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The new way of thinking


Published: 26 Oct 2022

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Six years ago, Salonica was set up as a boutique corporate finance adviser. As it closes its first investment fund, it has become a small investment firm with a key differentiator – its focus on diversity and sustainability. Marc Mullen speaks to founder Omar Majid.

In early 2016, former derivatives trader Omar Majid teamed up with KPMG corporate finance manager Othman Shoukat to set up Salonica. The longer-term plan was to establish a boutique investment bank, providing corporate finance and investment advisory services.  

Initially, the focus was on buyside advisory, servicing the high-net-worth family offices and/or individuals. Sector agnostic to start with, the firm began by offering advice on multiple asset classes but has now built up significant experience, particularly in the consumer sector. Increasingly, its focus has been on corporate finance and private equity and, as a differentiator, sustainability. “That’s been the natural progression of things for us,” says Majid. 

All bases 

In the six years since it was founded, the firm has advised shareholders on exit options; run dual and triple track sale processes resulting in IPOs, buyouts and trade sales; advised companies and investors on portfolio management; advised on buy-and-build strategies and identified investment opportunities.  

As a small firm, advising on both buy-side and sell-side has smoothed the workflow says Majid, adding: “Acting for the buy-side has its own challenges and issues. Sometimes – perhaps more so in the current climate – it can prove difficult to focus on one specific thing. You can have very open-ended conversations, constant to-ing and fro-ing, but never really taking something forward. Acting for sell-side is obviously much more definite. If it’s a good mandate, a good-quality asset, then you’d back yourself to deliver a successful outcome.” 

The real risk – again, perhaps increasingly so at the moment – is achieving the price expectations of the vendor. “In those circumstances, it is very important that you have built a close and trusting relationship with the vendor because it may sometimes require us to convince them to reduce their valuation expectations.” 

Much of the buy-side work involves origination strategies, he says. “We start with macro themes, flesh out two or three thematics and then build up a list of targets that fit within the strategy.” 

The next step is an open discussion to get the thoughts of the client. The team recently worked with a Middle Eastern family office on heritage brands within retail. “Once we’d identified targets that fitted within that macro thesis that they liked, we worked on identifying specific types of retail businesses that fit within the strategy that were within their valuation range. In this case, we had identified interesting brands with strong pedigrees and royal warrants, but operationally they had been out of sync for the past 20 or 30 years.” 

Placing a valuation on a business had to take into account both the brand and also the work required to get it back in sync. “The strategy was to pick it up for a low valuation because it was not profitable and revenues were decreasing. Then we had to introduce a strong operational management team, to turn it around with a view to exit. With the heritage of the brand and operations brought up to date, they have strong exit opportunities. A lot of Chinese and Middle Eastern buyers would happily snap it up.” 

The differentiator 

Another deal Salonica is currently working on is in the educational services sector, specifically apprenticeship training. Again, this fits with its key differentiator as an adviser, with a focus on diversity and sustainability – the latter being at the core of what the firm does, says Majid.  

At inception, the Salonica team looked at non-conventional finance. “Initially we looked at Islamic financing mechanisms, which we realised had limitations, but it made us think there must be a different way of doing things.”  

From an advisory perspective, the company has been strong in advocating “not just environmental, social and governance, which I think is a basic, but trying to get companies to think about natural capital, social capital, human capital, financial capital”. 

Longer-term financial strategising ties into the sustainability play, says Majid: “With some of the consumer companies we worked with, we pushed for paying not just the minimum wage, but the minimum wage plus 10% or 15%. Not only is it socially positive, but from a financial perspective it brings sustainability. It reduces staff turnover in consumer business, where retaining good staff is a challenge if you are not paying well. In the long run it will improve your bottom line. We now introduce buyout clauses in relation to sustainability considerations.  

“We don’t just have simple financial targets. That helps drive a whole new narrative.”  

The Salonica team 

Omar Majid is a director of Salonica and head of sustainability for the Salonica Maroon Fund. After graduating from Bayes Business School with a first-class honours degree in business services, banking and international finance, he joined RBS as a fixed income derivatives trader. He spent almost 10 years working at the bank, becoming head of Swiss and Scandinavian interest rates derivatives trading. He has also completed a masters degree in sustainability leadership at the University of Cambridge – his thesis explored the barriers and opportunities involved in increasing investment in social causes.  

Othman Shoukat, director at Salonica and board member of the Salonica Maroon Fund, spent nine years with KPMG prior to joining the firm. He trained as an ACA with KPMG, before moving into deal advisory. He has had a hands-on role at Creams Café since Salonica invested in the brand in 2018, and in April 2020 became managing director of the chain, which has almost 100 ‘dessert parlours’ across the UK. 

Kristine Chong, associate director and investment manager, joined the team at Salonica in 2019. Previously, she was at KPMG for eight years, where she trained as an ACA. She was a manager in the transaction services, and integration and separation advisory teams. 

Ipek Mutlu joined the advisory board of the Salonica Maroon Fund one year ago. She is managing director and head of international private equity at Esas Holding.  

Salonica Maroon fund 

In July 2021 Salonica launched the Salonica Maroon diversity- and sustainability-focused fund. Investments are made into ethnic minority and female- led businesses – the central thesis being that, on average, diverse firms outperform their peers. Business and sustainability cases must be approved by the Investment and the Sustainability Committees. Of course, proof of concept, revenue and profitability are key, too. Its final close is expected to be at £50m next year. 

Investments so far include: 

  • Creams Café, the UK’s largest dessert restaurant chain. It was founded in 2008 and has about 100 stores, operating on a franchised basis. The chain has created around 1,000 jobs across the UK. 
  • Super Fight League, a worldwide franchise of mixed martial arts leagues, which has held more then 50 events in the US, India and United Arab Emirates. 
  • Aaron Wallace, a specialist male grooming company catering for black men. It is a market leader in the UK, sold through ASOS, Sainsbury’s, Liberty and Saks Fifth Avenue.
  • Wahed – an ethical, Islamic-compliant fintech. 

Omar Majid is head of sustainability for the Maroon Fund. He says: “We want to demonstrate that diversity creates superior returns – this has already been shown by research, highlighting that firms scoring highly on various diversity metrics outperform their peers.” 

As well as investing, the plan is to take a hands-on role in companies, which has been the case with Creams. Salonica first advised Creams in 2018 and completed a majority buy-out in 2020. 

He says the fund will primarily invest in the UK consumer sector, with the remaining asset allocation being discretionary: “We have a great pipeline of deals lined up to invest in from the fund. We are looking at one in ethical fashion, another in ethical food and beverage, and we are also considering a very interesting business in disability tech.” 

Case study 

In May 2022, a Salonica Capital team led by director Othman Shoukat provided corporate finance advice to ValuStrat on its minority investment in Capital Value Surveyors. Capital Value Surveyors is an agile challenger to the larger surveyor groups. It is a RICS-regulated firm that offers bespoke survey and valuation advice on residential and commercial properties. 

ValuStrat is a Dubai-headquartered international property consultancy group. As well as the United Arab Emirates, it has offices in Saudi Arabia, Pakistan, Qatar and London. It offers a wide range of services – valuations, due diligence, research and industrial consulting across a diverse range of industry sectors and territories. One of its unique selling points is strong local knowledge, which is something Capital Value Surveyors will bring for its local markets – London and the south-east of England. ValuStrat chairman Shahid Umerani said: “This aligns with our strategy to enhance our presence in prominent and strategic locations across the world.” 

The deal value was not disclosed. The investment is ValuStrat’s second in a UK real estate consultancy company: in April 2019 it acquired a majority stake in Capital Chartered, which Salonica has also advised on.  

ValuStrat’s group CEO Shahid Kazi praised the Capital Value Surveyors management team and said they would be central to its plans for further UK growth. Declan King, ValuStrat managing director and group head of real estate, added: “We are buoyant on the long-term macro fundamentals of the UK. A number of our clients in the Middle East have interests in the UK.” 

Capital Value Surveyors was established in 2018 by Sean Mansfield, Simon Jackson and Marilyn Connell. The company has seen year-on-year growth in each of the four years since its launch. 

The deal will bring synergies between the two businesses, which will collaborate on developing markets and services to their client base through enhanced capabilities and resources. 

Salonica director Othman Shoukat said: “This acquisition will bring fantastic synergies; combining ValuStrat’s international capabilities, thought leadership and scale with the exceptional management team, strong local market expertise and experience will provide great scope for market penetration and growth across the UK.” 


First published in Coporate Financier, Issue 246, October 2022