Mark Onyett Interview: Ends and beginnings

Could you tell me about your involvement in the Rajasthan Royals cricket team?

“Well, it’s a Blenheim Charcot project. So we have 50% to 60% of our money and investments in financial services. And then we’ve done some stuff in the media, online learning and training.

“And we’re a digital transformation, venture capital player. So when they first were talking about having an Indian Premier League, one of Blenheim Charcot’s co-founders Manoj just caught on to that. And he rightly hypothesised this is going to be a big thing and we should try and play.

“And obviously, we’re a small fish in what was a pretty big pond. So we bid for the Royals, the Rajasthan team, which was the cheapest as it was the least popular because it wasn’t a big well-known city.

“Then we mostly filled our player roster with young Indians who had great potential but hadn’t made the big time, but importantly, we had Shane Warne as our captain and Graeme Smith as our other senior player, and we won it the first season. So that was a fairy-tale story.”

Could you just give me sort of a brief overview of your career history?

“So I studied engineering, and I briefly worked for Procter and Gamble, making Fairy Liquid, and then I decided that maybe engineering wasn’t for me in the long run, so I went into strategy consulting at Monitor - and that’s where I met Manoj and Charles, another co-founder of Blenheim Charcot.

“I did that for a couple of years and then my then boss/mentor left to join Capital One. A few months later, I caught up with him and he said that I’d really like working at Capital One, because it combined the analytical side of consulting with the real practical side of getting stuff done.

“So I joined Capital One in London initially, and then, in 1998, we opened an Operation Centre, so I moved to Nottingham to help open the centre there.

“During that time I worked in what Capital One used to call marketing and analysis, which was really credit risk, marketing and products all rolled into one. Then I ran collections and recoveries at the firm for a year, and that was my last job with them.

“And then in around 2004, Capital One began to change. It had been an organisation that aspired to be a global credit card player, which saw it open in places like France, Italy and Spain, and we were looking at a bunch of other countries - and the plan was to grow from there.

“However, and with great foresight, they worked out they were better off becoming a diversified bank in the US.

“That prompted me to think about what to do next. And I’d always hankered after doing something entrepreneurial, so I got back in touch with Manjoi and Charles - who’d left Monitor a bit after me, set up a few businesses, made a bit of money and learnt a bit about how to build businesses.

“I said, ‘I think there’s an opportunity to take some of the analytical rigour that Capital One has, and apply it more broadly in the collections and recovery space’. This would see us become a middleman.

“This was often, and still is arguably, an under invested part of the business as it’s not the sexy part, so it’s slightly forgotten. As such it’s not necessarily a core competence for the creditors, meaning the idea you might work with someone else, or partly outsource it to somebody else isn’t a bad one.

“So that was it, I left Capital One in 2004, and started by sitting around the table in my kitchen, wondering what on earth I’d done, what it was we were going to do, and what it was we had to sell - which was nothing.

“So we started off consulting and trying to help people with problems they’d got in the areas of collections and recoveries. Then we gradually built up some capability, built through the business and invested in some technology to help manage recoveries.

“Then we kind of stumbled across debt sale and the fact that people were selling debt, but they weren’t quite sure what they were doing.

“That may sound a bit unfair, but receivers knew there were buyers and there were sellers, and the sellers were typically people who’d been running a collections operation - and now they’re doing corporate finance transactions to sell millions of pounds of debt, and it wasn’t their skill set.

“So we hired some people and built up a capability to broker that sale. And again, we had this hypothesis that different buyers were good at and understood different things.

 “If you took these parcels of debt and segmented them up, you could sell the right pieces to the right people, and they bid more.

“So we built up this business, which grew pretty quickly, with us selling nearly half of the debt in the UK by around 2007.

 “However, one of the most important parts of what we did at TDX was we’d always be talking to our clients and asking them what their problems were, even if they weren’t things we could help with – and something that kept coming up was insolvencies.

“This moved us into a slightly different space and created TIX, which was the Insolvency Exchange.

“That grew up and we ended up with a three-pronged business – being recoveries management, debt sale, and insolvencies.

“In around 2013, Equifax approached us and said ‘we want some extra capability in the collections and recovery space, what we’ve got is a global sales force. We’ve got a presence in all the other parts of the value chain, but if we brought TDX together with Equifax, we could take your products and distribute it through our global sales network, and it would become complementary with our other services’."

“So we had a bit of back and forth on that, and then sold TDX to them in January 2014. And then, unusually for that sort of deal, they wanted us gone, so the day afterwards, I went into the office and packed my bags.

“Following that, I carried on working with Charles and Manoj in the financial services space, which we had started getting a bit more into, and since then I’ve been helping build out some of the financial services businesses within Blenheim Chalcot. I’ve had a couple of stints as an interim CEO where we were between CEOs, but then mostly a chairman or non-exec on the boards of those businesses.

You mentioned you spotted a gap in the market when it comes to things like debt sale. What did you see that maybe others didn’t?

“I think some of it was as simple as going out and talking to people. I moderately knew most of the credit risk directors from all the top lenders.

“And we would go and have a coffee with them and we would ask what their challenges were, what it was they were wrestling with. And when you’ve gone to five and they’ve all said ‘I’ve got this debt sale stuff coming up, and I’m building a team, but it’s quite stressful’, and we picked up on the fact that we need to learn a bit more about debt sale.

“After that you come up with something and you go back, trial it with them and say to them ‘we’re developing this, this is what we propose to do, do you think this would be of interest?’, and pick up that it is of interest.

“You then go and hire a few people that know what they’re doing, before building a bit of technology, and bringing in some data and analytical rigour to it, and lo and behold, it becomes a product.

“I think we were also lucky as if you can ride the wave of a growing product or sector, it makes life a lot easier than if you try to slog it out with other competitors.

“If I’m trying to start a debt collection agency today, I’m looking at a market where there’s a lot of existing players, capacity, and regulatory hurdles to go through.

“Whereas the debt sale market back then was very nascent, and that was that period between 2004 and 2006, that was really when a lot of the players that are big today, first emerged. Back then they almost barely existed, and they rode the wave of the development of it as a concept and an idea.”

Moving towards your work at Blenheim Chalcot, can you talk me through a couple of the businesses that you’re involved in at present?

“At the highest level, Blenheim Chalcot is a venture builder, so we typically start or invest in the very early stages of businesses where we think we can bring both money and expertise and resources to help it be successful.

“We also try and take away as much of the hassle from the entrepreneur as we can so they can focus on the most important thing: getting the product market fit and then scaling their business.

“In this, I’ve done mostly financial services stuff. The two I am most closely involved with at the moment are Oakbrook, which is a consumer lender which does relatively vanilla instalment loans, but all done digitally through the aggregator platform.

“They offer a range of APR’s from the super-duper prime, low single digit APRs up to the more non-prime end of the market. And their USP is the data and analytical rigour they bring to it and then the technology they’ve built around.

“And then there’s Libris which is a small business lender, so they lend to relatively small loan sizes of around £20,000, and they lend typically to retailers, those in hospitality and those in e-commerce. We partner typically with merchant acquirers, so people who provide the card taking facilities to the merchants.

“So they partner with the acquirers to offer the product to the merchant, and then the merchant repays the loan through the card machine.”

When you get approached by an entrepreneur, how do you decide if you’re going to invest in something?

“So some we start, for example, Oakbrook we started as we had the idea and we built a team to take it forward.

“For others we took a different approach, like Salary Finance. So that’s a salary-based lending business where we partner with employers to offer loans to employees that are repaid through payroll.

“And when we’re approached with an idea in my mind, there’s probably a combination of three things we’re looking for.

“Firstly, is there a strategic reason why it could be big? So if you’re going to come at me with your business, I’m thinking can I see this being a big successful business?

“Secondly, can I see a really clear route for what you’re going to do in the next six to 12 months? And people often come with one not the other, they’ll have a really good tactical plan for when they’re going to sell something to three restaurants. But then when you say, ‘okay, but how big could this be?’ you quickly find out it’s going to be a lifestyle business.

“Or they come with lots of charts showing that, if I can only get 10% of the market, we’re all going to be billionaires. But when you say, ‘what are you going to do for the next six months?’ They’ve got no idea.

“And then the third piece is the people, because ultimately the business plan will nigh on 100% of the time not look like what it does today, it’ll be something different. There’ll be a pivot, there’ll be setbacks, there’ll be all sorts of problems, so do I have confidence in the people that I’m backing that they have a resilience and the capability to adapt, flex and drive this ultimately, to where it needs to get to.”

You’re involved in a couple of businesses who lend to small-to-medium size enterprises, are they seeing more businesses struggle, at this current moment in time?

“I think there’s definitely signs. I mean generally speaking there’s a lot of breath holding, whether it be our businesses or people I talk to, there’s a lot of waiting to see stress at the moment.

“More than a year ago we started to worry about the state of the economy and where things were going in our lending businesses. Even though we had a little bounce coming out of Covid, we fundamentally believed it didn’t make any sense to have a bounce, and there was going to be pain coming.

“We’ve been very conservative for quite a long time, which means we haven’t really seen too many signs of distress - but it’s definitely there and we’re definitely starting to see the early seeds of it. In the small business space at the moment, in our sector, it looks fine but it’s only a matter of time.

“It’s surprising to think of hospitality - even though it’s been a slowdown recently and their cost of goods has gone up hugely, they’re struggling with employment and lots of other issues - people are still spending money and still going out, meaning they’re still doing okay, for now. But it remains to be seen whether that continues.”

You obviously operated during the 2008 financial crisis, are there any similarities or differences you’ve noticed from that time?

“We haven’t seen the crash in the markets as much. Fundamentally a lot of the reason the 2008 crash was very sharp is we had a sudden crash in the supply of money, and that was brought about by the downfall of some of the banks because the corporate markets got super nervous super quickly.

“There’s been a little bit of that, but there’s still a huge amount of capital to be deployed, interest rates have gone up a little bit, but not much, so people are still looking for ways to deploy money.

“And that’s why there’s a bit of light at the end of the tunnel as there are a lot of people with money to deploy, who are sitting on their hands right now saying ‘I’m just going to wait’.

“I think as soon as they can see and think ‘it might be okay’, they’ll all be desperate to get money out the door, whether that be lending or investing in companies or the debt purchase market, whatever it is, I could see that booming back quite quickly.

“And, while we’ve seen a little bit of a trickle up in insolvencies, we’ve not seen a big run yet on insolvencies, which again, somewhat characterised the 2008 situation.”

Finally, how did you feel when you found out that you won the outstanding individual contribution to the industry at this year’s credit awards?

“Well I’m obviously very honoured because you always feel like a slight fraud as you think ‘Really? me?’, so I feel flattered that a panel of very esteemed people who I have an awful lot of respect for, picked me.”