TOBY MELVILLE/Reuters
Five years ago, Canadian investment banker Michael Tory left the smoking ruins of Lehman Bros. and launched a novel new firm that would offer only one product – advice – and build its business model on monthly retainers.
The firm, which would become Ondra Partners, seemed doomed to failure – or, at best, to eternal niche status. The investment banking sector was imploding and Ondra was unknown. Even if it did survive, Ondra seemed unlikely to make gusher profits because its strategy was not based on the traditional "eat-what-you-kill" model favoured in London and New York, where fat transaction fees are the goal. Ondra wasn't paid to push deals.
But results submitted to Britain's Companies House last week show that Ondra's strategy is working. Profit for the fiscal year to the end of March 31 rose 31 per cent, to £14-million ($23.5-million), on revenue that climbed 16 per cent to £27.4-million. Doesn't sound like a lot until you remember that the firm, which operates essentially like a law partnership, has only 34 employees and eight partners; Mr. Tory – the son of the late John Tory Sr., who was Ken Thomson's right-hand man at Woodbridge, the controlling shareholder of The Globe and Mail and Thomson Reuters – is one of the founding partners (there is no CEO). The other founding partner is Benoit D'Angelin, who is also a Lehman refugee.
A recent article in Financial News determined that Ondra made more than $1-million (U.S.) for every employee and partner, or $5-million per partner. That's about double the rate of comparable operations, such as the European arm of Moelis & Co., according to the newspaper.
In an interview, Mr. Tory, 52, would only say "It's gratifying that our client-first focus leads to good financial performance. " After a slow burn since it was launched in October, 2008, Ondra (formerly Quattro Partners) is beginning to make a splash in the City, as London's financial district is known, and in Paris, where it has an office. About a third of Ondra's employees are French.
Ondra's clients have included GDF Suez, Prudential, Societe Generale, National Grid and Invesco Perpetual. Ondra strongly influenced the Invesco letter that concluded that the proposed £28-billion merger between BAE and EADS, the European aerospace giant that owns Airbus, was not in BAE's best interests. The deal collapsed.
This week, it emerged that Ondra was one of the financial advisers to Alcatel-Lucent, the French telecom equipment network maker, which is raising $2.7-billion (U.S.) in new shares and debt. Jean Raby, Alcatel's chief financial officer, who is Canadian, used Ondra along with heavyweights Merrill Lynch, Credit Agricole and Deutsche Bank. The deal marked Ondra's first association with Alcatel, which is undergoing an overhaul so it can compete with Ericsson, Huawei and other network players.
Ondra won't say what clients it's working with next, but there are strong rumours it wants to build a presence in Canada, where the Tory name is well known and where Ondra, in a sense, has its roots. John Tory Sr. was one of Ondra's original investors.