Any Other Business/Richard Fenhalls : Banking on the big sails

RICHARD FENHALLS is a keen yachtsman whose ventures in merchant banking have occasionally taken him close to the wind. While he was chief executive of Henry Ansbacher, the bank became deeply embroiled in the Guinness affair. The bank also advised Robert Maxwell, a former shareholder.

Ansbacher has since been sold to a South African bank, and its previous owner, Gerard Eskenazi, the financier, is now backing Mr Fenhalls in an expanding investment and advisory firm, Strand Partners.

Mr Fenhalls likes to escape the risks and tensions of the City on his 57ft yacht, Noonmaker. He has loved the sea since he started sailing as a boy in Durban, South Africa, although he could hardly be described as a romantic. He is highly analytical - his explanations are a triumph of essentials over details, and he never stops thinking about business. So when he took delivery of a set of sails five years ago and found Dave Williams, the sail maker, still working half-way up the mast in a bosun's chair hours after night had fallen, he decided this was a man whose commitment was worth backing.

Mr Williams, 38, is a moustachioed Cornishman who started out as an apprentice shipwright in Flushing, a fishing village near Falmouth. Along with his business partner-to-be, Bob Lankester, he was working for Hood, an American-owned sail maker, when he delivered Mr Fenhalls' sails. Mr Fenhalls says: "I asked them, do you want to be working for someone else all your life?"

Together with Richard Loftus, his yachting friend, who runs the Accurist watch company, Mr Fenhalls put in about £125,000 to buy a sail loft (as a sail maker's workshop is called) in farm buildings close to the marina in Hamble, Hampshire.

It's a pleasant place to work, where stacks of brilliant pink sail bags make an odd contrast with the old stableyard cobblestones. It was 1989 when Mr Fenhalls invested, and as recession approached he experienced a qualm or two. But the loft specialises in sails for superyachts of 50ft and more, using the Relax design software developed for the America's Cup, and its wealthy clients are fairly immune from recession.

Mr Fenhalls himself spent £22,000 on sails last year and Mr Loftus £140,000 for his Swan 77, Desperado. Other customers include Gianni Agnelli, the owner of Fiat, and Andy Soriano, a Filipino tycoon, with whose help Mr Williams dreams of setting up a loft in the old Subic Bay naval base to serve the yachts of Asia's nouveaux riches.

The company, of which Mr Fenhalls owns 31 per cent, has been strikingly successful, losing less than £20,000 in the first full year and making profits from 1991 onwards. Turnover is about £1.75m since the acquisition of a second loft last year, using additional loan capital from Mr Fenhalls and Mr Loftus. This makes it the biggest British-owned manufacturer of big boat sails, in what Mr Fenhalls admits is still something of a cottage industry. He chairs the company and lends his financial expertise.

The company is now licensee for Diamond, a Danish-owned company that offered a better brand-name and distribution.

Sails produced at the loft meet the requirements of a designer, modelled on the PC-based software to calculate shape and performance under different wind conditions, and cut and sewn from fabrics such as American-made Kevlar, costing more than £40 a metre, or polyester. The sails sell from about £500 up to thousands of pounds apiece.

The return on capital Mr Fenhalls will achieve if the company makes £90,000 a year is eye-popping. However Mr Williams and Mr Lankester, as managing directors, are kept on modest salaries, and a sensitive discussion about bonuses is shortly to begin.

Mr Williams, who borrowed against his house to pay for his equity, observes: "We would have been on the streets if this hadn't worked: our backers would not." But envy is an occupational hazard and he doesn't lose much sleep over it.

It's like knowing that some owners will get much less out of his best sails than he could: "If people here have been working 15 or 16 hours a day to produce something beautiful, and you see somebody with an obscene amount of money using it so badly, you wonder - but some of ourcustomers are very good sailors, and as long as they pay the bills, fine."

The week before Christmas Mr Williams received a phone call on the Tuesday that heavy winds were expected in the Sydney-to-Hobart race. An extra jib was dispatched on Wednesday night after some long shifts for the staff: "It cost us a fortune in fish andchips."

For Mr Fenhalls, the teamwork, the craftsmanship and the glamour of yachts make this the kind of investment many in the infuriatingly intangible world of finance would love. The irony is that Mr Fenhalls has hardly any time to sail. "I've only managed a couple of days on the water this year," he admits.