Chapter 3

Tuesday morning saw Andrew once again sitting drinking coffee with Morag Davidson.

“I hope you don’t mind me asking all these questions?”

“No. You work here and you need to understand how the business and the two Trusts function.”

“I talked to Ms. Campbell yesterday and she told me to ask you about the Trusts. I know they exist obviously but she said you would explain them. I am not sure if she was kidding though, as she was smiling the whole time.”

Andrew closed his eyes. Really Leslie, he deserved this?

“No, she was not kidding. Leslie, Julian and I set up the two Trusts from most of the proceeds from the sale of a business we started. Faith Campbell was Leslie’s sister who I met in hospital when we were both being treated for cancer. Its mission is cancer research. Julian, Leslie and I are the three Trustees. The other Trust we created later and it changed several times before ending up in its current form. We provided the majority of the money but it has external money as well. We three are also the Trustees, but we have a formal external advisor, Doug Somers who you will meet shortly. That Trust is supporting new businesses as well as general research here in Scotland and northern England, typical investment fund.”

“Okay, thank you for that. And this second fund is the one that generates most of the paperwork?”

“Yes, the larger Trust will be much less onerous in terms of the time commitment. The Endowment Trust is funding small businesses, we rarely invest more than £20,000 so there are lots of reports and updates, as well as proposals for new investments. Some of this may streamline but it is still a time commitment, and I am not just dumping it on Julian and Leslie because I am not here. For instance this week, we will get updates on the 20 or so investments so far, how they are doing, is anyone back for additional funds, that sort of thing, then go through all the proposals that passed the initial review by Creighton and Leslie. We are struggling with the volume at the moment more than anything else. And overriding it all is the fact we are still very young, only Leslie has graduated, and it is a lot of money.”

Andrew could see there were a couple of key questions she wanted to ask but had not figured out if it was appropriate or even how to phrase them. How much and why hung over their chat.

That day was reviews of everything so far, split into three categories. The first were those were there were positive signs, initial optimism, everything looking good so far. The second group were those where it was too soon to tell, this was largest group, all they could do was wait and see, but there were no red flags. And the smallest group, only two investments, were the ones where things were not looking positive. Here all the boring business detail which Andrew had skipped over worked in their favour. Most investments did not get the full amount up front, and often additional funds were conditional on some kind of milestone or performance metric. Given that they had this hammer they used it on one of the investments but agreed to review the other in three months. Again, a stark reminder that Doug let them learn, and which Leslie had absorbed and implemented. They were ruthless when they had to be. Again the day was organised and they finished early. Doug used the time to update Andrew on the individual investments that the five of them were funding.

“We have 11 investments totalling £120,000 so far. Ten of them were in March or June and so far, there are no concerns, too soon to tell one way or the other. The 11^th is our woodworker in Brora. We have hit on something with this. His work is already starting to get a reputation and that is only going to grow over the next year. Mhairi?”

“Andrew, I talked to several people at the reception about Robert’s work including the Scottish Office ministers. Several pieces are going to be bought for various constituency offices, not government though. It is too pricy for government funds. Both Ancram and Younger took details and their offices contacted me last week. More modest pieces probably but a good way to increase visibility.”

Doug jumped back in seamlessly.

“However, your idea to display the pieces as art had made a big difference. Hailey Knight has only had pieces in her Gallery for two weeks and the interest has been phenomenal.”

Andrew had to listen to a lot of accounting and legalese but the end result was that the People Fund, which is what they ended up calling this initiative internally, set up a company with Robert MacNish 50:50 and supported two more apprentices. It was a success story and it got lots of publicity, but it was also just five people employed. Every time they had a success it always felt like so little. Two other proposals were supported and together with setting up the company they had committed £150,000 of the £250,000 they had agreed to.

After Doug left Andrew sat with Mhairi and went through the two transactions with Tony.

“I am always pleased when you talk about something that we have discussed before. I have other clients where I swear they are goldfish. You tell them something and two weeks later they are sitting in front of me looking confused. You really listen and then when you turn up your ideas reflect the conversations that we have had. Setting up the company to hold the land is a smart and sensible idea. I will get that registered. I would recommend Hillier’s negotiate for us. That way there are several layers of separation for both you and Mr. Brown. Can you both come to the office on Friday afternoon?”

“I will let you know tomorrow morning. I am seeing Brian Campbell tonight and I want to go through this with him. Get his blessing I suppose.”

Mhairi merely nodded.

“Can you set aside an hour for us on Friday. We will explain the photography business and the way we want to structure it. That will be completed after I am back at Cambridge.”

“You don’t want to try and complete it this week?”

“Yes if there was time. But I am very conscious of trying to cram too much into this week as it is. So no, we will give you the 30 minute spiel and then leave you to paper it correctly and appropriately.”

Mhairi smiled, almost maternally.

“Like I said Andrew, it is nice to hear people listening to me. Again, that is the sensible thing to do.”

The smile was nice but Andrew had to mask a grimace. The frayed, borderline nonexistent relationship with his parents always popped up at the oddest moments.

As Andrew had mentioned to Mhairi he wanted to talk to Brian and so was going for dinner with him and Mary. Suzanne, Leslie and Julian all joined them and Andrew was pleased that the invitation had included Suzanne. Dinner was fun and after Sunday night and the previous day with Mhairi it was nice for the wedding to be ignored. The conversation was all around the start of term for three of them. After dinner Brian and Andrew went to his home office.

“We haven’t chatted just the two of us for too long Andrew. What is on your mind? Should I be worried?”

“The way everyone talks it is as if I keep having all these crazy ideas. Oh wait.”

They both laughed.

“No, nothing like that this time. You and I had a conversation a while ago about doing some investing together, maybe in some property. I wanted to talk to you about that. We have the People Fund investment but I wanted to know if you were still interested in anything else. Mhairi and Creighton sat me down yesterday and advised me to be conservative with my money and grow the capital through safe investments as opposed to some of my more speculative ideas. I think the purchase of the space for the art gallery freaked them out a bit.”

“Yes, your support of the Knight Gallery raised a few eyebrows. What are you thinking of?”

Andrew spent a few minutes recapping the conversation of nearly six years ago that started his thinking on money and investments.

“The stock market is producing significant returns; Faith’s Trust has grown by more than 30% in less than two years just from being invested in the market. My own personal wealth has also grown and so I wanted to discuss diversification. All these meetings with the Endowment Trust have made me realise that I need to spread my investments around so that they are not all concentrated in one area. So I was thinking about commercial property. But what that looks like, well that is why I am here. I do have one opportunity already.”

Andrew explained about the land at Bankhead Industrial Estate. He then had a fascinating hour listening to Brian as he talked about commercial property, the endless variety of it, and the strengths and pitfalls of different buildings or structures.

“I don’t have the time to spend on lots of management of a property and I am not going to dump all that onto you.”

“You could invest in a property company, you know. Let them do all the work.”

That was the issue, this was not an investment this was personal, wanting to do something with the person most responsible for his education as an investor. They would have to settle for the People Fund, as they never did find a property that made sense for just the two of them. Something like the piece of property that Tony had would have been ideal. It was a shame. Andrew continued the conversation with Suzanne as they lay on the couch in the flat that night. She had asked what he and Brian had gone to talk about.

“Years ago we had talked about investing together. I wanted to ask him about it. We chatted about property for a while but nothing came of it. It has to be low maintenance, I don’t have the time and I don’t want to dump on someone else.”

“Why now?”

“Oh, Mhairi and Creighton wanted me to be more careful with my money. No, that’s not fair. They wanted me to be more conservative with my money. I have a lot of speculative investments and they advised me to try and grow my capital. It is mainly in the stock market at the moment so I thought about buying some property. Which gets us right back to time and involvement. I can’t have it all.”

“Well you have the money you call the People’s Fund. What is that, five of you? Why don’t you try something similar with property? Talk to a few people like you have with Brian and all of you pool some money and get someone to run it for you.”

The answer was staring Andrew in the face, including an example that was working. They had the space at the office for somebody to work. It wasn’t that different to the idea of investing in an external property company.

“Brilliant idea Suzanne.”

Andrew’s kiss of thanks lead to many more kisses and the remainder of the evening he spent thanking Suzanne very thoroughly.

As usual after their swim, Andrew stayed and showered at the pool before walking back across the road, letting Suzanne have the all the hot water in the flat. When he returned to their room he carefully made the bed, flattening the duvet so that it was nice and smooth. Then he laid out a blindfold, the playsuit, wrist and ankle cuffs, together with various lengths of chains. Andrew then closed the door and went through to the kitchen to make breakfast. He heard the shower finish and eventually Suzanne left the bathroom to get dressed. He stood listening and didn’t have long to wait before Suzanne slowly came into the kitchen.

“Go through and get dressed as normal. Take a good look at what we will be playing with this evening. You can take the car today and if you don’t mind you can collect me at the office and we will go out for dinner.”

Andrew walked over and kissed Suzanne before returning to the toast and coffee. Returning wearing jeans and a sweater she looked lovely, fresh and innocent, which made him smile even more. They chatted away, pretending normalcy, talking about her sorting what she wanted to bring to the flat before she went to Glasgow. Andrew stood behind her, trapping her against the sink, kissing her neck. But he said nothing, merely rubbed his index fingers against her temples. With a kiss on the cheek Andrew left Suzanne to her day-long distracted thoughts.

Unusually, he was the last to arrive that morning so Morag had no time for further questions. Again, he could see the benefit of Leslie now being full time. Everything was better prepared, and the whole day, indeed the whole week, seemed to have run smoother. They invested a further £310,000 in 12 projects, including their first four in northern England. They were wrapped up at 3.00 and Leslie wanted to spend the rest of the afternoon talking about the structure going forward.

“So Andrew came up with the notion that given the full-time nature of this Endowment Trust that I should be an investment manager. Faith’s Trust will be a small amount of time so I will run this Trust full-time and as it becomes necessary, employ additional staff. Creighton will act as the Finance Director for both Trusts as well as handling the personal accounting for the three of us. Doug has asked that he now do the accounting for what is known as the People’s Fund and Creighton has agreed, subject to letting us all know. Doug will still manage those investments but Creighton will deal with the paperwork. I think that this structure will ease the time burden that all of us were facing until June. Any thoughts or questions?”

Predictable silence.

“Okay then, I know that Julian wants to talk about computers and Andrew wants to talk about property.”

Julian went first.

“I am going to actively monitor the three computer company investments that we have at present. This summer at Ferranti really pissed me off, to the extent that I am no longer going to accept a job there. I told them that two weeks ago. The dickhead I had to work for all summer just soured me on the whole place and I am going to get back into computing. I don’t know in what form, or how yet, but I am going to look for an opportunity for next June.”

The discussion was positive around this development with a lot of speculation which would not be resolved until next spring at the earliest. Julian didn’t want to just code, he wanted to be involved in the strategic direction of the company, just as all three of them were with Jullesand. Then it was Andrew’s turn.

“I had the idea to give something back, to help individuals get a start in their careers, more than three years ago. That idea struck a chord with Brian and Doug, as well as our other two partners. It made more sense for the five of us to pool our money across a larger number of investments. It was the same with the three of us when we set up what was originally called the Venture Fund. That morphed into the current arrangement when others once again joined us. Well I want to try the same idea again, this time with property. Earlier this week Mhairi and Creighton advised me to build additional capital in safe investments rather than some of the riskier ventures I have invested in recently. To that end I want to take a portion of my money and invest in property. There would be a property manager hired to manage the different properties, talk to the tenants, ensure payments, liaise with Mhairi and Creighton on the paperwork, all that sort of thing. I wanted to let the five of you know, firstly to see if you had any personal interest, and secondly to spread the word, just as the word filtered out previously.”

Andrew stopped and the questions started. All five were interested, the diversification made sense for all of them, and so there were tons of questions about what kind of properties and where, everything was mulled over.

“Suzanne came up with the idea last night when I was talking to her about my meeting with Brian, she even referenced the People’s Fund idea. I am telling you this less than 24 hours later. I have no pre-set ideas, what I have is some thoughts, most of which I only have due to the time that we have spent together. The idea came to me through thinking about diversification. While I am not saying we should not invest in Scotland I think that we need to diversify from just Scotland. I was thinking that the property company would have an English bias, maybe even southern English bias, so that it is a different market we are exposed to. As to what, the thing that caught my attention when Brian talked about this yesterday was those business estate units that are around the edges of towns, structurally and mechanically simple. What he called light industrial and warehousing. I want to get close to 25% of my money into this, but it will depend on opportunities, who else is involved, how big the company is, what minimum it needs to be to support an employee, and pay all the other bills, everything like that.”