Mere months after the troika arrived in Ireland, austerity programmes in tow, Alan Merriman set up his own business. Not many ventures were being established at the start of 2011, but Merriman could see something real, something tangible amid the chastening economic debris.

Where others saw calamity, Merriman saw potential. There was still a wall of capital held by wealthy families and high net worth investors, and, in Ireland, there was a great investment opportunity. And to capitalise on his vision, he founded Elkstone, which has grown over the years into a multi-family office operating in wealth management, venture capital and real estate.

Almost a decade later, the Irish economic outlook is once again grim. The economy has been brought to a standstill by Covid-19. Redundancies are rife, fear stalks the stage like a threatening apparition. Merriman, however, remains resolute. He believes his team will get through the crisis. But the world has changed, and he knows this too, and he also knows that the new reality will bring challenges for Elkstone and for every business.   

*****

I had been tick-tacking with Merriman over the last few weeks, as we sought a way to tell the Elkstone story. And it is quite a story; one of building a family wealth advisory business based in Dublin similar to what can be found in London or New York.

Finally, a time was arranged to meet for a coffee in its modern light-filled office on Molesworth Street near the Dail.

Elkstone had a positive story to tell. It had backed Bobby Healy’s drone startup Manna Aero and built badly needed new apartments. And it had sought to challenge the establishment players that dominated the high-net worth wealth management industry there. Along the way it had attracted a few high-profile investors.

There was Roger Jenkins, the former Barclays banker. And of course there was Elle Macpherson, the supermodel turned lingerie, swimwear and wellness entrepreneur. Dozens of other more low profile families and individuals also came on board. From scratch Merriman has built a substantial business that employs 40 people.

Elkstone was also close to launching a €50 million venture fund aimed at backing up to 40 early stage Irish technology startups. I was intrigued by this and I felt that learning more about this fund, and who was behind it, would be of interest to our members. 

About 48 hours before we were due to meet the country began to go into lockdown. Our meeting is cancelled and instead we are both sitting in empty offices a few hundred yards from each other chatting over the phone.

Merriman is reflective and intelligent in his assessment of the perilous period that is ahead for the economy. He admits he considered rescheduling our interview until better times, but he said he felt on reflection it was better to do it as he admits this could be some time away for Ireland. He is frank and straight-talking about the crisis, his personal business challenges, and honest about his determination to get his team through it.

“If we roll back the clock a month or six weeks ago, there was an awareness of what was evolving in China and in the very early stages in Italy,” he says. “But I think the speed and the impact means there’s really only been a realisation about the threat [to Irish business] within the weeks.

“The vast majority of businesses locally and globally are definitely going to be impacted. We are all definitely trying to figure it out in real time.

“There is no doubt at all it’s a very dramatically different world today than we would have been contemplating certainly as little as three or four weeks ago,” he says. “But I think it’s going to take quite some time to assess properly, what is ahead of us and how best to manoeuvre through that and what adjustments will inevitably have to be made.

“I think for many, many businesses, it will be out of their control in terms of the levers they’ll have to pull to make things happen. So, yes, I think I’d be concerned for Elkstone today vis-a-vis where we were three or four weeks ago and I think I’d be concerned for the vast majority of businesses, in an Irish context and much wider context.”

Merriman and most of his team come with the experience of getting through the last recession. Ruairi O’Neill, chief revenue officer, Padraig Owens, head of alternatives a special lending opportunities business,  and Ciaran McIntyre, head of real estate, had joined Elkstone after a merger with their business Opportune Capital.

Their background had been in restructuring property deals and protecting wealth post the financial crash. Fiona Sweeny, chief executive, has 30 years’ experience in asset management, working across AIB, Davy and Brewin Dolphin. Edward Yusko spent over a decade with Key Capital as director of wealth management and is part of its venture team. It has an experienced team in venture too who have nursed as well as scaled businesses before.

“The stock market is still struggling and sliding. You just can’t be confident that we’ve hit at bottom yet.”

“There’s a good bunch of people who have had to manoeuvre through difficult times before and I think we have the character and the grit to do it again and we are determined to do it,” Merriman tells me. “That said every crisis is different and I think there’s a lot more uncertainty around this one vis a vis the last one.”

“Elkstone has a certain talent and skill set and versatility that gives us better optionality than some other businesses. Elkstone as a business and a team can be agile. But I think this is definitely a much more challenged environment today than it would have been four weeks ago.”

Merriman said he welcomed the government’s support so far for business, but said he feared it was missing out on helping some areas. “What they are doing is very much welcome. But there are some real gaps – such as the need to consider start-ups and the early stage venture sector. It may be hard for many to meet the government’s criteria.

“In particular we need to accelerate moves on various longer-term state supports such as low interest rate loan schemes like Germany seem to be doing. We need to stay conscious of the bigger picture to ensure there is a level playing field across Europe to support entrepreneurs and our start-up community.”

We will discuss much during our lengthy interview, but we begin with the fallout of Covid-19. Given the current climate, where else could we possibly have begun?

Tom Lyons (TL): As a former banker how do you see the financial markets?

Alan Merriman (AM): When it comes to the financial markets, I think there’s a growing awareness that it is going to be very difficult for this to be a V shape recovery. For example, with say a hurricane, a tornado or a tsunami, you can have rebuild programmes that kick-start the economy. This is harder to judge in terms of how quickly the economy might come back and how much of the economy is going to be lost permanently or at least semi-permanently. I think the evidence is that the actions being taken so far, they’re absolutely needed.

The stock market is still struggling and sliding. You just can’t be confident that we’ve hit at bottom yet.

There’s going to be a US Dollar liquidity squeeze that’s clearly evident already. The dollar has picked up in strength and is likely to go a good bit stronger. That will bring additional pressures.

There’s an awareness from the last crisis that very fundamental action was needed to get liquidity into the banks and support the banks in the context of the money system as a whole. But I think there’s a clear awareness this time around that actually, as a mechanism to help resolve this, that can’t be the only solution. You need to get money to businesses and to people too.

TL: You have different arms to your business – wealth management, venture and real estate. How will each be impacted?

AM: I think it’s different in each case. If I start with the wealth management side. Broadly speaking this should be an opportunity because we’ve a small client base on the wealth management side. They’re high net worth individuals and entrepreneurs. We’re a small player in the Irish market when it comes to wealth management. There’s a lot of people who are very challenged out there. There’s a lot of people who are going to be in a very weak position today having thought they were in a very strong position four weeks ago. There is an opportunity for Elkstone to guide and advise and help. People might be more willing to look at alternative advisors to what they’ve traditionally been using. Particularly, if they feel that they’ve not been well served.

TL: And venture?

AM: We’ve been particularly unfortunate with our timing. We were about to launch a new fund which was very much targeted at Irish early stage venture. We were in a very good place and still are, in the sense that it is still feasible. We’ve the support of Enterprise Ireland, who’ve been great and we’re waiting on Revenue approval. We are waiting on Revenue approval to get that into the market because it was going to come with an EIIS wrapper in response to last years’ budget. It was going to be an enabler in terms of attracting private money to support early stage ventures. It was one thing we were very excited about. We really expected to have that out in the market in January. It’s been stuck in Revenue and as a result we don’t have that fund today. If we did, I would be, in an Elkstone context, be very bullish. There was a compelling need four weeks’ ago for this fund in terms of supporting Irish venture. There’s a crying need for it today.

TL: So why isn’t it ready to go?

AM: We don’t have it because we’re still waiting on Revenue approval. Now when we do get Revenue approval, hopefully when we get it, clearly, it is likely that we’ll have some of the individuals that were keen to support us, maybe be less keen. So, we’ll certainly be going down the waiting list to see whether we have that same €50 million or whether it’s going to be somewhat less. With that in place I’d be very positive about what Elkstone can do to support what’s happening in the country in a very meaningful way and it would give good support for Elkstone itself. Absent it, we run a very successful venture business which has been done on a deal by deal basis. You have to be pragmatic and assume that in the current environment, individuals would be very slow to put money at risk while there’s so much uncertainty out there. I think in the venture business there is a huge opportunity for it long-term. I think in the current eye of the storm it’s a very difficult space.

“This is a liquidity squeeze for the general public and SMEs and corporates”

“There is a lot of value that Elkstone can bring and a lot of different spaces that we can make a real impact.”

Elkstone has investments in healthcare businesses like LetsGet Checked and Healthbeacon. It also has e-commerce businesses which are unlikely to be as impacted by the crisis as other businesses.

“The vast majority of businesses, regardless of what particular segment they’re in, are very challenged right now. Early stage ventures that don’t have strong balance sheets and are very dependent on revenue and winning new business will clearly find it much, much tougher now,” Merriman tells me.

“The venture business in the immediate future is challenged and absent the fund will remain challenged. With a fund in place we’d actually be able to make a really big difference in the marketplace and this particular point in time. It’s vital money that’s needed by many very good companies who just need to get through this next six, twelve-month period.”

TL: Will there be opportunities in real estate or restructuring?

AM: We’ve already had our own reflections on what are the options for Elkstone and what can we do. There’s no doubt that against the Covid disruption, there’s a lot of value that Elkstone can bring and a lot of different spaces that we can make a real impact. Whether it’s on the private company side or whether it’s on the real estate side there’s going to be restructuring. There would be a very good opportunity for any new fund that would be put in place. I think in truth, I’d like to be in that place in time but right now it’s more crisis management. But that’s something that could come in three- or six-months’ time.

TL: What are you saying to your clients at present?

AM:  We have some clients who do all aspects of business with us. They’re very central to the family office and they’re involved in real estate, venture and alternatives. And we’ve other clients who might be more focussed on just one of those areas. It depends on who you’re talking to and the context of where they’re coming from. Certainly, my message is not to panic and to try and be patient. There’s no need to rush in and there’s a lot of uncertainty yet to play out. The expectation is that it won’t become a solvency issue (versus liquidity) but it could if we don’t get the right actions from authorities and so forth. It’s about trying to help people be sensible about how to better protect their position and be measured and to wait and see where there’ll be opportunity to move forward.

On the portfolio side, if we’re dealing with entrepreneurs, be it that they’re clients or on the venture side, it’s much more dramatic. We’re having to encourage people to be quick to take action because it’s about ensuring survival. So, it very much depends on who you’re talking to and what particular state they’re in and what their particular challenges or opportunity set is.

TL: Are you frustrated with Revenue delays around launching your new fund? It could save a lot of businesses at the moment if it was ready today…

AM: I’ve written to the Revenue. I’ve said ‘Look this is needed now more than ever can we not accelerate?’  We had a very innovative structure that was going to serve Ireland Inc and it was certainly going to serve the individuals putting their hard earned money at risk. It was in response to last years’ budget. The Revenue is definitely very encouraging about it. But unfortunately, it’s precedent setting, and because it’s precedent setting they have to issue guidance notes… and unfortunately that’s what’s slowing this down. So, we’re stuck until that can get resolved but we’re certainly trying to encourage them in as clear a way as we can, can we somehow get this pushed on. 

TL: My colleague Ian Kehoe recently interviewed Michael Somers the former head of the NTMA. He spoke about how the state “needs to concentrate on getting money into people’s hands’. Do you agree with him?

AM: I do. It doesn’t matter what sector. Look if you’re a restaurant or if you’re a consulting company or you’ve a venture business like us – twelve months is a long, long time. I 100 per cent agree that a different solution is needed to the last crisis. This is a liquidity squeeze, not for financial institutions, this is a liquidity squeeze for the general public and SMEs and corporates. And it’s at all levels that it is happening at. You can see massive PLCs and corporations drawing on their credit lines to get cash in.  So, whether you’re BA or whether you’re a corner café and restaurant, you’re facing very severe challenges and cash is king. If you don’t have cash, you’re not going to be able to pay for the things that you need to pay for and maintain them. It becomes a downward spiral. This is not going to solve itself. A huge intervention is needed. It needs to be done in a way that gets the money to the right places as quickly as possible because otherwise it collapses on itself. That’s why this particular crisis is so worrying. I don’t want to be too negative, but it would be imprudent not to recognise how serious this particular black swan is.

TL: And recovery?

AM: The question is how long that will take and what damage will be done and how damaging will it be. It has the risk of being more like a 1929 crisis in terms of taking quite some time to level off and rebuild. And if that’s the case, that’s going to leave a lot of damage at an individual level and at a business level. At the same time, as the last crisis showed us in 2008/2009, a lot of innovation came, a lot of new ventures, a lot of amazing companies were born out of that last crisis and that will happen again. There’ll be disruptions, there’ll be lots of behavioural changes. There’ll be winners undoubtedly, but unfortunately this time around I think there’ll be a lot of losers. A plethora of different initiatives are needed to bring about the confidence that’s going to be needed to minimise a very significant economic and personal wellbeing crisis.

*****

When we speak, the entire Elkstone team is working from home. It is something that many businesses are getting used to, part of the collective response to the Covid-19 crisis. I ask Merriman how it is going?

“We’re one of those businesses that is able to work virtually,” Merriman says. He said its business was spread across four nearby buildings on Molesworth Street, so it was used to communicating via Zoom and other technologies. “The team is good. It’s a very talented team. There’s a nice blend of people who are experienced and have been through difficult times before and talent and energy.”

“We’re very lucky with the team we have and we also have the advantage that our team has the benefit of having their finger on the pulse,” he says. “They know exactly what’s happening to other businesses. We know the pressures and the threat that numerous different countries are under on the real estate side, on the venture side, on the client side.

“So, we have our finger on the pulse and that helps the team better understand Elkstone’s own challenges. I know this sounds very negative, but whatever happens, I’ve been saying to the team, ‘Look, we’ve got to do what we can do with whatever we have to do it with’.

“In three months or in six months’ time, whatever is said about Elkstone I want people saying that we were there to help and didn’t go hiding whether that’s our clients, our real estate projects or our portfolio companies.

“That doesn’t necessarily mean that we can write cheques that bail people out because we can’t – that is the ’ reality. But we can certainly help in other ways and that’s very much where our mindset is.”

Merriman said getting Revenue approval for its new fund would be one way that Elkstone could help lots of Irish businesses. But there were lots of others.

“I’d be very much hoping that, when we get back to some sort of normality the work that’s needed on the real estate side can continue. Setting aside this crisis we know there’s a housing crisis in Ireland and Elkstone was very pivotal in terms of creating different solutions in that space. There are lots of opportunities for Elkstone but you have to survive the short-term to have the opportunity to grow in the long-term.”

*****

“We’ve over 150 clients today. The vast majority of those are Irish”

“I was working 24/7 flying around the world and it was a very interesting business but it wasn’t a scalable business”

Alan Merriman founded Elkstone in April 2011. He had worked as finance director with the EBS from 2005 until March 2009. “I left in the context of accountability,” Merriman says. “Myself and the chairman left. We resigned from EBS to make it very clear that the EBS was putting its hands up and acknowledging responsibility for mistakes.”

He joined SHS Capital as chief operations officer. It was a corporate finance business that was a Barclays Capital joint venture and was focused on connecting sovereign wealth funds and major global companies.

The principal in this business was Roger Jenkins, a former senior Barclays Bank executive. Jenkins was poached by Brazilian financial services company BTG Pactual – considered the “Goldman Sachs of Latin America.” He asked Merriman to come with him to Brazil.

“I was less keen, and he came up with the idea of, you know, ‘Look Alan you know, would you look after me personally, would you run my financial affairs for me?’ This was April 2011, Ireland was still not in a great place.”

“The strategy was to build up our client base and that’s what we’ve done,” he said. “We’ve over 150 clients today. The vast majority of those are Irish.”

Merriman thought about it and decided to go for it. “A year later, we had a gentleman’s agreement that I’d do it for a year. A year later came, and he was very keen that I stay on, but I was less keen.”

Merriman wanted to work for himself. “I was willing to do it but only if I could set up my own business and built out a multi-family office.

“At that time, I was thinking I didn’t want to work for one single individual, it would be good to have a portfolio of clients. And (Roger) was very helpful because he led me to the second client and the second client led me to the third and the third client, their tax advisor led me to the fourth and the business grew through word of mouth.”

Soon he had about ten clients in total. As the economy began to recover Merriman decided he wanted to also work with clients based in Ireland. “The strategy was to build up our client base and that’s what we’ve done,” he said. “We’ve over 150 clients today. The vast majority of those are Irish.”

But it wasn’t always that way. “About four or five years after I started, I had a very nice business. I’d built up a very talented team. I’d about 12, 13, 14 people, all based in Dublin serving international clients. But I was working 24/7 flying around the world and it was a very interesting business but it wasn’t a stable business and I was the bottleneck and I came to the view that it just didn’t make sense and I certainly wasn’t going to be able to deliver proper career growth for the team that I had.

“I came to the view that I’ve a very talented team in Dublin serving international clients. But we had no Irish clients, and wouldn’t the smart thing be to go after the Irish entrepreneurial market and give them a proper sophisticated wealth management offering?”

Jenkins was by now spending more time in his home in America. The banker decided to relocate his family office there and amicably ceased being a client of Elkstone around 2015. This reinforced in Merriman’s mind the need to have both Irish and overseas clients.

As an aside, it was via Jenkins that Elkstone got to know one its most high-profile clients. Jenkins had dated Macpherson for seven months in 2012.

It was around the swimming pool in Jenkins’ home in America that Merriman first met Macpherson.

About a year after she split up with Jenkins she contacted Merriman for financial advice and became a client of Elkstone.

Alan Merriman joined the board of her wellness business WelleCo in January 2018. It makes a premium, plant-based nutritional beauty supplement

But back to the Elkstone story.

Having decided to focus more on gaining Irish clients, it was as the economy moved towards recovery about to beef up its team. Elkstone as it is today was about to be born.

“People aren’t getting the intimate service they need as high net worth individuals. Entrepreneurs are poorly served”

In July 2017, an opportunity arose for Elkstone to come together with Opportune Capital.

Opportune’s team had developed a reputation for being adept at restructuring property deals gone wrong in the crisis and for locating new opportunities for their investors.

Opportune had worked with American property investor Steve Fifield on big deals in America and acted for clients in helping them get their money back from boom-time syndicates.

It had worked on deals worth a couple of billion over nine years from when it was founded the month after Lehman Brothers collapsed in November 2008. Merriman could see a good fit between their business and his.

“That was a good marriage because I was one chief with a talented team and staff, and they were three chiefs with no staff really.”

“Elkstone hopefully will continue to play a big role in connecting our portfolio to opportunities and helping Irish companies scale

By merging with Opportune, Elkstone bulked up both its team and its ambitions in a short space of time.

“Ireland really has no history of family offices, certainly of having multi-family offices. Family offices are very important globally. Ireland is underrepresented and the entrepreneurial market hasn’t been well served in Ireland and there’s just lots and lots of opportunity.

“We still have international clients and we’ve added to them, but we’ve also built out a really solid Irish base.”

Merriman said the plan had been to open offices outside Ireland, but he said this was not going to happen while the current crisis is ongoing. He said Elkstone can continue to differentiate by giving better service, and having an international perspective.

“People aren’t getting the intimate service they need as high net worth individuals. Entrepreneurs are poorly served. I like talking about a window in and out of Ireland.

“Elkstone genuinely can be a window into Ireland by attracting family money and venture money into Irish real estate or into Irish venture and also being a window out of Ireland because I think it’s important that we bring people sophisticated wealth management that’s properly diversified.

“Elkstone hopefully will continue to play a big role in connecting our portfolio to opportunities and helping Irish companies scale. I still am very excited by the opportunity Elkstone has to build a very special business.”

“Today, we’re all clearly much more challenged and we’re going to have to dust ourselves down and figure out how we’re going to make it work. But that’s what we’ll do.”

*****

Meeting Roger Jenkins

Roger Jenkins with Elle McPherson

Roger Jenkins is a fiercely intelligent and competitive banker who was instrumental in the early years of Elkstone. While the connection has been referred to in passing in the press, Alan Merriman has never discussed the veteran banker’s role in helping get Elkstone off the ground in detail before. First, however who is Roger Jenkins?

Jenkins was an outstanding athlete representing Scotland in the 400 metres in the Commonwealth Games. A former chief executive of Barclays Capital’s Private Equity Group, Jenkins was one of the best paid bankers in Britain in the run up to the financial crash. He was a tax expert, which drew criticism from some quarters externally, but clients of the bank did not complain. Jenkins is an immensely well connected financier who knows his way around Mayfair, Manhattan and the Middle East.

In April 2008 Jenkins was appointed by Barclays as chairman of investment banking and investment management for the Middle East. His job at the time was described as being to strengthen the bank’s relationships with sovereign funds and mega-rich families in the region. Jenkins was a friend of Qatar’s then-Prime Minister Sheikh Hamad bin Jassim Al Thani, which is one of the reasons Barclays head of investment banking Bob Diamond suggested that he take the job.

However, as the financial crisis worsened in 2008 Jenkins job became to help rescue Barclays. Jenkins was involved in Barclays raising £12 billion in funds from the Middle East including Qatar avoiding the need for a British government bailout.

Later the Serious Fraud Office alleged that Jenkins and two other bankers were involved in giving Qatar secret fees to make the deal happen. Jenkins was described by the SFO as the “gatekeeper” to the Qatari relationship.

In February 2020 after almost a decade of enduring negative publicity of being under investigation Jenkins and fellow bankers Tom Kalaris, and Richard Boath were found not guilty on all charges. Former Barclays chief executive John Varley had already been acquitted in June 2019.  The trial had already been dismissed in 2019, but the SFO had on appeal managed to take it.

Jenkins and his fellow defendants successfully argued that what happened was not a fraud – and that if, alternatively, it was a fraud, they were not the ones who should be held accountable for it as they were some rungs down the ladder of the bank. The three bankers said what they did was signed off by their employer and approved by the bank’s lawyers. This defence incidentally was one that the Irish court system prevented its bankers advancing.

Afterwards questions were asked about whether the SFO should ever even have taken the case. During the trial Jenkins intelligence was regularly praised with emails and phone calls revealing that his peers referred to him as “magician,” “anchorman” “ace” and “Big Dog.” In his first trial the Judge described Jenkins as “the sharpest knife in any box. He’s working in an environment with many clever people and he’s the cleverest.”

Bloomberg in its concluding report on the trial said: “Not only was Jenkins smart, but he played in a different league too. He’s thrice married, dated supermodel Elle Macpherson, and lives in Malibu. Every day, Jenkins strode into court with the determined look, agility and strength of an athlete.”

“As bad as things financially are and as challenged as they are, there are other more important things to value in life too.”

I ask Merriman about Roger Jenkins.

“Roger was pivotal to Elkstone. He was the one who came up with the idea of me looking after him,” Merriman says. “Roger is probably the smartest person I’ve ever met.”

Jenkins, he said, was “super sharp in meetings.”

Merriman said he had heard about Jenkins during his years in banking and knew about his expertise in structured products and tax arbitrage. “My understanding from the people who worked for him and with him is that he was always very concerned when it came to, what I might call judging the borders of what’s acceptable or not acceptable,” Merriman says.

“My experience with him in Elkstone is very good. He never went across a line.”

Merriman said he had followed Jenkins battle to clear his name. “I was very conscious of what an impact it had on his own life,” Merriman said. “It was a big cloud and it did very much impact him to have that hanging over him for such a long time.”

Merriman said he could relate to the stresses Jenkins was under during the financial crisis from his own time as finance director with the EBS, a relative minnow in banking terms, from 2005 until March 2009.

“The way I saw it, he was in the trenches. He was fighting for the bank. He was fighting for the UK banking system back in those days and they did what they thought had to be done to save the bank.”

“I always thought it was a very harsh case to take against him. But juries are juries and who knows, it could have gone the other way. So, I was very happy for him to be honest. Very happy for him.”

“He might have been found not guilty in the end but he certainly paid a big penalty over the last eight or nine years and certainly in the more recent years because of that case getting dragged on and on,” Merriman said.

Merriman said he knew Chris Lucas too, a former finance director of Barclays, who at one stage also faced charges before they were dropped due to ill health. Merriman had worked with Lucas in PwC where he was head of banking and insurance practices in Dublin.

“I knew him from my PwC days. He’d been the partner on Barclay’s for PwC. Again, that court case must have had a very big impact on him.”

Merriman said staying healthy had to be everyone’s priority. “As bad as things financially are and as challenged as they are, there are other more important things to value in life too.”