Biotech backer's new baby is caravan parks

The venture capitalist who turned a pounds 750,000 stake in ML Laborato ries into pounds 370m talks to Magnus Grimond
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The Independent Online
A drop-out from the educational system, Kevin Leech is the unlikeliest venture capitalist. The son of a Manchester undertaker, this small, somewhat crumpled figure with a lisp might be mistaken for a salesman. He is actually one of Britain's most powerful business angels.

Wealthy individuals who risk their money backing fledgling businesses tend to be a secretive lot, and Kevin Leech is no exception. His bashfulness is understandable, given the ever- present threat of unwanted supplicants, but the exterior impression is belied by a sure touch with investment. Since 1964 he has turned an original pounds 3,000 investment in his father's business into a portfolio now valued at several hundred million pounds.

Much of his success has been based on one investment: ML Laboratories, one of a rapidly growing band of fledgling pharmaceutical groups. In January, the extent of that success became clear when Mr Leech raised pounds 37.5m from reducing his stake in the group, leaving a remaining holding still valued at around pounds 340m.

Not bad going for an original investment of pounds 750,000 in 1982 and a well- timed exit to boot. His sale marked the shares' recent peak.

Having reduced his holding to 54 per cent, Mr Leech is already turning his attention to his other investments. At the end of last month Milner Laboratories, the vehicle through which he originally invested in ML, announced it was injecting pounds 1.5m into another of the so-called biotech babes, Proteus International, with the option of raising its stake to just under 30 per cent.

His interests range wider than biotech companies, though. Queensborough Holdings is at present one of the more intriguing possibilities. Like ML and many of his other business opportunities, this one arose from contacts in Jersey, where Mr Leech, who remains a keen Manchester United supporter, now makes his home.

The group, acquired with partner Stuart Sim, has been through a number of incarnations over the years, but it is now being rapidly turned into a leisure business. On Thursday, Queensborough announced a pounds 9.2m cash- raising to pay for three acquisitions which take it overseas to France for the first time. It already owns the Needles Pleasure Park, a 20-acre visitor attraction on the Isle of Wight, and in February paid pounds 1.35m for the Cheddar Gorge Cheese Company.

The latest passion, however, is caravan parks and the recent deal increases the number of caravan pitches owned by the group to 6,000, making it one of the market's biggest. It is not something to set the middle class pulse racing, but Mr Leech is confident there is great potential in this highly fragmented industry.

"A lot of people cannot afford to go on Continental holidays, nor do they want to. A lot of people want second homes, but they can't buy the big freehold second homes, so as people are living longer, as people are retiring earlier, as people are working less hours, the leisure parks are only a gallon of petrol away from where they live, so it's affordable", he says.

Queensborough is already the third-largest operator of caravan parks in the UK, behind Park Worlds, part of the Rank Organisation, and the privately owned Bourne Leisure. Now installed as chairman, Mr Leech is hoping to cash in on income growth in the sector, currently said to be running at around 8 to 10 per cent a year in the UK, and is ready eventually to expand into Europe.

ML Labs, Proteus and Queensborough are just the most public results of Mr Leech's move into venture capital in the early 1980s. Recently his Jersey connections led him to pick up Fletcher Powerboats, the biggest maker of trailer boats in Europe, from Hornby Group.

His own start in business over 30 years ago was as a result of the death of his father. But he had to turn to the family solicitor for the personal guarantee which allowed him to raise the pounds 3,000-odd he needed to buy out the rest of the family. That experience left an indelible impression.

"In 1964 when I wanted help, nobody would help me. There were no venture capital funds then. No BES funds. There were no tax breaks for people. So I made a conscious decision ... that I would back people when banks couldn't help. Banks can only help when you are successful. Banks can only help when you have got collateral."

Mr Leech and Mr Sim also claim a different approach from corporate venture capital backers by giving managements more time to succeed. "We hang on until we get them right and if it means buying another company to bolt them on, we get it right. If it means changing the management, we get it right," says Mr Leech.

Mr Sim emphasises the importance of ensuring both that the individuals remain keen and that the product and its price are right. They are less concerned about the return year-on-year. "A lot of businesses fail ... and they had no need to fail if they had been given more leeway by the bank."

With Mr Leech's ability to pick winners and Mr Sim's financial disciplines, the two men may have something to teach the slick venture capital groups operating out of the City. It is an impressive performance for Kevin Leech, who left school at 15 with eight O-levels and failed to complete his articles as a chartered accountant.