Souter’s private investments beat the stock market

Brian Souter

By Mark McSherry — Souter Investments, the private equity focussed family investment office of Stagecoach founder Brian Souter, has announced continued strong performance and growth in its fifth Investment Review.

The review outlines the performance from Souter’s core private equity portfolio, which generated a 26% annualised return across nearly 30 realised deals.

The current private equity portfolio includes companies spanning sectors including industrials, financial services, business services, telecoms media and technology (TMT), consumer, healthcare, energy, and education.

Two thirds of the portfolio firms sell business to business.

Founded in 2006, Souter Investments has made over 70 unquoted investments, deploying more than £500 million of capital.

It currently has significant investments in more than thirty businesses, acting either as the lead investor or as a partner for other financial sponsors.

“The office has been particularly active over the last three years, adding nearly 20 new private companies to its portfolio,” said Souter Investments.

“These include LIKEZERO, a software business providing next generation data capture and contract analysis solutions to the financial services sector; Climate Impact Partners, a voluntary carbon markets specialist working with leading corporates, NGOs, and governments to deliver solutions for climate impact; sustainable clothing and homeware brands Celtic and Co and Turtle Doves, which specialise in ethically sourced fashion; and Amber River, a consolidator of the independent financial advice market …

“The office has also successfully sold several companies, including Stone Technologies Group; Duke Street backed Voyage Care; Global Risk Partners in a deal led by Penta Capital; and The Rohatyn Group’s Pet Network International.

“Acquirers have been a mix of strategic corporate buyers and financial investors.”

Brian Souter said: “Our total portfolio increased in value by 8% per annum over the fifteen years ended 31 March 2022.

“This is stated after tax, all running costs and adjusting for charitable donations, and compares against a 5% annual return on UK quoted equities including dividends over the same period.

“Although this may not sound like much of a difference, the compounding effect of our performance means that our portfolio is now 270% higher in value than it would have been if we had invested solely in the UK stock market.”

Souter Investments’ co-managing director Calum Cusiter said: “Sir Brian’s vision for Souter Investments was to create an entrepreneurial family investment office, which would be resilient to economic downturns, generate healthy returns over the long-term and fund charitable donations.

“Since 2006 we have pursued those objectives by building a diversified portfolio and retaining an opportunistic and flexible investment approach. Our overall strategy of focussing on private equity investments remains the same today as it did over 15 years ago.”

Co-managing director John Berthinussen said: “We are particularly pleased that the returns from our private equity portfolio, where the weight of our capital and efforts are focussed, remain so strong.

“This is thanks to the talent and tireless efforts of our portfolio company management teams and co-investment partners.

“While holding high levels of cash and liquidity over the last three years during a period of low yields has inevitably held back our returns in the short-term, and the social and economic backdrop has been challenging, we are pleased with the progress of the portfolio and confident that the new investments we have made will mature to generate continued robust returns.”

Brian Souter added: “As we traverse today’s set of challenges and seek to identify new opportunities, we are fortunate to benefit from a diversified portfolio of strong businesses and significant liquidity to invest in new deals.

“Following the sale of Stagecoach Group in May 2022, I am excited to continue with our work at both Souter Investments and The Souter Charitable Trust.”