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The trouble with letting the next-gen invest the family fortune

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Greybull Capital is a sober reminder that next-gens can get it wrong when they invest the family’s fortune.

The London-based investment firm is currently in the eye of a storm involving its ownership of British Steel, which has just gone into compulsory liquidation. British Steel is a sizable company, it employs around 4,000 people, and has a prominent place in the psyche of Briton’s industrial history.

How much money Greybull will lose from its ownership of the steel company remains to be seen, but it could run into millions of dollars. Those losses are likely to be on top of Greybull’s investments in a number of other failed businesses, including Monarch Airlines and Comet, an electrical retailer. Monarch entered administration in 2017 and Comet in 2012.  

Greybull was set up in 2010 by  French-born brothers Nathaniel and Marc Meyohas, whose father made a fortune in private equity in the US, and Richard Perlhagen, the son of Swedish pharmaceuticals entrepreneur Lennart Perlhagen.

Nathaniel left Greybull last year and is now a director of two investment companies with registered offices in Poole, in the south of England. Perlhagen also left Greybull last year and is now a director of a London-based Warmscombe Investments. So, the involvement of family capital in Greybull appears to have lessened in the last year. For the parents of Greybull’s directors, that might not be an altogether bad development.

Of course, Greybull isn’t a family investment group in any sense. It is a private equity group set up by the offspring of rich parents. Also, its questionable investment record so far doesn’t mean that Greybull might not get it right in the future and make its shareholders and investors some sizable returns.

Nevertheless, in a world where family capital through the generations often seems to mostly get it right, whether it is organised through a family business or investment group, Greybull’s tribulations are a timely reminder that this doesn’t always happen.  

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