MAYANK PATEL - CURRENCIES DIRECT
Reproduced with permission from Growing Business Magazine
(Issue 46, February 2006)

Mayank Patel is seriously ambitious. He’s targeting a £5bn turnover for his foreign exchange business, Currencies Direct, in only five years. He tells Ian Wallis of Growing Business magazine how he’s going to do it.

Mayank Patel’s big on his five-year plan. It’s a buzz phrase he drops more than 10 times into our two-hour meeting. In comparison, the value of relationships crops up eight times, a strong culture gets six mentions, and organic growth four. Admittedly he’s responding to questions, but there’s good reason for his talk of targets. After all, he’s set himself a pretty stratospheric one. £5bn. That’s the target. Simple. A turnover he fully expects Currencies Direct to hit, as a group, by 2011. He’s quite happy for people to dismiss it as crazy talk – it wouldn’t be the first time. So is there reason to take him seriously?

STRONG FOUNDATIONS

Right now, the foreign exchange company boasts an annual turnover of £750m, with £7.5m gross profits (the bottom line figure is around £2.5m – “a healthy figure, it keeps adding to the pot”). Profit is built into the price of the currency itself. It buys in bulk and hedges against fluctuations in exchange rates, enabling it to transfer without charging commission or management fees on top, providing at least £5,000 is changed.

Nine years ago though, former futures and options broker Patel and co-founder Peter Ellis were stationed in a box-sized office in Paddington with equally grand designs but a zero turnover. Ellis left the business some time later and Patel’s exuberance has not abated. “I know it’s very ambitious to predict a £5bn turnover, but organic growth, without any external funding whatsoever, has got us to where we are in nine years.”

Being in financial services, where the product to sell is money, makes a high turnover almost a given, particularly when corporate clients, representing 85% of revenues, and private individuals alike are changing up currency to make hefty outlays overseas.

But, then again, Currencies Direct, has established itself as arguably the leading independent player in the overseas property market with a database of 1,600 estate agents and property developers, and claims to be the UK’s top commercial foreign exchange company – so whichever way you look at it the company’s pulling up trees.

What’s more, Patel’s ambition knows no bounds. “It’s hard to describe, but if I said to you that from the early days I’ve had a very good vision of what I wanted, people would have said ‘where the hell has this guy come from? Is he barking mad?’,” he admits. “Even as a small entity, I’d talk about a global business and international growth with offices here and there.”

His conviction is 100% and while he says little with a straight face – he’s usually beaming – this is something he states with the utmost sincerity. It’s a level of enthusiasm that must either inspire colleagues to match it or else be exhausted by it. So far the former appears to be the case.

RESTRUCTURING

All this begs the question: How’s he going to achieve his lofty aims? First up, and any company looking to make a step change will face this, he’s spent a considerable amount of time strengthening his management team.

It still needs further refinement, but the non-executive directorships he’s handed to former TSB England & Wales Plc chief executive Leslie Priestley and Tory peer and High Court judge Lord John Taylor represent a shift in class to Patel.

He believes the appointments will enable the business to extend its international reach, introduce new vertical markets, make large-scale acquisitions and provide the corporate infrastructure to cope with the changes.

One of the things that strikes you about Patel is his self-awareness. Entrepreneurs tend to be imbued with such confidence they believe they can pull off most of the acts needed to grow a business. When your personal touch has made the difference before, why not again?

No doubt, he feels he would make a fair fist of a major acquisition, despite never having made one before. He’s also made Currencies Direct an international company, so what’s to stop him conquering new lands?

MIDAS TOUCH?

“You’ve got to realise what your strengths and weaknesses are. I know mine. I’m hopeless at documenting things. I’m not the best person to cross ‘t’s and dot ‘i’s. I’m not an accountant. I can understand a balance sheet, financial statements and some of the key ratios, but I can’t look at figures as they would.”

So he stepped back. As chairman he’s left the day-to-day running to his former finance director – and now group managing director – Neil Redcliffe, an ex-Price Waterhouse (now PriceWaterhouseCoopers) chartered accountant.

Patel still gives his opinion where he feels it necessary and is kept informed by email, copies of emails, management meeting minutes, and meeting agendas, but beyond that channels his considerable energies into the group’s overriding strategy as well as flying out to meet clients, partners and staff.

“If I get involved I’m undermining his position,” he adds. “I’ve always known it’s very important to separate myself from the company. I’ve never wanted Currencies Direct to be all about Mayank Patel.”

Trust is critical and he’s prepared the company for the worst, saying that if he doesn’t come in again it shouldn’t make an iota of difference. Clearly he’s doing himself a disservice – underselling his role – but then he’s keen to appear both a humble and forthright leader.

On the one hand, he chuckles as he tells of the company’s last Christmas party when he was “boogieing away with everybody until 4:30am”, leaving him with aching feet, and how he still opens the red suggestion box in the office’s kitchen.

Yet, on the other he insists how blunt he is by nature and illustrates through his talk of the five-year plan how his personality pushes the business that bit more than it would otherwise be pushed.

HIRING SENIOR MANAGEMENT

In Priestley and Taylor, he clearly feels he has two people he can trust fully too. It was a year and a half ago that he and Redcliffe agreed it was time to bring in non-execs and the fault lines that precipitated such a move were clear to both.

“The tell-tale signs become so obvious,” he says, “particularly when one is really trying to grow the business. We want to make acquisitions – we’re looking at some of our direct competitors – and we want to look at different markets. We’re expanding into jurisdictions where there are different legalities, different cultures, and we might be completely out of our depth.”

Typically, Patel had already laid the foundations. Back in 2002 he won the BT Entrepreneur of the Year award. Taylor was a judge, and after an awkward introduction at the dinner – which Patel later found out was down to Taylor struggling to keep the winner’s identity under wraps while sitting next to him – the pair got on famously.

“Every time I’ve seen him at a function or event I’ve gone up and spoken to him and built a relationship. By the time he decided to come on board he knew everything about us,” he says.

What does he bring to the party then? Legal perspective and international exposure, says Patel. “Being a barrister by profession, and a High Court judge historically John is very strong on our responsibilities. We can be talking about a certain part of our business and John will step in and say ‘what about ethics? Is this ethical?’. Compliance, money laundering, the way we do business, due diligence are all key and someone with his background is invaluable.”

A heightened level of discipline accounts for both appointments, by and large, and Patel already feels he and Redcliffe are being held more accountable. “Trust me, those guys give me a tough time. It’s important we become more formal and disciplined,” he says. “We’re always running because the business has grown so fast. We need to take stock of the way we do business, the way we document and hold meetings.”

Priestley was another natural hire and came through the company’s financial controller. It’s interesting that so far Patel hasn’t shelled out exorbitant headhunter fees or resorted to non-exec databases. “The process isn’t rocket science. One does not always have to go the headhunter route.

It’s a bit like interviewing somebody. They come in and say all the right things, but within a month you realise the chemistry’s not there. You can use a third party and be as specific as you like, but sometimes nobody knows better than you.”

As well as his time at TSB, Priestley spent 35 years at Barclays Bank, holding a number of senior positions. He is now a director of Egg Plc and a fellow of the Chartered Institute of Bankers. For an owner-managed financial services business with 100 staff he’s a big puncher.

“Leslie has great experience of regulations in every country and without him we’d be sitting there speculating,” admits Patel, who, once again, wasn’t afraid of looking stupid and risking rejection.

Three years back he performed something of a coup by getting Bill Clinton over to make a keynote speech at a business seminar the company co-hosted. “We didn’t think about how small we are and whether we’d be laughed at. People buy into that positive attitude.”

ADDING VALUE

Priestley is already adding value too. Aside from his knowledge of banking regulations he’s putting together a new training programme with Taylor and recently cut a £750,000 deal with Indian software giant Satyam Computers to completely revamp the company’s IT and accounting systems.

“We’ve grown so quickly the present front and back office systems need to be reconciled so that they can talk to each other, giving us client information and the accounts systems at the touch of a button.”

It’s not hard to imagine that somebody like Priestley has a very good handle of what such systems are capable of and can also judge what the £5bn turnover version of Currencies Direct will need. And he’s not backward in coming forward on areas requiring further improvement.

“He’s a no-nonsense guy: doesn’t mince his words. It’s something I love about him,” says Patel, who’s clearly been brave enough to take on those who will challenge and oppose him, rather than nod passive agreement and skim through the figures each month in return for £25,000.

On the subject of salaries Patel says he did his own research, talking to business friends, PriceWaterhouseCoopers and Ernst & Young. “This gave me a good indication of general salary structure and they charge an average industry amount. It’s not a huge cost – it’s very sustainable. Chemistry is very important.

Personalities within a senior management team have to gel and we had several meetings and chats with John and Leslie before we took them on. They need to be inspired too.”

How does he formally assess their value then? “It’s simple,” he responds. “Their role becomes self-accountable during board meetings and very quickly their input and experience becomes visible. It’s an ongoing process that needs constant communication, feedback, trust and respect.”

Patel hopes to add a senior industry heavyweight in compliance and anti-money laundering soon. But while the search continues so does progress on the five-year plan.

EXPANDING, DIVERSIFYING

“Currencies Direct has gained a reputation for leading,” says Patel.

It took more than a year to gain a licence to operate in Australia, for which Redcliffe spent 10 months in Sydney building a small team and pursuing the application.

Next was South Africa, where it was the first currency exchange company to test the water. “It’s uncharted territory. That’s the one thing I’ve never shied away from – otherwise you’re just a follower and don’t get such good market share.”

What’s next then? “Online foreign exchange trading and corporate foreign exchange trading,” he says, which on the corporate side will deal with risk management strategies and analyses. “Corporate clients are buying large amounts of foreign exchange and it’s important for them to manage their risk and hedge their balance sheets. That’s where we come in.”

He’s also keen to expand services into mortgage lending and insurance, which would obviously represent a greater leap. Plus, he’s keen to join Western Union and MoneyGram in remittance. “If we have parts of the business that are regulated and parts that are not it distinguishes the two,” he offers. Understandably, each ‘vehicle’ will have its own MD, with Redcliffe retaining his position as group MD.

Wiring small amounts of money is a huge global business, with £232bn transferred globally in 2005. Close to 10% of that was accounted for by India, the world’s largest market for remittance services. And Patel feels his background, the company’s office in Mumbai and efforts made with the Asian community will now reap dividends. “We’ve spent three years grooming that market, including sponsoring a very prominent Asian awards ceremony.”

Isn’t such activity a huge risk? Patel says not. “We’re not going to move away from financial services and currencies to trying to manufacture something. We’re only changing the verticals. We won’t lose focus of what we’re good at.

The offering will change, the markets we go to will change, the business model and products will not.”

He adds that due to hardship in the company’s early days – on two occasions it came very close to technical insolvency – the company is conditioned to think ambitiously on one hand and conservatively on the other.

“People could look at us and say ‘they’ve got a healthy balance sheet, why don’t they leverage on that? Why don’t they borrow?’ But it’s down to the fact that we’ve grown the business so far out of cashflow and created a very successful model.”

He does admit, though that there has to be an element of risk.

“Market forces could radically turn against the business or something could completely change,” he says.

Taking on finance for the first time inevitably adds to the risk, although Patel isn’t planning to relinquish any of his 63% shareholding yet. And while two or three acquisitions could push the business halfway to his £5bn grand design, it could also cause a seismic shift if the deals go bad. His answer is that by diversifying, the group will be able to absorb the odd failure.

With so much change in a relatively short period it’ll be fascinating to see the scheme take formation, particularly as Patel understandably has to hold one or two secrets back. “I’m slightly hesitant as I know competitors will be reading this, but on the other hand there’s so much excitement within me that wants to tell you how we’re really going to go in the next five years.”