Conroy's healthy investment strategy
The former chief executive of Merrion Capital believes there are significant opportunities in the wellness and tech sectors, writes Samantha McCaughren
Three years ago, John Conroy walked away from Merrion Capital, the firm he founded with six of the country's leading brokers in 1999, taking with him a key lesson on building up a successful business. Finding the right people is as important as identifying an opportunity in the market.
Having kept a low profile since then, Conroy has this month launched his new venture, the Acton Health and Wellness Fund, again bringing on board an impressive team.
The fund, which has been gestating for some time, brought in Olympian Eamonn Coghlan and former Eircom vice-chairman Con Scanlon at an early stage. Several leaders from business, the food sector and medical world have also now come on board, including: Niall Fitzgerald, the former chairman of Unilever; Paul Finnerty, the former chief executive of ABP Food Group; and renowned US investment banker John Duffy.
For Conroy, he wanted to mark his new project out by the calibre of the people involved.
"There are a huge amount of investment ideas coming through any family office now. I think we have an advantage because a lot of people have a personal interest in what we are doing," he says. "It gets us in the door. After that, it is down to the quality of the product and the people."
The new fund seeks to ride the growing wave of interest in wellness and the opportunity which technology might bring in terms of making us healthier.
Conroy explains: "What are the issues today? From a governmental perspective, the very high spending on health worldwide and an increasing burden on the budget as people are living longer.
"You have this dichotomy, a section of the population is fitter than ever and another section has major health issues."
There are several opportunities for businesses delivering solutions, such as "trying to reduce the reliance on primary care and other trends are that more people want to take control of their own health and more people are using more technology.
"The two silos we are focusing on are consumer-focused digital health and also functional foods. We feel that the opportunity is big in these areas," he says. "So we are looking to invest in companies operating in those sectors, mainly in Ireland."
Conroy believes that Ireland also has an advantage in these areas, with 18 of the world's leading medtech companies having operations here. In addition to this, Ireland has produced Kerry and Glanbia, two world leaders in the food sector.
He says that in the area of functional food "not many people have made money out of it yet but I think we are at an inflection point".
Conroy, originally from Portlaoise, started his career by studying civil engineering in UCD, before joining Dublin County Council and being seconded out to McCarthy & Partners. With an innate interest in business, he took an MBA in the evenings at Trinity College, Dublin.
Conroy was then recruited into NCB stockbrokers in 1986, which was at the time breaking the mould in Dublin's cosy stockbroking world.
He impressed people with his appetite for hard work, his intellect and ability to read world politics and business and understand its implications for Irish business. Starting off as an equity analyst, he soon moved into managerial roles, eventually becoming head of equities.
NCB was later bought by Ulster Bank and in the late 1990s after a new ceo had taken the reins at the broker, Conroy decided to break away from NCB and set up a new firm with several of his colleagues. The team included Adrian O'Carroll, who Conroy says was "the best stockbroker in Dublin".
"Merrion was an exciting enough adventure," recalls Conroy. "The critical thing for us was at the outset to get a good partner on board. We talked to many, many people, both domestically, in the UK and one or two in New York."
He was introduced by the Smurfits to Allen & Co, a renowned but low-key boutique investment bank, which went on to take a 30pc stake.
As far as Conroy knows, Merrion has been its only investment outside of US.
Allen & Co has tremendous business links in the US and is behind the annual Sun Valley conference, which attracts the likes of Tim Cook, John Malone and Rupert Murdoch.
Allen & Co heavyweights Walter O'Hara and Paul Gould joined Merrion's board.
"We were very privileged, this tiny little start-up in Ireland getting these power players from the US and guys whose reputations stood above a lot of global players.
"Allen didn't want to own us," says Conroy of the minority stake. "Their attitude was, 'you do well and we'll do well'. That suited our entrepreneurial spirit at the time.
"The question was whether or not there was room for another stockbroker. We had to make room. So for us, it was very important to differentiate ourselves and we did that by being independent and objective."
It was not without its challenges, however. Merrion launched in 2000 and the tech bubble burst soon afterwards. There were also other headwinds, like the Enron scandal and 9/11.
"It wasn't a good time to be setting up a business. But we came through it," says Conroy.
"By the mid-2000s, from a standing start, we were making €25m-€26m a year," he says.
"Any time we looked to make a very significant move, I would ask how would this sit with the reputation of Merrion, because I don't want to damage it. And it was a good discipline and we minded the brand really well."
In November 2005, they started talking about a possible sale to Iceland's Landsbanki and a deal was done by December. Under the deal, 50pc of the sale price was paid up front, with the remaining 50pc sold over three tranches and linked to performance. The 2008 payment never happened as the Iceland economy felt the bite of the recession ahead of Ireland and others in Europe.
"We could see it, they were distracted," he says. "What happened in Iceland was a harbinger of what happened here."
Merrion, once again backed by Allen, bought the business back. "It wasn't as easy as people think. The public sentiment turned against the banks and asset sales. Landsbanki had gone on a shopping spree across Europe. In London, Paris.. a lot of it was rubbish."
However, Merrion had been a prized asset bringing the Icelanders into the high-profile deals, such as the Aer Lingus IPO, for example.
In 2014, there was again a change of ownership at Merrion, with Conroy exiting and taking some time out. Looking back on Merrion, Conroy counts his exposure to the US through Allen & Co's involvement as a huge positive. By nature, he is hugely interested in world politics and business.
"I have been observing the US for a while and I have great admiration for the might of the economy and their military force and all of that. However, what I'm seeing is that the US is losing itself.
"What has sustained the US is the entrepreneurial culture they had and still have and the technology lead."
Conroy also believes that the US has benefited from strong leadership. "This has all allowed the US to be the dominant force in our lives anyway.
"Looking at it now, the entrepreneurial culture is still there. On leadership, I'm not a fan of Trump; he is divisive and will only become more divisive."
He says that the election of Donald Trump as president may be a reaction to the lack of leadership on both sides over the past two decades.
A Democrat by nature, he says recent presidents have been 'nothing to write home about'.
"The few recent presidents have pursued their own agenda, which has tended to be narrow."
However, from an Irish perspective, this presents an opportunity. "There is a great opportunity for us because there is a dearth of leadership in the US and the UK where not alone is there not a governing party, there is no opposition.
"Having said that, we don't do plans in Ireland, we do forecasts. There is no sense of where we need to be, which areas of the economy we need to be promoting, etc."
He believes there are many creative and entrepreneurial Irish companies out there. "But we have a natural disadvantage due to our small population and so a lot of these good ideas never make it.
"If you were in the US, you would be much more inclined to hold on for the bigger pay cheque.
"I would contend that we could help companies in terms of managing and mentoring, commercialisation, getting what I would call the shelf space and that means getting products accepted by some of the big players."
His hope is that several investments backed by the fund will become "national champions and international success stories".
Chief executive and founder of the Acton Group
Civil engineering, UCD and MBA Trinity College Dublin
Founder of Merrion
Married to Yvonne, three children
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