for backing for a new emerging markets investment bank. But he only pulled it off in 1995. "The gods have been looking down on us favourably. If we had been sitting on the wrong side of a crash, it would not have been a good start," he said. "The costs of entry are now much lower, there are not the expectations of booming markets. The whole environment is more conducive to building up a business than one year ago."

Caspian aims to cover the investment banking waterfront: securities, including research; capital markets and advisory business; and asset management. By the turn of the century, Mr Heath hopes, it will be the world's leading investment bank for emerging markets, centred on London, New York and Hong Kong. But for tax reasons, the business is based in Luxembourg and Mr Heath himself expects next year to move to the US, to "avoid the impression that this offshore business is controlled from any one financial centre".

It may have been a hard slog convincing investors to back his new banking venture, but his success where others have tried and failed is testimony to Mr Heath's standing in the City, where he has raised pounds 50m. Forty per cent comes from himself and other wealthy individuals, and the rest from a group of international pension funds. Caspian intends to raise a further pounds 100m next year out of an expected total financial requirement of pounds 250m.

The Heath name is linked in City lore to Barings, where he founded and built up its successful securities operation focussed on the Far East. At the height of his success in the 1980s, he was reputedly Britain's highest earner, on pounds 2.5 to pounds 3m. He thrived in fashionable circles, and in later years was rarely out of the society gossip columns, associated with a string of beautiful, young women.

But he earned his success, transforming Barings from a traditional merchant bank into a full-throated investment house with a buccaneering securities trading side. He fell out with Barings when, in the early 1990s, after delivering a string of enviable profits, the securities operation dipped into loss. In the wake of Barings spectacular crash early this year at the hands of an unscrupulous trader in Singapore, the comparatively free- wheeling style of the securities business originally built up by Heath came under closer scrutiny. But in the end, any such considerations paled into insignificance next to the complete absence of proper management controls at Barings.

That, says Mr Heath, would never have been possible during his time at Barings, and will not happen at Caspian. "Caspian has hired experts in their field, managers who completely understand what they are running. At the end of the day, the people on risk control at Barings evidently did not understand the businesses underneath them. Had they done so, the disaster would not have happened."

If a fair whack of the initial capital raised for Caspian has gone towards hiring big names such as Paul Zuckerman, former vice-chairman of S G Warburg, and a string of Barings heavyweights, then much more has been spent on information technology. "When I started Barings Securities it was not possible to have seamless global technology, an overall system where everything is interactive, offering complete, instant access to all the centres. It means risk management is [now] available across the globe at an instant."

Some would say markets like South-east Asia and Latin American are over broked. But Caspian, argues Mr Heath, is already finding its space because it is different, indeed unique. He added: "Our focus is going to be on some of the smaller to medium-sized transactions - the $30 to $100m that the bigger players don't look at."

So far most of Caspian's 100 pioneers are in New York, where the global sectoral research team is based, with the rest in London and a few dotted about Latin America. The priority for the early part of 1996 is building up the Far East operations, as well as getting started in Eastern Europe.

Among the prestigious names are Robert McNamara, the now 78 year-old former US defence secretary, head of Ford and of the World Bank. Rupert Pennant-Rea, with time on his hands since an indiscretion in his love life lost him his job as deputy head of the Bank of England, is a two- day a week non-executive.

Powering Caspian to success, Mr Heath argues, will be strong economic growth in the developing world - 7 per cent plus for South-east Asia and 5 per cent for Latin America - along with the region's high savings rate compared to those in mature market economies.

But the miserable performance of the main emerging markets over the past year, notably since the Mexican devaluation at the end of 1994, offers a sombre counterpoint to such enthusiasm. The big US funds that rule the world, having poured money into emerging markets, spent much of 1995 taking it back home.

All the same, Mr Heath confidently believes time and trends are working his way. "And I tell people investing in our business, they are doing it at the right time, in the downturn of the cycle."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy