Reaching the peak

Andrew Fritchie has scaled one of the world’s highest peaks, but that’s nothing compared to his latest challenge. Vanessa Pawsey meets a lawyer who is taking his company to the heights of the stock exchange

ThE assertion “think global, act local” could quite easily have been made with financial services software company Marlborough Stirling in mind. Andrew Fritchie, the Cheltenham-based operation’s head of legal, makes no qualms about his support for the local community and for business in the South West.

“I want to help other businesses in the area and I know that local firms appreciate us going to them,” says Fritchie. “I don’t believe in exclusive relationships because it’s not competitive, but if we get a similar degree of competency for half the money, then why pay for overheads and salaries?”

Fritchie wears his heart on his sleeve, and when not working he can frequently be found fighting his way to the top of Mount Kilimanjaro, Africa’s highest mountain, to raise money for the Cotswolds Care Hospice, or running 26 miles across London for Great Ormond Street Hospital.

On the global front, the company is continuing to expand and so far it has a presence in the UK, Canada, South Africa, the Isle of Man and Ireland.

Fritchie took the job as head of legal at Marlborough Stirling in July 1997 with the eventual aim of listing the company. Three and a half years later, his ambition is about to come true – Marlborough Stirling is due to float on the London Stock Exchange (LSE) this spring.

There will also be a 144a offering in the US, which will enable investors there to invest in the company on the LSE without complying with Nasdaq regulations.

Marlborough Stirling services the mortgage, life assurance and investment sectors. Its clients are major bluechip financial institutions, including the Bank of Scotland, Alliance & Leicester, Clerical Medical, Egg, Nationwide Building Society and Northern Rock.

It offers two services. It provides licences for and maintains software products, which help to reduce the cost of pensions and mortgages. But it also has an outsourcing division where company employees use the software to administer policies on behalf of clients.

The company had a turnover of £50.1m last year and has an estimated market capitalisation of £350m. After a stringent beauty parade involving six investment banks, UBS Warburg was chosen as the sponsor, financial adviser, global coordinator and bookrunner. HSBC was chosen as the co-lead manager. Perhaps surprisingly, Osborne Clarke OWA was chosen as the legal adviser.

“The advice we were getting was that we should use magic circle firms, but Osborne Clarke has done work for us for about five years and I felt it should have a shot at advising us on the initial public offering (IPO),” says Fritchie. “The firm knows the business very well, so I took a risk and gave the work to a firm that wasn’t an obvious choice.”

Perhaps there is a certain amount of risk. Preparing Marlborough Stirling for its float has not been an easy task. The company has a complex share structure, with shares being owned by the founder, 3i and a number of other trusts. And to make matters more complicated, 30 per cent of the company is under option to its employees. Cleary Gottlieb Steen & Hamilton has been brought in to handle the US side and Freshfields Bruckhaus Deringer is advising UBS.

Although Fritchie is by no means a one-man band, he has taken most of the in-house legal responsibility for the IPO. The other team members, a company commercial lawyer, an IT and outsourcing lawyer and a generalist lawyer, have played a minimal role.

Fritchie explains: “As I’ve been pulled out of the mainstream of the business to handle the IPO process, the rest of the team are shouldering the day-to-day running of the company. We’re all flat-out at the moment and are surviving on adrenaline and caffeine. I’m home so rarely that my 18-month-old son calls me ‘bye Daddy’.”

But the good news is that the company has been give a clean bill of health. Fritchie says it is easy for software companies to lose track of who owns the codes for the software. “But we’ve been pretty good at keeping track,” he says.

As you would imagine, the due diligence has been monumental. So much so that Fritchie and his finance director are planning to plant large numbers of trees when the IPO is finished to make up for all the paper they have used throughout the process.

Fritchie is a barrister. He went to the bar in 1988, but in 1989 he upped sticks to San Diego where he worked as a lawyer for US law firm Gray Cary Amherst Fry (now Gray Cary Ware & Friedenrich). He returned to the bar in London for a short time before moving to Australia in 1996 to work in-house for Sydney-based firm Nicholson International.

“I like being in-house because of the lack of pomposity,” he says. “I’m a courtroom advocate to my fingertips, but I like the breadth of working in-house. I’m an integral part of the business and I get to meet people from all disciplines. You learn to get a perspective on your own part within the fee-earning structure.”

Marlborough Stirling has six subsidiaries and the legal team has responsibility for the whole group. All the copyright and trademark work is done in-house. Although the company sells the object codes for its software, it keeps the service codes. This gives the clients responsibility for licensing but prevents them from tampering with, or developing the products in any way.

Fritchie hires only external people when the department is swamped or when it does not have the in-house expertise. He names just one law firm in each jurisdiction as preferred counsel but denies that it is a panel.

“We’ve used a variety of firms in the past, including Burges Salmon,” he says. “But Osborne Clarke are one of the top firms in Bristol and it helps that they have offices in London and in the Thames Valley.”

He believes that law firms have to be managed very closely to get the best results. “You need to be very specific about what they should and shouldn’t do,” he says.

“In intergrational acquisitions we negotiate the deal, but we do so in consultation with external lawyers who assist with the local regulatory points. We brief them to help with the drafting.”

When 3i invested millions in the company last spring, Marlborough Stirling brought in Osborne Clarke and 3i used their in-house team. “We wanted pure corporate assistance because of the complicated share structure. 3i does this type of work day in and day out, and we didn’t want to miss a trick,” says Fritchie.

But when the company did a joint venture with Egg to set up the subsidiary company, Marlborough Stirling Mortgage Services, it used its in-house team, while Egg used Lovells. “We had the time and the experience to do it in-house,” explains Fritchie.

Marlborough Stirling used the Canadian firm Fasken Martineau Du Moulin to give local jurisdictional advice when it acquired the Canadian company Plexus. It was buying a business with two owners and, according to Fritchie, the whole thing was a nightmare.

“They wanted the most for themselves with the least obligation, and we wanted the opposite,” he says. “The time differences meant that we talked to them late at night when they were bright and we were tired. The Canadian mentality is different to ours and it was good having someone in Canada on our side who could judge how they were feeling.”

For now Fritchie’s mind is elsewhere – all his energies are being channelled into the IPO. But is he not concerned by the current market conditions and the fact that the IT sector is tarnished with the dotcom brush?

It seems not. “We’re floating because we think it’s the right thing to do for the business. It will enable us to finance our organic growth and give us credibility,” he says. “We fully expect the market to recover. When analysts start to say that technology shares are cheap, people will start buying.”
Andrew Fritchie
Head of legal
Marlborough Stirling

Organisation Marlborough Stirling
Sector Financial services software
Market capitalisation £350m
Employees 840
Legal Capability Four lawyers, one trainee and one paralegal
Head of legal Andrew Fritchie
Reporting to Chief executive Graham Coxel
Main location for lawyers Cheltenham
Main law firms Osborne Clarke OWA, Cleary Gottlieb Steen & Hamilton, JF Kirby (Gloucestershire), Deneys Reitz (South Africa), Fasken Martineau Du Moulin (Canada), Cains (Isle of Man) and Mason Hayes & Curran (Dublin)