Greybull Capital: rescuer of distressed firms or vulture fund?

British Steel owner Greybull Capital is a private investment firm with a controversial record, founded by a group of wealthy heirs and run with the help of a former Lehman Brothers banker.

It styles itself as a valiant rescuer of distressed businesses but has amassed a questionable roster of firms that it bought for a song only to walk away relatively unscathed after they eventually collapsed.

Greybull was set up in 2010 by Marc and Nathaniel Meyohas, the sons of a French corporate lawyer, and Richard Perlhagen, the son of Swedish pharmaceuticals tycoon Lennart Perlhagen.

Marc Meyohas has said Greybull was a response to the financial crisis, when traditional banks withdrew lending. As the banks pulled back, he spotted an opportunity to charge higher fees to firms who still needed to borrow.

Operating from an office near Harrods in London’s salubrious Knightsbridge area, Greybull claims that it is “passionate about making companies successful”, buying distressed firms and turning them around.

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But in the past few years it has saved precious few of its acquisitions. It has previously been reported that the company made more than £10m out of Monarch, the airline that went bust in 2017, four years after Greybull bought it. Sources close to the company have denied this, saying it did not recoup all of its investment, although it did not lose out substantially either.

It acquired sports bar and snooker hall chain Riley’s in 2012 before placing it into administration in 2014 after failing to find a buyer. And it also backed a deal for M Local, the convenience store chain sold by Morrisons. The company went into administration nine months after the purchase.

Greybull backed a deal for M Local.Photograph: Andrew Matthews/PA

One of Greybull’s former partners OpCapita was also involved in the buyout of electricals retailer Comet in 2011 only for the company to collapse into administration in 2012.

Taxpayers were hit with a bill for £45m and 7,000 people were made redundant.

Since buying British Steel for £1 from Indian conglomerate Tata, Greybull has invested £20m in the company but also charged the business £20m a year, collecting £9m in “management fees” alone.

It has also accrued more than £50m in interest on a £154m loan it made via an entity based in Jersey, an arrangement it says is not for tax purposes.

Greybull is among the highest-ranked creditors to British Steel, although it ranks below the bank lenders and the government’s insolvency service. How much of the loan it gets back will depend on the insolvency process but it could, in theory, emerge having made a profit.

In that case, lower-ranked creditors – such as small businesses that supplied the steelmaker – would be left hoping that there is something left over to pay them what they are owed.

Greybull’s uncanny ability to avoid financial loss, or even to make a profit from such failures, has seen it labelled a “vulture” fund, a charge Meyohas has vociferously denied.

He says Greybull is simply not afraid to take risks and his family wealth allows the fund to make quick decisions. “We are entrepreneurs at heart, we take big risks and not all the risks work out,” he said in a 2016 interview.

“It’s purely family money; we don’t manage institutional capital. As a result you can move quickly.”

When Greybull took control of the Scunthorpe steelworks in 2016, Meyohas told the Guardian: “What we bring to the table is a period of stable ownership for the business, capital, and committed investors to growth.”

He also appeared before MPs in parliament to reassure them that the future of the plant would be secure in his hands.

The business is named after an oilfield in Wyoming that was one of the first investments Meyohas made.

He remains with the company but his brother and Perlhagen have both left, replaced by Daniel Goldstein, a former equity derivatives specialist with Lehman Brothers.

The Perlhagen family owns a vineyard in the south of France and Knightsbridge designer Chelsea Textiles.