How Hedge Funds Makes Money: Solo Capital Story

Solo Capital is today known as an international boutique financial services company with headquarters in London, England. Today Solo Capital is recognized as a major positive contributor to the financial sector and its founder Sanjay Shah is seen in a generally positive light for all the work he does around the world, both financial and philanthropic.

What many people don’t know however is that this is a story that was almost left un-told.

Sanjay Gupta never intended going into finance at the outset.

He actually wanted to become a doctor, and actually began medical studies at King’s College before deciding medicine was not where his future lay.

According to an interview done by Global Citizen, this realization forced him to take the step most popular with medical students who no longer want to become doctors: he became an accountant.

But even that was short-lived as he made the choice to forge a career in the big city with the major players in the financial world.

According to Sanjay Shah, “My first job was for the investment bank Merrill Lynch,” and with time stints at Morgan Stanley, ING, Credit Suisse, Dutch Bank Radobank followed. Saying his resume was impressive would border on an understatement.

And yet in 2009, during the height of the global financial crisis, when he was head of trading in Dutch Bank Radobank, he was found surplus to requirements and was laid off!

He was one out of millions worldwide, a statistic on a huge board in the labour office.

And yet Sanjay Shah was relieved! He openly admits that he hated the daily office grind, ““I didn’t like having to go to the office every day and sit there for 10 hours, even if only half of that time I was productive. I didn’t like the commute from my home in Stanmore in North London.”

He saw his laying off as an opportunity, recognizing it as a chance to forge another way for himself, although in truth, given the financial situation of the world at large at the time, his prospects of finding another office job were less than slim. So he took a gamble and went into business for himself.

““The only way for me to earn a living without limiting my income prospects was to become a broker but I thought rather than me doing that job for a big organization, I’d rather start up my own business.”

With the little he had he rented a small flat on the outskirts of London for office space, and took on a couple of graduates and traders, making a firm resolve to tough it out for one year.

“That’s how Solo Capital was born,” Shah says.

Their reputation spread by word of mouth, their growth completely organic since no venture capital was poured in. They helped their clients with stock decisions and other consulting services.

Despite these humble beginnings, Solo Capital grew steadily. For instance, Shah was able to pay himself 19 million pounds by the end of 2011, the same year which Solo Capital was incorporated.

Merger with Old Park Lane Capital

By 2014, Solo Capital was a big enough player on the international scene to make a strong enough impact. And nothing testified more to this fact than the merger and subsequent takeover of Old Park Lane Capital.

Old Park Lane Capital was started in 2007 by Michael Parnes as a natural resources stockbrokerage and for many years afterwards was quite successful.

However all that changed by the end of 2013 when the company registered a loss of 435, 538 pounds; quite a drop from the previous year’s profit of 82,056 pounds. Further woes befell them when turnover fell 57% over that same period, sliding from 1.8 million pounds to 777,527 pounds.

In desperate need of a lifeline if it were ever going to survive, Old Park Lane Capital reached out to other brokerages with takeover offers even though their precarious financial reality made it a very unfavourable deal.

However, when then Chief Executive of Solo Capital, Anne Stratford-Martin, joined Old Park Lane Capital’s board as a director, news filtered through the vine that a deal was in the works.

Solo Capital was set to merge with and take over Old Park Lane Capital in a deal that directors hoped would “substantially and immediately bolster the profitability of the business.”

It was a bold move, one that required courage and a clear vision, and Solo Capital was able to step into the divide.

By 2015, the company that Sanjay Shah started in a small flat after becoming a casualty of the global financial crisis is a far cry from its humble beginnings. Solo Capital has offices in London, Dubai, and has interests in Europe.

As at March 2015, the company had assets worth £67.45million under its management, net worth of £15.45 million, and £30.26 million of cash flow.

Sanjay Shah himself is now worth over $280 million and is no longer as involved in the day to day running of the business as he was in the beginning. Says Shah, “I got to the point about a year ago where [Solo Capital] was doing really well and I didn’t need to spend all my time focusing on it so I decided to take a step back. I’d say I’m retired now.”

Some would say this is a natural consequence of steady and phenomenal growth, which is the same that can be said about his present passion: Philanthropy.

The multi-millionaire, who now lives in Dubai with his wife, Usha, and their three kids, has invested enormous amounts of time, energy and capital into his foundation Autism Rocks that raises funds and awareness about conditions on the autism spectrum.

He stepped upon this cause when, in 2011, one of his sons was diagnosed with autism by doctors when he kept throwing up after his meal. The link between autism and eating disorders is a long established one.

Perhaps the same internal structure that enabled him to turn his apparent personal tragedy into victory back in 2009 is what led to the formation of Autism Rocks in the face of his son’s diagnosis.

In his words, “I’m in a good position where I can persuade colleagues, clients and friends to donate money.”

Or maybe he just has a good heart.

 

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