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BUSIN

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Filmbuff FrankKeoghis hoping for a happyending in his role asmanaging director atDPS Engineering, thefirmbehind pharmaand life science projects

GAVINDALY

Frank Keogh likes to keep thingslow-key. He wears a smart greysuit, unflashy tie and sensiblespectacles, and accepts, with asmile, that a lot of people havenever heard of his company,

DPSEngineering.“Most engineers are introverts,” he

said, tucking into a lunchtime platter ofcheese and cold meats at a Dublin hotel.“The company reflects that.”DPSbroke cover last week, in grand

fashion. On Tuesday, Keogh hooked upwith jobs minister Richard Bruton for theannouncement of 80 new jobs at thecompany, which already employs 810.OnWednesdaynight, hehad 250guests

in the RDS in Dublin for a celebration tomark 40 years in business. ComedianMario Rosenstockwas the entertainment.Fitting Keogh’s down-to-earth style,

though, the dress code was smart-casual,not black tie. He prefers the title of man-aging director, even though “everyonetells me I should be chief executive”.He has probably earned the right to be

calledwhateverhewants.DPShad25 staffin 1996 when Keogh and three others gotinvolved in the business, a specialist indesigning and building pharmaceuticaland life sciences projects.Itsworknowspanshugecapital projects

in the pharma, tech, and oil and gassectors.AswellasbasesinDublinandCork,ithasofficesintheUS,theNetherlands,Bel-gium, Israel, Singapore and Saudi Arabia.“Arethereanylifesciencescompaniesin

Irelandwe don’t workwith?”Keogh askshimself. “I don’t think so.”Business goes way beyond Ireland,

however. The main DPSoffices — inDublin, Cork, Boston, and Leiden inHolland — are full design offices, eachcapable of handling two or three bigprojects at a time.“We’re big enough to do global

work,”said Keogh. “We’ve just beenawarded a big project in Denmark.”Client names are confidential but it is

safe to conclude they include the likes ofPfizer, GlaxoSmithKline, Merck andGenzyme. Tech clients, likewise, includesome of the biggest names in the sector.Growth has been impressive. DPS is on

track for €75m revenues this year andKeoghhaspencilled ina figureof€84mfornext year.A target of€100mrevenues and1,000 staff is in his sights.“In 2010, we did 90%of our work in

Ireland,”said Keogh. “This year, it will be60%Ireland, 25%Europe, and 15%US.”Hisaim is toget toanevensplit between

each region. Another hard-fought goal isto preserve a 5% profit margin, whichDPSachieved in each of the last two years.“We could get a lot bigger, but we are

more focused onmargin than volume. It’snot all about being big.”Heismoreinterested,hesaid,inmaking

5%profiton€100mrevenuesthanmaking2%or 3%on €200m. With one eye onexpansion into Asia and funds in thebusiness for acquisitions, though, youwouldn’t bet against Keogh pushingDPSfurther.He smiles. “There is a lot of personal

satisfaction from running this business.”Keogh grew up in Goatstown, south

Dublin, one of seven children. “Wewere asmall family compared to lots ofothers,”he said. Their father, James, was

the first chief executive of An BordAltranais, theNursingBoard,setupin1952by then health minister Noel Browne.Keoghwent to secondary school atMarianCollege in Ballsbridge and then to theDublin Institute of Technology at BoltonStreet to study quantity surveying.“I enjoyed my college life. I wouldn’t

mind going back some time,”he said, ina tone that suggests he enjoyed itverymuch.Afterfouryearsstudy,hedidthreeyears

with Mulcahy McDonagh, one of thecountry’s largest firms of quantity sur-veyors, to qualify as a chartered quantitysurveyor.Heoptedforajobinconstructionmanagement with Jacobs, an engineeringand constructionmultinational.He joined in 1987 and stayed the best

part of a decade. One of his first projectswas building a brewhouse for Guinness inDublin. When that contract was com-pleted, Jacobs moved him on to work forSanMiguel, thePhilippines-basedbrewer,whichwas upgrading facilities in Asia.TheyoungKeoghfamily,thenincluding

threechildren,uppedsticksforHongKongfortwoyears.“Itwasagreatexperienceforusandthekids,togetoutandseetheworldbeyond,”said Keogh.They came back to Ireland in 1991,

thoughKeogh spent a chunkof time in theUKwhere Jacobswasbuilding aplant for alifesciencescompany.In1994,theymovedagain, toCork,where Jacobshadasizeableoffice. “Munster was huge for lifesciences,”he said. “It was a really busyoffice, a very productive office.”In 1996, however, Jacobs entirely over-

looked Cork when it came to a round ofpromotions. “There were a lot of disen-franchised people,” said Keogh, whowould have been considered in line for apromotion. In the fallout, he decided toleave Jacobs with three other colleagues,Gerry Creaner, Pat McIntyre and NoelRooney, and do their own thing.Creaner was familiar with DPS, a small

engineeringoutfit foundedin1974andrunbyMichaelMulhall.“Ithadabout25people

in Cork and Dublin, run completely byMichael, a workaholic. We decided therewas an opportunity.”Keogh and his three colleagues each

took a 20%stake in DPS, and Mulhallretained 20%. He had to invest a “signifi-cant” amount of money and put up hishome as security. “You’d have to be mad,or else reasonably confident of suc-cess,”he said. They split the main rolesbetween them, with Keogh in charge ofproject management and construction.Withinmonthsofthebuyout,DPSwona

big contract in Dublin, managing thebuildingof adrugmanufacturingplant forHelsinn Birex, a Swiss group. The Keoghsmoved again, back to Dublin.“I didn’t think I’d ever be coming back

to Dublin,”he said. “Our business planwasn’tbasedonuswinning jobs inDublin,butsomeonehadtomanageitandIhadtheconstruction background.”In 1998, with a plan to become “amore

global company”, DPS opened its firstoverseas office, in Leiden. A UK officefollowed in 1999, but closed within 18months. “We didn’t do enough marketresearch. The UKis huge and you’d neednumerous offices to serve it properly.”Between1996and2000,DPSgrewfrom

25 people to 200. In 2000, however, thebusiness lost money.“It was very difficult to turn down

work,”said Keogh. “We had huge growthbut we just couldn’t handle it. We didn’thave the structure.”Withthebenefitof externaladvice, they

madeaconsciousdecisiontotrytocontaingrowth to 10% a year. Business continuedto roll in, and, by 2005, DPS had revenuesapproaching€30mayearandwasmakingmillion-euro profits.At the end of that year, Mulhall,

approaching his 65th birthday, decided tosell the majority of his DPS stake. Rooneyalsocashedout, leavingalmost40% of the

business up for grabs. Donal Roche, chiefexecutive ofCovestoneAssetManagementand a former managing partner of legalfirmMatheson, came on board as a share-holder and chairman.Keogh andMcIntyreboosted their stakes, and a group ofabout 20 senior managers also becameshareholders.Bringing in Roche, and later John

McGowan,aformerchiefexecutiveof IntelIreland, as a director, gave the companyfresh impetus, said Keogh. “When youhave a company run by five engineers,you’re going to limit yourself.“Up to2006,weran it as anengineering

company. Nowwe run it as a business.”The Singapore office opened in 2007

and,in2011,theystartedaUSmove.Keoghflew to Boston to size up a company calledBiometrics as a potential acquisition.In a meeting, he realised the USgroup

was runbySteveFitzpatrick, aMancunianwhose family had holidayed in Goatstown

whenhewasachild.KeoghandFitzpatrickhadplayed togetheras children.“Itwasanunbelievable coincidence. He nearly had aheart attack,” said Keogh.Earlier this year, DPS also bought

ProjectPlanning&Delivery,aconsultancyin North Carolina. “Our acquisitions weredone on a relationship basis. We like theguys involved.”The two US businesses are branded as

DPS and employ 110 people in total.Fitzpatrick is on themain DPS board.CreanersoldhisDPSshareholdingatthe

end of 2012 and left the group. Keogh,Roche and McIntyre are the “significant”shareholders, though Keogh won’t bedrawn on his exact stake.He plans to step down as managing

director in threeyears, just shyofhis60th,buthewill remainwith thegroup.There iswork to be done before then.TheDPSbrandandwebsitegot anover-

haul last week and Keogh wants to“freshenup” the company. “DPS feels likean old company,”he said. “We’re lookingat new areas with highermargins.”He aims to do more business in Asia,

primarily through joint ventures to limitthe risk involved. Partnerships are alreadyin placewith engineering consultancies inIndia and Turkey.“Weworkwithglobalclients,sowehave

to be global,”he said. More acquisitionscouldwellbeonthecards, likelyata largerscale than the two done to date.“We are very well structured,”said

Keogh.”Wehavebigfinancialreservesandare positioned for investment.”There have been buyout approaches for

DPS itself, which could be valued at up toseven times its profits, based on industryaverages.“Aswegotabitoftraction,alotofinternationalcompaniesdid lookatus,butnone seriously,” said Keogh.He has no personal exit plan as such. “If

we get to €5m profits and I’m gettingdividends as a significant shareholder, I’llbe quite happywith that,” he said.Alow-key income instead of a big-

number buyout? That sounds about right.

Quiet evolution the key for shyboss ready to take on the world

THE LIFE OF FRANK KEOGHWORKING DAYI’m an early riser. I used to get up at 5.30am but now I’m upat 6.30am. If I’m in Ireland, I swim at 7am every Wednesday,and on Saturday morning too. I usually work until 7pm or8pm, so they’re long days. I’m doing the budgets for the nextcouple of years at the minute, and we’re spending time onsuccession planning. I travel a lot. I go to the States oneweek a month and Europe one week a month, so only 50%of my time is spent in Ireland, between Dublin and Cork.

DOWNTIMEI like to keep active. I’m doing swim training lessons and I’mgoing to do a triathlon next summer. I like hill-walking with agroup of good friends. We do it mostly in Ireland, but onceevery three months, we go further afield. I’ve been toScotland, Wales and the Lake District. I’m a rubbish golferbut I do enjoy it. I play a bit of tennis, and I go to the gymas well.

Keogh has grown DPS Engineering into aserious player and has set his targets as

€100m revenues and 1,000 staff

Age: 56Home:Enniskerry, CoWicklowFamily: Married with fouradult children, agedbetween 21 and 31Education: Degree inquantity surveying andconstruction economicsfrom Dublin Institute ofTechnology at Bolton StreetFavourite book: Thy TearsMight Cease by MichaelFarrellFavourite film: PromisedLand, starring Matt Damon,pictured. “I’m a bit of a filmbuff.”

IN A packed Sotheby’s auctionroom in NewYork, the tensionwas palpable. Up for sale wasone of themost recognisablepictures inmodern art —EdvardMunch’s The Scream.When the gavel finally wentdown, the tortured figure hadfetched nearly $120m (€96m).The identity of the buyer,

however, was amystery.Soon thewhispers began tocirculate— The Scream’snew ownerwas no oligarchor industrialist, but one LeonBlack, founder of Apollo

Global Management, one ofthe so-called buyout baronsfrom the secretiveworld ofprivate equity. Black is nostranger to high art; theMunchwill sit nicely along-sideworks by Vincent VanGogh and Pablo Picasso in his$750m collection. Making afortune from buying andselling companies, the lavishriches enjoyed by Black andhis fellow private equity titansare the stuff of legend.Butmany private equity

executives are not as cash rich

as they seem. Thoseattempting to launch theircareers in the private equityworld are finding it difficult,with some even lacking cashto invest in their own funds.Private equity firmsmainly

spendmoney given to them bypension funds, wealthy indi-viduals and insurance compa-nies. They are, though, told toput some of their ownmoneyinto each fund they raise. Inthe past this has been as lowas 1%-2% of a total fund. This“skin in the game” is intendedto show that the interests ofdealmakers and investors arealigned— if investors lose, sodo the fundmanagers.However, investors are now

demandingmore from theirprivate equity fundmanagers— specifically, that they putmoremoney into their funds.Since the financial crisis, they

want assurances that fundmanagers have thrown intheir lot with their investors.According to research firm

Preqin, the European privateequity funds raised since 2008have seen executives put innot the usual 1%-2%, but 4%of the total fund raised.Adding to executives’ prob-

lems is growing investor scru-tiny of fees. Practices such assiphoning off excessmanage-ment fees to invest in fundsare being clamped down onby investors, marketobservers say.One fundmanagerwho

invests in private equity fundssaid hewas aware of privateequity dealmakers whowerenow “fully loaded” in theirfunds, piling in all their per-sonal wealth and leaving them“exposed”. This, he said, evenmade it difficult for private

equity executives to buyhouses and pay expensiveschool fees, and left themvulnerable if funds failed.The fundmanager said:

“The norm as regardscommitments to funds used to

be 1%. This is now rising andis frequently 2% or sometimeseven higher. Not only areinvestors expecting privateequity executives to investmore in their own funds butthey frequently ask these

commitments be paid usingafter-tax income from theindividuals themselves . . .As funds get larger the totalamounts involved can get verysubstantial.”Carried interest — private

equity executives’ share offund profits — is usually onlyachieved once the funds havereturned all of their money,plus about 8%, to investors.But the global financial crisishas left many buyout funds,including the industry’s bestknown names, unable toreach that benchmark.The fundmanager said:

“People assume that the [pri-vate equity] industrymakes afortune. People are paid verywell butmost executives haveto fund their investments at avery significant level on a reg-ular basis. It is challenging.”These concernswere laid

bare in a recent report byInvestec. The report, whichsurveyed senior private equityexecutives, found that 21%thought theywould have toput 3% into their next fund,while 7% said theywouldhave to invest up to 7%. Thereport revealed executives hadconcerns about carriedinterest. A total of 38% saidthey did not expect such apayout for at least anotherthree years.Robina Barker-Bennett,

who runs the Lloyds opera-tion, said the bankworks onlywith larger, lower-risk pri-vate equity firms. She insistedthe facilities are not risky.“Only the best clients get thisservice. The people we back,we have been paid back.Weensure there is cash flowcoming through, such as inmanagement fees.”

Can you spare a million, guv? I’m a skint private equity baronMany in the industry are strugglingas investors imposemuch stricterdemands.DanDunkley reports

Bucking the trend: Apollo’s Leon Black and his wife Debra

CHRIS GOODNEY