The Marketmaker

by Michael Ridpath

  ‘D’you hear that, guys? That’s balls for you. The kid’s pitching for an M and A mandate.’ He reached into his pocket for a cigar and lit up. It looked huge compared to his tiny body. Despite the laughter I was encouraged. Stahl’s cigar deliberations were giving him time to think.

  ‘Isn’t Dekker a private company?’ he asked. ‘Doesn’t that guy they call “The Marketmaker” own most of it? What’s his name? Ricardo Ross, that’s it! He’s not gonna sell to us, is he?’

  ‘You’re right, it is a private company,’ I replied. ‘But Ricardo owns very little.’

  Stahl raised his eyebrows. They were pencil thin, as if they had been plucked.

  ‘Ricardo finds other ways to take cash out of Dekker,’ I said. ‘Lots of it.’

  The eyebrows fell back to their normal position. ‘So who does own it?’

  ‘Fifty-one per cent is owned by Lord Kerton and his family. His ancestors founded the firm a hundred and thirty years ago. Chalmet et Companie, the private Swiss bank, owns twenty-nine per cent. They picked that up in 1985 just before Big Bang. And the remaining twenty per cent is owned by other directors.’

  ‘And Ross is one of those?’

  ‘No, actually. Ross refuses to go on the board. He wants his Emerging Markets Group to be as separate as possible from the rest of the firm.’

  Wolpin and Stahl exchanged glances, Wolpin’s I-told-you-so, Stahl’s irritation. I realized I had briefly trespassed on a political battlefield. But in a moment Stahl’s attention was back on me. ‘Well, how can we buy the company if it’s that tightly held?’

  ‘Kerton doesn’t know what a hole Ross has got him into. If we tell him, he may want to sell. Especially if, once we’ve hit him with the problem, we give him the solution.’

  ‘Which is?’ asked Stahl, puffing on his cigar.

  ‘Bloomfield Weiss taking on the Dekker portfolio and trading their way out of it. There can’t be many firms in the world that could do that. They’d have to be big, they’d have to know how to trade, and they’d have to know emerging markets. That means Bloomfield Weiss and about nobody else.’

  ‘That would be one hell of a position,’ said Wolpin. ‘The risks would be substantial.’

  I looked straight at Stahl. ‘I thought that’s what you did. Take risks.’

  Stahl cackled again. ‘I like this guy. Of course we can handle the risk, Cy. We’re gonna be buying the bonds for peanuts. But what about the Swiss?’

  ‘I don’t know. I’ve no idea what Ross has told them about his position. It’s also impossible to tell where their money is coming from. You can get very little information on Chalmet. Theoretically it’s a small bank based in Geneva, but it has undisclosed billions under management, and I think that it’s using its clients’ money to fund Dekker.’

  Wolpin interrupted, ‘Chalmet have a reputation in South America as a good place to park dirty money. I’ll bet they’ve got all kinds of drug dealers and corrupt politicians on their client list.’

  This was a subject I wanted to steer well clear of. I didn’t want Bloomfield Weiss to scare themselves off with talk of money-laundering.

  ‘There must be a lot of loyalty to Ricardo Ross at Chalmet,’ I said. ‘But if they think they’re going to lose everything, they might be prepared to change their minds. And, once again, the best way for them to get their money back might be to have Bloomfield Weiss take over Dekker’s portfolio and trade out of it.’

  ‘Interesting,’ said Stahl. ‘So, what do you want, kid? A two per cent fee? We have our own people who know about this corporate-finance stuff, you know.’

  I smiled. ‘I’m sure you do. And I don’t want a fee. I know you wouldn’t pay me one anyway. All I ask is that you keep me informed. Tell me what happens.’

  ‘So what’s in it for you?’

  ‘Dekker Ward treated me very badly,’ I said, the intensity of my voice surprising even me. ‘I want them to pay.’

  Stahl smiled quickly. He understood revenge as well as greed. A more noble motive would have raised his suspicions. ‘Well, they will. That is, if we decide we want to go along with your idea,’ he added quickly. But there was something in his voice that made me feel sure he would. I couldn’t help smiling. He caught it, and his quick brown eyes twinkled. ‘OK,’ he said, standing up. ‘We’ll be in touch. Soon.’

  ‘So where were you going this morning in your nice little suit?’ asked Kate. We had just sat down to supper, a salad I had thrown together. ‘Interview?’

  Both Kate and Jamie looked at me expectantly. I had been worrying about how to deal with this all day. There was no way I could tell them the truth. It would be expecting too much of Jamie for him to keep quiet, and it would be hard to stay in his house.

  I was betraying him, and I felt bad about it.

  ‘Yes,’ I lied. ‘It was with a management consultancy. They’re looking to start some operations in Russia.’

  ‘Oh, which one?’ asked Jamie.

  ‘KEL,’ I said. ‘It’s only a small one.’

  ‘Oh, I know KEL! Christian Deerbury works there. He was at Oxford with us. Do you remember him?’

  Damn! I did vaguely. ‘No, I don’t think so,’ I replied.

  ‘Well, I could give him a call. Get him to put in a good word.’

  ‘No, don’t bother. I’m sure they don’t want me. Consulting’s too much like banking anyway. I should never have gone.’

  I felt uncomfortable, and Jamie and Kate could sense it. But I couldn’t tell them what I was really doing.

  They realized I didn’t want to continue with the conversation, and fell silent.

  I took a deep breath. ‘Perhaps I ought to leave soon. I should start looking for a place of my own.’

  ‘No!’ said Jamie and Kate together.

  ‘Stay here, Nick. Please,’ Kate said.

  I looked at Jamie. He nodded his own encouragement. ‘OK,’ I said, and smiled weakly.

  I sat up at my desk that night, looking out over the shallow valley, illuminated by a full moon. Should I stay? It was very pleasant, and I had nowhere else to go. The estate agent had successfully let my flat. Kate’s eagerness for me to remain was evident. Why? I wondered. I suspected it had something to do with Jamie. Perhaps she thought I could change him or, rather, prevent him from changing. I sighed. I feared there was little chance of that.

  But, if I stayed, how would they react when they found out about the takeover, as they surely would? Well, Kate would probably approve. She thought as little of Dekker as I did. She was as angry as I was over the way they had treated me.

  And Jamie?

  It would be a shock. But it shouldn’t be too bad for him. One of the main attractions of Dekker to Bloomfield Weiss was its employees, and Jamie was an important one of those. And continued employment with them would be preferable to Dekker going bust.

  So that was how I persuaded myself that I wasn’t letting down my friends.

  And I would be giving Ricardo exactly what he deserved.

  Stahl himself called me back at about eight the next morning.

  ‘We’re gonna go for it,’ he growled. ‘Be at our office in Broadgate at ten forty-five. We’re gonna see Lord Kerton.’

  I waited for him in the Bloomfield Weiss lobby. He was flanked by two besuited bankers. Although they were both of average height, they towered above him. In fact, as he swept out of the office with one each on either side and slightly behind him, he looked like a Mafia boss with his two heavies in tow.

  And these guys were heavies. Bloomfield Weiss had a reputation for aggression that applied to its corporate-finance dealings as well as everything else. These two had personally been involved in the dismemberment of dozens of corporations throughout the world. Technically the activity was known as mergers and acquisitions, or M and A. But some of the jargon gave a better idea of the flavour of what actually happened: ‘downsizing’, ‘giving value back to shareholders’, ‘shedding non-core activities’, ‘squeezing cash out of the business’. An
d then there was another set of phrases that dealt with the other side of the coin: ‘golden parachute’, ‘executive incentive scheme’ and especially that little three-letter word, ‘fee’.

  Stahl introduced me as ‘the kid I was telling you about’. The bankers’ names were Schwartz and Godfrey. We hurried across the paved squares in the centre of Broadgate to a cab that was waiting for us on one of the side-streets that adjoined the complex. Dekker Ward’s office was in a small street just behind the Bank of England. It took us fifteen minutes to crawl there through the City traffic. It would have taken five minutes to walk.

  Of course, I had never been to Dekker’s City office before. It was where the traditional, non-Ricardo business of the firm was carried out: trading in British and ex-colonial stocks, some private client business, a small fund-management group, and corporate finance. At least, that’s what I thought went on there. Sitting high up in the air three miles away in Canary Wharf, Ricardo’s team neither knew nor cared much what anyone else at Dekker did.

  The façade was an elegant Georgian four-storey building, painted light grey. We walked into what could have been the entrance hall of a country house. The man at the reception desk was more like a butler than a security guard. After having our credentials respectfully taken, we were ushered into a lift and led into a boardroom one floor up. There, an assortment of Victorian financiers stared down at a long, polished table. I wandered over to look at the names. There was a Dekker, and a Ward, but most of them were Kertons.

  Stahl, too, looked closely round the room. I could tell he liked it. He liked it a lot. ‘Hey, Dwight, do you think we could fix up the thirty-eighth floor like this?’

  I glanced at the two bankers and only just managed to suppress a smile.

  ‘I dunno, Sidney,’ said the one called Dwight. ‘We’d need some old photos of your folks. I’m sure we could find an artist to add the necessary touches.’

  Stahl laughed. ‘I’d get them to put up my old grandma. You know she was a matchmaker? One of those babushkas who arranged marriages? Boy, did she know how to create a deal out of nowhere.’

  Just then the door opened, and Lord Kerton strode in. With his tall frame, longish fair hair and his elegant suit, he was all poise and self-assurance. ‘Morning,’ he said, holding out his hand. ‘Andrew Kerton.’

  Stahl shook it. ‘Sidney Stahl. This is Dwight Godfrey and Jerry Schwartz. And Nick Elliot I believe you know.’

  ‘Actually, I don’t think I do,’ he said, but he shook my hand and smiled in a friendly way.

  Stahl glanced at me strangely. ‘Nick used to work for Dekker Ward until recently.’

  Kerton frowned.

  ‘In the Emerging Markets Group,’ I added quickly. ‘We did meet once.’

  ‘Oh, I’m sorry. I do know many of the people over there but I couldn’t quite place you. Jumped ship, have you?’

  ‘You could say that, sir.’

  Kerton’s cool blue eyes studied me for a moment, and then he turned back to Stahl. ‘Have a seat, gentlemen.’ There was a knock on the door and a butler-type man brought in coffee. ‘As you requested, I’m here alone. I haven’t told anyone else in the firm about your visit, but I must admit I’m curious to know what it’s about.’

  ‘OK Mr … er …’ Stahl hesitated, caught uncharacteristically off-guard. ‘Andy OK?’ he said.

  Kerton smiled. ‘Andy’s fine, Sid.’ I caught Dwight Godfrey stiffening a touch. I suspected Stahl preferred Sidney to Sid.

  ‘OK, Andy. It’s real simple. We’d like to make an offer for your company.’

  Kerton leaned back in his chair. ‘I’m flattered,’ he said, looking it. ‘But Dekker Ward is growing very strongly, and we expect this growth to continue. I don’t think we’re too keen to sell at the moment.’

  ‘OK,’ said Stahl, and waited.

  ‘All right,’ Kerton said, a pleased smile on his face. ‘You’ve intrigued me. What price were you thinking of?’

  ‘Ten million pounds.’

  Kerton snorted. ‘Ten million! That’s absurd. I’m sure you’ve discovered we keep our results confidential, but our annual profits are substantially more than that. In fact our monthly profits are several times that.’

  ‘Oh, we know,’ said Stahl, fixing Kerton with his brown eyes. ‘The thing is, we know you got a problem down there with your emerging-market guys. But we don’t know whether you know how big a problem it is.’

  This had caught Kerton’s attention. ‘You’re referring, I take it, to the deal we launched last month for Mexico?’

  ‘That, and some other things.’

  ‘Well, the deal wasn’t a success. It suffered from unfortunate timing. But when you dominate a market like we do, you have to take the rough with the smooth. I can assure you we can handle it. Look, if you want to talk emerging markets, perhaps I ought to get hold of Ricardo Ross.’ He reached towards a telephone.

  ‘No, don’t do that, Andy,’ Stahl said. ‘There’s more. Nick?’

  ‘Well, sir, I understand that Ricardo has bought four billion dollars of Mexican bonds, and two billion of debt from other Latin American borrowers. As you know, the market has fallen sharply in the last two weeks. My understanding is that Dekker’s losses are more than one and a half billion dollars.’

  Kerton didn’t respond at first. His expression switched from polite attention to hostility. Of course he didn’t know this. And he felt a fool for not knowing. He was cornered. He lashed out. ‘Who the hell are you, anyway?’ he said to me. ‘Did we fire you or something?’

  ‘I resigned before you had the chance, sir.’

  He turned back to Stahl. ‘I can’t see how you can possibly listen to this man. He obviously bears a grudge. He’s making it up.’

  ‘It kind of fits with what we’ve seen in the market, Andy,’ said Stahl. ‘I believe him.’

  ‘Well, I don’t. And I think you should leave. There is no need for me to respond to such allegations.’

  Stahl stood up. ‘OK, Andy. We’re going. But check out what Nick here is saying. And we’ll be in touch to see if you change your mind. But do yourself a favour, OK? Don’t tell Ross about our little talk. At least, not till you know he isn’t hiding anything from you.’

  Kerton showed us out of the building in icy silence.

  Stahl called at lunch-time the next day. ‘Kerton wants to talk. He wants to come to our offices. Can you meet us at three?’

  ‘I’ll be there.’

  It was tight, but I changed into a suit, bicycled to the station, got the train to London and the tube to Liverpool Street, and arrived at Bloomfield Weiss at two minutes to three. We met in a conference room: Kerton, Stahl, the two corporate financiers, and me. It was a much blander room than the one we had occupied at Dekker Ward, but there was a nice view of a giant iron phallus that looked as though it had been blown down in the wind. Kerton was there with someone he introduced as Giles Tilfourd from Tilfourd and Co., a corporate-finance boutique. It was promising that he had his own independent adviser. It suggested he expected discussions to lead somewhere.

  ‘OK, Andy,’ said Stahl. ‘Shoot.’

  Kerton did well. He kept his cool. Although he seemed thoughtful, he didn’t look like a man who had just discovered that his shareholding, which he thought was worth several hundred million pounds, was now worth just five.

  But it was.

  ‘Perhaps you could go through the details of your offer again …’

  Negotiations proceeded quickly. They have to, in these situations. Any further deterioration in the market would make Dekker Ward worthless, worse than worthless. It would become a liability that even Bloomfield Weiss wouldn’t be able to handle. Stahl left London, but Godfrey and Schwartz stayed, and kept me informed. Kerton was careful to keep Ricardo out of it. He sent a trio of his own people down to Canary Wharf under the guise of an internal audit. This apparently aroused some disquiet in Ricardo, but no suspicions. He was confident he could run rings round any internal auditors.


  I bought the Wall Street Journal every day. Things seemed neither better nor worse in Mexico. It was unclear what would happen to the Pinnock Bill in Congress. It seemed to have become sidetracked somehow in a negotiation over which military bases would be shut down in the continental United States.

  It was difficult to focus on my thesis, but I did my best. Sitting in my room at the top of Kate and Jamie’s house, my mind kept drifting back to the deal. It was exhilarating. I spent many hours imagining the look on Ricardo’s face when he heard that Dekker had been sold from underneath him. To Bloomfield Weiss, of all people! Surely even he wouldn’t be able to keep his cool. He and Eduardo probably had plenty of cash stashed away for a rainy day, but this would hurt Ricardo much more than merely losing money. This would be a very public humiliation. A statement that the powerful Dekker machine that was so feared by the market was, in reality, nothing but a pile of worthless paper.

  I thought of Isabel, and smiled wryly. I was sure she would appreciate it. If she was still alive. The familiar, chronic anxiety returned. I thought of calling Luís again to see if he had any news, but there was no point. I knew he would contact me as soon as he heard anything, if he ever heard anything.

  I felt twinges of concern for the other people that worked at Dekker: Charlotte Baxter, Miguel, Pedro and, of course, Jamie. But Bloomfield Weiss intended to keep most of them, in fact it was the people they were really buying. They were good; even without Ricardo, they were the best in the market.

  My musings were interrupted by a knock at the door.

  ‘Come in!’

  It was Kate. Her face was serious. She carried a brown envelope in her right hand. I recognized it immediately.

  Shit! It was an internal report prepared by analysts at Bloomfield Weiss on Dekker.

  ‘Where did you find that?’ I asked.

  ‘By the phone downstairs.’

  Damn! I had rung Dwight Godfrey the day before, when Kate was picking up Oliver from his nursery school. He had wanted to know whether the Bloomfield Weiss report gelled with what I had seen at Dekker. It had, more or less.