UK bus tycoon Brian Souter goes on M&A spending spree after selling Stagecoach for £595 million in cash

Brian Souter has built one of the world’s biggest transport fortunes over the past four decades through Stagecoach, the British bus operator that he and his family started with a pair of second-hand vehicles.

Now, fueled by profits from last year’s takeover battle, Souter’s personal investment firm has embarked on a wave of major deals, moving his fortune further away from the sector that defined his career.

Souter’s namesake family office announced Seven investments this year in UK and Irish companies, spanning the energy, construction and engineering sectors.

It agreed this month to acquire British metals solutions company Premier Hytemp in its latest gamble, with terms of the deal not disclosed. Even with globalization to slow down When closing deals, the company plans to continue to allocate part of the £595 million ($743 million) that Deutsche Bank AG’s DWS Infrastructure paid last year to acquire Stagecoach as part of an all-cash transaction.

“This release has given us more firepower,” Calum Cusiter, managing director of Souter Investments, said in an interview. “We are certainly not in the risk-averse camp.”

Souter’s company has net assets of around £400 million, according to documents released last week, accounting for the bulk of his wealth and making him one of the UK’s largest family offices. United for a British entrepreneur.

The Edinburgh-based firm has completed more than 50 transactions since its inception in 2006, often focusing on established businesses, far from the radar of larger private equity firms. Souter Investments typically makes five to 10 investments per year worth £2 million to £30 million, putting 2023 on track to be one of its busiest 12-month periods.

Souter, 69, and his sister Ann Gloag, 80, co-founder of Stagecoach, received a total of around £120 million from the DWS takeover, which collapsed a merger with rival company National Express, according to data compiled by Bloomberg. Around £25 million of the deal was paid separately to Souter’s eponymous foundation, which oversees more than £100 million of investments, according to filings.

“We could probably write bigger checks,” said Cusiter, who declined to comment on Souter’s wealth. “But we are aware of the need to diversify.”

Souter, a former accountant for Arthur Andersen, founded Stagecoach with his sister in 1980, as Margaret Thatcher’s Conservative government began to deregulate the UK’s bus sector. These changes helped Souter grow by acquiring competitors while remaining focused on affordable pricing.

The British tycoon, whose father was a bus driver, helped run the Perth, Scotland-based company’s operations until 2019, when he stepped down as chairman after serving as general manager.

By that time, the company’s revenue had increased by more than 650%, with Souter receiving at least £200 million in dividends and share buybacks, according to data compiled by Bloomberg. DWS’s offer to buy Stagecoach for 105 pence per share valued the company around 350% higher than its London IPO price around three decades earlier.

Souter previously shared a family office with his sister, but the couple split due to different priorities when it came to managing their money. His family office has since focused on buying stakes in companies directly, alone or alongside mid-sized private equity firms, rather than through a major buyout fund.

Of the roughly three dozen prior investments listed on the Souter Investments website, the firm had a representative on about half of the companies’ boards. He has held several for more than a decade, exceeding the usual time limits for a private equity fund.

“Our tendency is to ask questions and get involved,” Cusiter said. “Giving money to a fund is a completely valid strategy. That’s just not how we do it.

Successful bets for the family office include an investment alongside Buckthorn Partners for a stake in industrial equipment company Ashtead Technology. The company listed in London in 2021 and saw its shares more than double before Souter’s family office closed in May.

She also invested in the management buyout of Esure in 2010 and exited three years later when the British insurance company listed at a valuation around 350% higher.

However, not all of the family office’s investments are great successes. Fullers360, one of New Zealand’s largest ferry operators, bought by Souter Investments in 2009, has made losses in its last three financial years. It also sold Turkish transport company IDO in 2020 after facing debt problems.

“We don’t pretend that everything we touched turns to gold,” Cusiter said.

Cusiter, 43, joined Souter Investments shortly after its founding alongside fellow managing director John Berthinussen, making them two of the longest-serving employees among the family office’s dozen employees.

Cusiter said the company was monitoring the situation in Israel and Gaza for any broader macroeconomic impacts, but had no plans to stop making deals.

“We’re still looking to deploy,” he said.

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