Tony McDonough meets STEVE SEALEY, chairman of North West-based Aquarius Equity Partners

WHEN Liverpool-born entrepreneur Steve Sealey was delivering toilet rolls to corner shops and market traders, back in the early 1980s, he must have dreamed of the day he would be wealthy enough not to have to work any more.

Almost 20 years later the business he ran, AM Paper, was sold for £200m and, thanks to his share of the proceeds, the opportunity for the easy life beckoned.

But the work ethic that had driven him since his teenage years would not let him rest.

“After the firm was sold, I decided to take some time out,” said Sealey, 51. “I had some fun and played some golf but then I started to get itchy feet and wanted to get out there and do something again.”

The result was Aquarius Equity Partners, a venture capital fund manager which currently operates two funds and is this week launching a third.

It generates millions of pounds for investment from a network of high net worth individuals from across the North West and beyond.

The company was established in July, 2005, after the buy-out of Axiomlab Investment Management from the Axiomlab Group.

As part of the deal, Aquarius took over the management of a £4.5m regional venture capital fund, the North West Seed Fund, or NWSF, funded by the Northwest Development Agency (NWDA). It made equity investments of up to £350,000 in seed fund and early stage businesses.

Sealey said: “That was the first fund we had managed and we learned a lot from doing that. The fund is now closed to new investments but we have done a very good job on it and have made a lot of money for the NWDA.”

But the father-of-two was frustrated that the rules of the fund barred him from investing personally in any of the companies.

So, in 2007, Aquarius launched the Northern Entrepreneurs Fund, a £20m fund specifically raised to invest in progressive companies within the “equity gap” range of between £750,000 and £2m.

This week, at Liverpool’s Racquet Club, Sealey will launch the Aquarius Origin Fund, which aims to raise £7.5m from wealthy individuals to invest in early stage companies, in particular those who have potentially valuable protected intellectual property.

The twist with this fund is that it will allow people to invest through their SIPPs (Self-Invested Personal Pension), thereby enjoying considerable tax benefits on their investment returns.

“We think this is a wonderful idea and is a real unique selling point,” added Sealey.

“There are no shortage of businesses who fit that category and are looking for investment. No one can get a bank loan at the moment and there is very little other money out there.

“In the current climate, I think we offer something very attractive from investor’s point of view. Many wealthy individuals have become disillusioned with some of the more traditional ways of managing their wealth.

“They have had a real battering in the current climate. They don’t trust the banks, equity markets are uncertain and property has not yet reached the bottom.

“What we offer is attractive because the value of companies is very low at the moment.”

Sealey, who lives in Ormskirk with his family, was born and brought up in Huyton.

He attended Prescot Grammar School and, like many Merseyside youngsters, he dreamed of becoming a rock star.

He said: “I played bass guitar in a band and we used to play gigs around Prescot.

“But I eventually ended up selling my music equipment to buy my first car and went to work for a freight forwarding company at the docks in Liverpool.

“I was made redundant from there and then the same thing happened at another similar firm. I decided I was fed up with this and wanted more control over my own destiny.”

In his mid-20s, Sealey met Alan Murphy, a businessman who owned and ran the Champion Discount Supermarket, in the Walton area of Liverpool.

Sealey began working for Murphy in a sideline operation – supplying toilet rolls to corner shops and market traders.

“Competition became tough when Kwik Save opened a supermarket nearby, so Alan decided to sell up,” said Sealey. “He bought a toilet roll machine and opened a factory in Skelmersdale, which we ran together. We worked day and night and it was hard going.”

The business, which supplied toilet rolls to supermarkets, prospered through organic growth and acquisition, and by the mid-90s the pair came up with an ambitious plan to build a state-of-the-art manufacturing site. But the banks were reluctant to help.

It was then they met representatives from HSBC Private Equity (now Montague).

Sealey added: “They invested £125m in return for a stake in the business. That was initially quite scary.

“I took over as managing director in 1998 and in 1999 we landed a massive contract from Asda to produce the Shades brand of toilet roll.”

Then, just two years after Montague took their stake they told Sealey they were looking to sell and had a buyer lined up.

“It came as a bit of a shock,” he said. “I always knew it was going to happen but I was expecting them to sell after about five years.”

AM Paper was sold to SCA Hygiene for £200m and Sealey was able to take a sabbatical, but was soon itching to get back into business.

He added: “People were telling me to get into property but that is not really for me – I’m a people person.”

Sealey admits evaluating the worth and potential of a young company can be a difficult task but says the range of expertise within Aquarius means they usually get it right.

He said: “The companies we invest in haven’t been going for long so there isn’t a track record to go on but we are very experienced here, particularly when evaluating technology companies.

“My skill is in looking at and working with people. It’s very important to look at the guy behind the idea.

“I still get a buzz out of doing this and it is great when we get a return. We are already thinking about our next fund.”

tony.mcdonough