Well-known travel entrepreneurs have joined forces to create a dedicated investment fund with £2 million to target small and medium-sized specialist businesses in the sector.
Steward Baird, John McEwan (pictured), Ian Brooks, Craig Burton and Matt Ansell make up the advisory board of Pebble Travel : Investors, which is looking for established travel agencies, tour operators and dynamic packaging companies to buy or invest in.
It aims to fill a gap in the market for investment in travel companies with turnovers of £2 million to £20 million.
Baird is chief executive and founder of private equity investor Stone Ventures, which will provide the primary funds for Pebble Travel, although all directors will also invest their own money and take active, non-executive roles in the businesses.
“There is a massive gap in the market right now; someone needs to help the smaller companies get bigger. With regulatory changes, more businesses are going to find their cash is tied up in financially protecting businesses and not in growing businesses. This is not good for the sector; it will suppress growth,” said Baird.
Pebble Travel, a subsidiary of Stone Ventures, will target businesses where owners are looking to retire or sell up as well as businesses which need investment in order to grow to the next level.
“It could be an owner who has failed to realise the full potential and needs a partner on board or an employee who wants to buy the business from his boss and we could provide support,” added Baird.
McEwan, former chairman of Abta and chief executive of Advantage, said: “Interest from private equity companies in the travel industry over the last couple of years has been in large companies. There has not been the same level of opportunity for small to medium sized businesses to relate to private equity businesses.
“There are some really good small and medium sized businesses out there which could grow and move up the “league”.”
Baird, who previously worked for Virgin Holidays and Eurostar and was on the board of Abta and the Federation of Tour Operators, said Pebble Travel would differ from investment houses because of the hands-on travel expertise it could offer.
As well as McEwan, Brooks has worked in businesses including Ideal Cruising, Gail Kenny Group and Medhotels, which he co-founded and sold; Burton in managing director of winter sports specialist Ski Solutions; and chartered accountant Matt Ansell, who is the senior investment manager at Stone Ventures. It has a network of professionals it can bring into businesses.
“Ultimately we are putting money in to build a management team and we will join the business for up to one or two days a week,” said Baird.
Pebble Travel will be identifying potential opportunities over the next couple of months.
It expects to invest in a couple of companies a year, ultimately with the aim of selling them on as larger, more profitable businesses.
In order to be considered for investment, companies need to be profitable and established for at least three years; operate in niche product areas, the luxury market or provide special interest holidays; have a strong brand, client base and customer loyalty.