Profile: Corporate angler hooked on the big deals: Now Glenisla has secured KKR's financial clout, no European firm is safe. Patrick Hosking finds its founder has fish to fry: Ian Martin

FLY FISHERMEN tell of a magical spot in Perthshire where the River Isla meets the Tay. The salmon seem to be irresistibly drawn to it. Ian Martin, who announced plans last week to go into business with the biggest corporate anglers of all time, Wall Street's infamous Kohlberg Kravis Roberts, tries his luck there at least twice a year.

'It's a great place to fish,' he says, with a glint in his eye. So it was that he came to call his new investment vehicle Glenisla Group.

The name may soon put the fear of God into sleepy managements. With KKR's financial backing, Glenisla has the financial muscle to take over virtually any British or Continental company. Martin says he is looking at acquisitions of pounds 300m or more. There is no top limit. KKR, which in 1989 spent dollars 26bn (now pounds 18bn) on the food and cigarettes group RJR Nabisco, has never been put off by mere size.

The corporate raiders of KKR have changed perhaps since the RJR deal, the aggressive, greedy and audacious leveraged takeover immortalised in the best-selling Barbarians at the Gate. They now take a longer-term view of investment and are even hailed in some circles as models of good corporate governance.

For Martin, the tie-up with KKR is an exciting opportunity. It was also a gratifying boost to the ego after the shock and disappointment of being passed over for the chief executive's post at Grand Metropolitan. For years he had been seen as Sir Allen Sheppard's heir apparent at the pounds 8bn-turnover food and drinks group.

But it was not to be. Last September, when the puff of smoke finally appeared above Grand Met's St James's Square headquarters, it was Martin's colleague George Bull who emerged wearing the pontifical robes. Martin, who had won many plaudits for masterminding the dollars 5.8bn takeover and restructuring of the US food group Pillsbury, admits he was surprised by the board's decision: 'But that was their prerogative. I didn't agree with the decision, but if I had to choose any chief executive other than myself, I'd have chosen George.'

There are lots of theories of why Martin missed out. The semi-official reason was that he was too much of a deal-maker and not enough of a manager. Grand Met was reaching maturity and needed someone to coax more out of its existing brands, not an acquisitions and disposals expert. Bull, who had successfully built brands such as Smirnoff, J & B and Croft Original while head of the wine and spirits arm IDV, was considered the better man.

The unofficial version was that some of the North American businesses were starting to look a bit sorry for themselves. Green Giant, the tinned vegetables division, was hit by closure and redundancy costs. Pearle, a 1,000-strong opticians chain, was losing money. The view from London, however unfair, was that Martin must shoulder some of the blame.

The highly unofficial version was that he missed out simply by being in the wrong place. While Martin, the son of a Dundee baker, was busy for five years in America, his urbane and blue-blooded rival, based in London, was better placed to woo Sir Allen and other members of the Grand Met board.

Whatever the reasons, Martin was out of a job, though he continued as non-executive deputy chairman. Money wasn't a problem - he would continue to receive his pounds 690,000 package for another three years - but at 58 he was not ready to retire.

Of course, the headhunters were on the phone immediately. He says he was offered the non-executive chairmanship of a Footsie company (one of the 100 biggest quoted companies in Britain). He also considered the offer of a major chief executive role based in the US. Meanwhile things were ticking over with various non-executive directorships, including House of Fraser, Granada Group and the St Paul Companies, a large US insurance company.

'Then just before Christmas I got a phone call out of the blue from an investment banker in New York who's a friend of mine and a friend of Henry Kravis, who said Henry would like to talk to me.' Kravis is the middle letter in KKR. He wanted someone in Britain to spearhead an investment drive in Europe. KKR was looking to invest in undervalued companies. It would also consider investing heavily in a single industry, along the lines of its successful KIII venture in the US, a buy-out vehicle which has invested in more than 20 media companies, or KSL Recreation, which specialises in golf courses.

Martin was hooked. 'In the US I got to like the excitement and adrenalin of a big deal in full swing.' The other job offers were conventional appointments. 'I'd been a corporate guy for a long time. This was new, exciting and different.' There was also the opportunity to make a colossal sum of money, or 'significant upside potential' as Martin puts it in his distinctive brogue - Dundee with a mid-Atlantic tinge. KKR typically likes to motivate the management of its acquisitions by giving them 10-12 per cent of the equity.

He is coy about which industries or countries he will be looking at first. 'But we're not looking at the hi-tech engineering sector. And we're probably excluding gaming and betting.'

He is also banned from investing in food and drink businesses, because of his 'non-compete' clause with Grand Metropolitan.

Restaurants - a big market for Grand Met with its Burger King chain - are 'a grey area'.

His experience is not limited to fast-moving consumer goods. He spent eight years working for the industrial products group of ITT in Europe: there his stock-in-trade was heating, ventilating and air conditioning equipment, pumps, electrical components, and brown and white goods. Earlier he worked for Mine Safety Appliances of Pittsburgh, which made anything from hard hats to missiles and industrial instruments.

He knows Continental business well. He lived for four years in France and also ran companies in Germany, Sweden and Portugal. He believes now is the right time in the economic cycle to invest: 'Germany has much stronger resilience than most people believe.'

One unknown is how serious KKR is about a big exposure to Europe. Whereas the New York-based Kravis is a passionate Euro-phile, often bypassing American ski resorts in favour of the Alps, and a frequent visitor to London, his California-based partner, George Roberts, is thought to be lukewarm.

KKR has never made a substantial investment this side of the Atlantic. As early as 1983 it considered coming in as a white knight to Thomas Tilling, then trying to repulse BTR. It looked at the supermarket group Gateway twice, first as a solo bidder, later with A & P, and walked away both times. It built a small stake in BTR in the late 1980s, but that came to nothing. And it took a close look at several large UK companies including, two years ago, United Newspapers.

So is it serious this time? Yes, says Martin, who explains that until now, 'they have never really felt they had identified value or perhaps in some cases they felt they didn't have the local presence'. He believes that despite a decade of hunting by the likes of Hanson, BTR and Williams Holdings, there are still undervalued companies. He points to Pillsbury, which owned Burger King. Everyone else saw BK as a poison pill, a reason not to buy Pillsbury; he saw it as an opportunity and turned it around.

Martin is regarded as a tough, sometimes ruthless manager. Reshaping Pillsbury meant many sackings. According to one associate, he has a keen intellect and a good feel for what consumers want. As a buyer and seller of companies he enjoyed many coups, not least the disposal of Inter-Continental Hotels for a top price.

As head of Watney Mann & Truman in the early 1980s, he was ultimately responsible for the highly successful promotion of Foster's lager in the UK, and the introduction of the then unknown Australian comic Paul Hogan to advertise the amber nectar. Ten years later he launched Haagen- Dazs ice cream in the UK, with its sexy advertising campaign.

It is all a long way from Dundee, where Martin was born in 1935, the youngest of seven children. He recalls how his father got up at 1am every day for 50 years to go to work in the bakery. He was educated at Harris Academy and decided to do chartered accountancy. 'It was the classic escape for a young Scot to get out and see the world,' says Martin, 58, married with three grown-up children.

As the meat in his sandwich course at St Andrew's, he studied economics and psychology for three years. The university almost persuaded him to stay on as an academic, but such a life was not for him: 'Someone once said a psychologist is someone who goes to the Folies Bergeres and studies the audience.'

Instead he went into deal-making. Since the KKR announcement, the phone has not stopped ringing at his Chelsea home (he also has a home in Palm Beach), with corporate financiers offering their services or ideas. He wants to recruit a team of up to six people and is close to leasing a West End office. He could be ready to pounce soon.

Sluggish fish, beware]

(Photograph omitted)