Sprinkling pizzazz on heritage brands
Two of Britain’s most innovative and patriotic entrepreneurs are combining financial and intellectual resources to form an investment trust to take some of the nation’s best known brands to the next level.
Sir Peter wood, the brains behind Direct Line, insurer Esure and a big investor in the publisher Future is combining with Gary Channon of Phoenix Asset Management to launch the Castelnau investment trust, which will be introduced to the London Stock Exchange today.
The fund will be supported by Phoenix’s investors and wood is putting £25m of his personal fortune in. He is committing to an extra £75m and upwards should the right new opportunities among potentially valuable British firms come to the fore.
Channon, who runs his funds from Barnes, west London, is known for his love of the UK’s great hobby brands.
He is the biggest investor in famous stamp auction and collecting firm Stanley Gibbons and, for £6m, recently bought the world’s most valuable stamp, the 1856 one-Cent Magenta, worth more than a third of Gibbons’ market capitalisation.
His plan to syndicate the stamp, in the manner of a bloodstock racehorse, is seen as a means of transforming the rarefied world of philately, which is in acute need of modernisation.
Yesterday, Channon played down events in New York where Stanley Gibbons has been forced into liquidation as a result of a lease dispute with the LVMH-controlled Stella McCartney fashion brand.
He argues it is time for Stanley Gibbons to tap into burgeoning interest among young people in India and China for stamps celebrating the heritage and culture of two of the world’s fastest-growing economies.
Using technology provided by digital group Rawnet, one of the firms being injected into the Castelnau fund, Gibbons has begun a large project to put more than a century of its famous catalogues online.
The valuation of the shareholdings of the companies being transferred into Castelnau is expected to be a modest £250m. But there is a confidence that with the right creative direction, it could be valued at £1bn or more within three to five years.
The initial investments start with British hobby favourite Hornby, best known for highquality electric train sets but also home to Airfix models, which made a huge comeback in the pandemic when craft industries prospered.
Channon believes Hornby could appeal to the same hobbyists who have lifted Games workshop into a stock market phenomenon. It will sit alongside Gibbons, another eclectic favourite. At the next stage, the Castelnau portfolio will include shares in Cambium Group, which has become the UK’s leading wedding gift enterprise.
Its victory over UK rivals such as John Lewis is down to a clever platform that goes beyond selling china and vacuum cleaners.
At the less joyful end of life Castelnau will also hold a stake in leading funeral provider Dignity where Channon is chief executive – although his role as the investment manager of the new trust will doubtless lead to claims in some quarters of a conflict of interest.
Channon will count on wood’s expertise in insurance and comparison site marketing to bring pizzazz to a sector steeped in tradition. wood’s ability to break the mould, with Direct Line and Esure in the UK and Plymouth Rock in the US, should enable Dignity to provide funeral cover and add-ons that relieve some of the pain of bereavement.
The engine of the new trust will be two privately-owned enabling firms. Rawnet provides digital knowhow while the data analytics comes from ocula Technologies, founded by tech specialist Gerry Buggy, as firms embrace social media to sell their wares. Channon is seeking acquisitions and claims to have the disruptive technology to take famous but under-valued brands onwards.
The Castelnau project looks risky. Previous efforts to turn around Gibbons and Hornby have failed. But with wood and Channon in the Fat Controller’s cabin, investors won’t be steaming into the unknown.