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Acquisition a new chapter in west Cork firm’s Global success story

Global Shares’ sale to JP Morgan means even greater opportunities – and a windfall for Clonakilty

Global Shares chief executive Tim Houstoun says it’s great to see people doing well out of the Clonakilty-based firm's success and acquisition

Looking out on the car park of Global Shares HQ in Clonakilty, Tim Houstoun sees visible signs of the transformation he has helped bring to the west Cork town.

“There are a lot of nice electric vehicles and Range Rovers there now. You wouldn’t have seen that 12 month ago,” he says, smiling. “It’s great to see people doing well out of this. Other companies will spawn from this. There will be another generation of entrepreneurs in west Cork.”

Englishman Houstoun is something of a local hero in the picturesque seaside town; the $730 million (€676 million) sale of Global Shares to JP Morgan last year resulted in a huge windfall for the area. Around 150 of the firm’s 800 employees are based here, where the story began, with the rest spread between offices in Cork city and Dublin, and a suite of hubs in Europe, North America, the Middle East, Africa and Asia-Pacific. Employees owned 26 per cent of the firm before the sale and the crystallisation of that has been life changing for many families in west Cork.

“I wondered what would happen after the deal,” says Houstoun. “Some people have retired because, quite frankly, they have all they need. But most are fully committed and staying. Recruitment is easier now we are part of JP Morgan. Our people now have very interesting CVs. They’ve worked for a very successful fintech and now they also work for one of the biggest banks in the world – from a base in Clonakilty.”

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Thwarted retirement plans

None of this was on Houstoun’s agenda when he settled here 25 years ago. The area ticked boxes for him and his wife Maire. She was a primary-school teacher from Donegal, he explains, and the couple decided to relocate from the UK to raise their growing family and enjoy the better quality of life west Cork offered. They set up home in the village of Timoleague.

Houstoun’s background is accountancy; he trained with BDO in London following a BA in economics and statistics from the University of Manchester. Initially, he commuted to Britain. He had founded automated logistics firm Business Direct in 1993 and later floated it on the London Stock Exchange’s AIM. By 2008 he was planning to retire and brush up his tennis. Timoleague is blessed with a grass court.

Global Shares staff 'have worked for a very successful fintech and now they also work for one of the biggest banks in the world – from a base in Clonakilty', says Tim Houston. Photograph: Getty Images

A friend of Houstoun’s had been working in a part-time finance role at a local start-up, Global Shares, but needed to go elsewhere for a full-time role and so persuaded Houstoun to work one day a week there in 2009. Soon it was three days, then five.

Global Shares is in the business of administering employee share plans on behalf of client companies. It had been founded in 2005 by Carine Schneider, a former benefits consultant at Towers Watson, and Maoiliosa O’Culachain, who had helped establish and run the Eircom employee share scheme.

“I hadn’t been a finance director for 20 years but I thought I could do it,” says Houstoun. “The founders were good sales people and had some good clients but if you don’t have a good model, your Rolodex eventually runs out.”

He says the company was struggling – at best.

“We had to stabilise it and get it into profit. There was no finance to grow. To scale a service company is difficult; to scale it from west Cork is nigh on impossible.”

Potential to build globally

Nonetheless, Houstoun saw in Global Shares the potential to build a global business, though he identified two big flaws in the company’s original model. Firstly, it was using third-party software – up to eight different platforms – and, secondly, it was not a broker. Both needed to be tackled, he felt, but the firm’s owners were sceptical about the prospects of achieving these ambitions so Houstoun assembled a consortium of investors, including himself, and bought them out in 2012.

His bet was that Global Shares could write better software than its big-name international competitors, moving the company from a low-value service provider to being a globally focused fintech with a broker offering. A key strength was the in-depth knowledge the company’s staff had about the employee share market.

“We got a grant from Enterprise Ireland and built an IT team and our software platform. It took over three years – it was far more difficult than we thought,” Houstoun recalls. “The founders were right about how difficult it was.”

We won our first big client, the fourth-biggest company in Italy, against two French and one US bank. We knew we were on the right track

—  Tim Houstoun

By 2015 he and his team had had done enough to migrate all their clients to the new platform and in October of that year we became regulated under the EU’s Markets in Financial Instruments Directive.

“We won our first big client, Generali – the fourth-biggest company in Italy. That was against two French banks and a US bank. It was relatively easy to win. We knew we were on the right track,” says Houstoun.

The firm has been on a large growth trajectory since then. International offices were opened, largely “under the radar”, in Houstoun’s words. Global Shares has also typically set up shop adjacent to competitors, luring staff away, he explains. The opportunity to work for an agile and fast-growing fintech has proved attractive to recruits, he says.

“In Barcelona we set up next to Computershare and Morgan Stanley. In Leeds it was next to three of our competitors. In Nashville we set up next to UBS. I could go on.”

Motive Partners took a 40 per cent stake in the business in 2018, while other backers of the firm included IFG Group founder Richard Hayes and his family, Duke House Investments and Carrig Glen Investments.

“We win a decent amount of business,” says Houstoun. “Our compound growth rate is around 40 per cent – and ours is all organic. Our nearest competitor does 10 per cent. We’ve always been underfunded so that’s involved bootstrapping, so we’ve been very careful about what we have done and built up a good sales and marketing team.”

While its client wins were impressive, lack of top-name backing remained a problem until recently.

“Some clients passed up on us because they felt we were very small,” Houstoun admits. “We had to persuade clients that they could go with a small company from Ireland; often we did but for some it was a step too far. Now we have something different, of course.”

The difference is the acquisition of the firm by JP Morgan. A big move to address funding was always on the cards. A 2024 flotation was one option being actively considered and there has been no shortage of potential suitors in recent years. But Houstoun says the sale to JP Morgan offers multiple benefits.

One issue holding Global Shares back was that it couldn’t offer a wealth-management proposition for clients. It had $200 billion of assets on its system that it couldn’t monetise.

“When we met JP Morgan, it ticked a lot of boxes for both sides. They didn’t have share plans. There would not be a rationalisation of staff or IT systems. They had a global wealth-management system, which was a key piece that was missing for us. They have an investment bank, commercial bank and a private bank. They touch every area of business. Our agreement with JP Morgan is that we stay as a ring-fenced fintech – we run our own P&L – but now we have a strong balance sheet, we have funding and we have distribution.”

Jamie Dimon, the billionaire chairman and CEO of JP Morgan, visited the Global Shares team in Clonakilty last year. Photograph: Daragh Mc Sweeney/Provision

Houstoun says JP Morgan’s geographical footprint was similar to that of Global Shares. The cultural fit was good too, something remarked upon by Jamie Dimon, the billionaire chairman and CEO of JP Morgan, who came to Clonakilty and spent two days with the Global Shares team in early 2022. Contracts were signed within weeks and the deal was completed, with regulatory approval by August.

The company won’t comment on its latest financial performance now that it is part of JP Morgan but filings reported by The Irish Times in February revealed that Global Shares generated revenues of around €31.5 million in 2022, up from just under €19 million the previous year.

Houstoun is excited about the prospects for “exponential growth” under the new ownership structure. With a wealth-management element now in the company’s proposition, building broader-based solutions for clients is opening up a whole new set of possibilities, he says.

Committed to staying

His management philosophy consists of three elements: “Know your value proposition very well and build your strategy around that; hire the best senior team/board and focus on them; and ensure you have sufficient funding, and that will help get you through the ups and downs along the way.”

He is committed to staying with the company for the next three years, ensuring the integration work is done and the company gains the maximum advantage from its new ownership structure.

Has he thought about where he wants to go after that?

“Yes,” he shoots back without hesitation. “The beach”.

Having run several early-stage companies, with all that that entails, this is definitely his last, he insists.