Of all the ways to burn money, starting your own car company must be one of the most sure-fire strategies. That is exactly what Oliver and Philip Lyle – scions of the Tate & Lyle sugar-producing business – did back in the 1920s. At least, they provided the cash while a former Royal Horse Artillery captain- turned-boat designer built the cars.
The resulting marque was called Invicta and made big, loud sports cars to rival Rolls-Royce and Bentley. The high point came when an Invicta took part in the 1932 International Alpine Rally with Donald Healy at the wheel and a young Ian Fleming, who later wrote the James Bond novels, as navigator. Sadly the low point came soon after and the business folded in 1935.
“Crazy idea,” says Sebastian Lyle, the 35-year-old who manages the Lyle family’s wealth. Invicta, he says, “used up a huge amount of capital – can you imagine setting up a car manufacturing company?” Sebastian says his family members have, through the generations, had “a penchant” for “crazy ideas”. Sitting in his office in Lincoln’s Inn Fields, an oasis of green and calm between Covent Garden and the City of London, you get the distinct feeling that these days the family money is in safer hands. Sebastian runs wealth management firm The Family Office, which manages around £15 million (€19.15 million) of his family’s money and a further £175 million for 19 other families.
He first started dealing with the Lyles’ labyrinthine financial affairs in the early 2000s. Still in his mid-20s, he was working for Anderson Consulting (now Accenture), following stints in corporate and private banking during his summer breaks from Edinburgh University and Harvard. But when his father had a mini-stroke, Sebastian was summoned back to take charge of the Lyle fortune.
It was a strange time, he says – the Iraq war was about to kick off, the markets were “low, low, low”. “I remember sitting down in that spring and realising a couple of things. Number one was that the way in which the family had managed the investments was probably not optimal.” The Lyles received a lot of “poor advice, especially around investment management over the years”, Sebastian says. “There were real issues that went on at that phase” including “a lack of diversification, bad management of the portfolio in terms of the structure ... tax efficiency and speed of change, and then [the use of] weird investment funds”. He reckons that if different steps had been taken in the 1980s up until the early 2000s, the family’s investible wealth could be a third to half more than it currently is.
And possibly even more if the family wealth had not been so badly fragmented over the generations. Tate & Lyle currently turns over more than £3 billion and made the founding families wealthy, but there was no real liquidity moment for the Lyles. Instead various family members sold out gradually, and the wealth was diluted as marriages and divorces took their toll and the company moved towards professional management – Sebastian’s father was the last Lyle to head the business. The money is now spread across various trusts and held by individual family members. The family holds just “1%” of Tate & Lyle, and that’s for “emotional reasons”, Sebastian says.
The second thing he realised back in 2003 was that he “needed to get authorised and regulated by the FSA [the Financial Services Authority, the UK’s main financial regulator] – gone were the days when you could give guidance and advise as a consultant without being regulated”. Sebastian spent the next few years wading through the family’s investments at various private banks and brokers throughout the City of London. After deciding that the Lyles’ wealth wasn’t great enough to justify a family office of its own, the solution was to set up the multi family office that he now runs.
Sebastian focuses on the financial planning side of things, looking at all financial assets and liabilities, from credit cards, small saving accounts and insurance plans to investment portfolios, businesses, property and pensions. “My philosophy has always been that you’ve got to get the financial plan right – and it will often take us ages to get it right, six or seven months to pull together all of the assets,” he says. “Once you’ve got it right, a good financial plan tends to only need a little bit of checking a couple of times a year.”
What does he recommend investing in? “We tend to take the view that clients, especially the new ones, are their own best investments,” he says. That’s because many of his clients have set up their own businesses – which are growing quickly and are likely to offer the greatest returns. He says: “We are never going to be able to create those kinds of returns. We are the plan B and the plan C. If the business doesn’t go well, if everything goes wrong and everything goes under, is there £20 million of investment wealth that will act as your plan B?”
But the office isn’t complacent – “if we can double their money every seven years, we’re doing a good job”. To do this, the multi family office, which employs just four people, looks to outside “funds, open-ended investment companies, investment trusts etc”. Clients are asked what they want to achieve, then the office will recommend private banks, boutique investment houses and fund managers.
Recommending rather than selling is one of the main attractions of The Family Office, Sebastian reckons. Clients like that it is independent – in recent years, families are increasingly looking for “someone to sit on their side of the table”, someone who isn’t incentivised to sell a particular product. What of the multi family offices that run their own funds? “At that point, I think your independence is marred,” he says.
His efforts seem to be working. Returns are good – much better than if all assets had been left in the hands of traditional City of London bankers and wealth managers, he says. “The more time the investment manager spends in front of you, wining and dining you, the less time he spends managing the portfolio,” he reckons. Sebastian, it seems, is intent on making sure his family – and the others he is involved with – don’t make any more crazy decisions.
Tate & Lyle
The family’s business goes back to Sebastian Lyle’s great-great-great-grandfather Abram Lyle (pictured, right), who founded the forerunner to Tate & Lyle on the banks of the River Clyde in Greenock, Scotland, in the mid-1800s. The son of a Presbyterian minister, he went from being a law clerk to a shipping merchant, importing products from all around the world, including raw sugar cane. His eureka moment saw him set up a sugar refining business. “Then as he was refining, he realised that a by- product of sugar was molasses and golden syrup – and that became Lyle’s Golden Syrup,” says Sebastian. Lyle’s Golden Syrup, whose tins bear the image of a lion and a biblical quotation, is the UK’s oldest brand, according to the Guinness Book of Records. Later in 1921, in an attempt to ward off competition from the British Sugar Company, the Lyles merged with another family business owned by the Tates – the family whose philanthropy was behind Britain’s famous art galleries. The result was Tate & Lyle, which in 1935 became one of the original constituents of the index of the top 30 shares in the UK, the forerunner of the FTSE 100.
The Family Office manages the Lyle family’s educational trusts, set up originally by Lord Leonard Lyle (pictured, left), the grandson of Abram Lyle. Lord Lyle was a busy man – a member of parliament, who gave up his seat so that Winston Churchill could be elected, he was president of the All England Lawn Tennis Association and the Professional Golfers’ Association, and ran Tate & Lyle too. He also wanted his children and grandchildren to work hard, believing “you can’t just be born with a silver spoon in your mouth – which was playing on Silver Spoon being a competitor of Tate & Lyle”, says Sebastian. “Leo’s view was that armed with a good education, you should be able to try and accomplish anything in life. You don’t necessarily need to have all this capital and run the risk of creating the wrong decisions and wrong incentive plan.” A trust is set up for each child and used purely for educational purposes – any capital left in the trust after a family member has finished their education is given to a charity. This is because Lord Lyle believed, says Sebastian, that if “you are given too much money at too young an age, it can stop you from trying to go out and better yourself and create your own entrepreneurial ambition”.
Portrait by Antonio Sansica