David Heron - who died earlier this week

The most influential City figure you’ve never heard of??

Maybe.

But that’s how my Dad, who died earlier this week, would almost certainly have wanted it.

Early life and career

I think it’s fair to say that Dad just wanted to get out into the world and start earning. He left school at 16 with just one qualification: Maths O level.

But after the accountancy firm he joined as a trainee was acquired by stockbroker James Capel in 1959, his career prospered – first in accounts, then research, then in UK institutional equity sales, then as Head of Far East Sales and then as a ground-breaking Head of Derivatives from 1985. A major figure in European derivatives circles he was also a director of LTOM and latterly Deputy Chairman of Liffe.

Not overawed for a second by the posh voices that surrounded him at Winchester House and then Bevis Marks – according to his own notes he became Capel’s first grammar school educated partner and it tickled him enormously to list his education in the Who’s Who of the City of the 90s as “Christ’s College (Finchley)”!!! Ironically, he subsequently missed out on a number of more senior industry roles away from Capels for which he was shortlisted because he didn’t go to private school or have a degree.

A passionate advocate for the role of options and futures in both investment and risk management, he also set up Capel’s Program Trading and Japanese Warrants teams alongside the options broking unit. In 1991, the last year Dad headed all the separate equity derivatives businesses at James Capel, his teams accounted for over a third of James Capel’s revenues - and a much larger percentage of the company's profits.

Perhaps unsurprisingly, he was an aggressive PA risk taker at a time when Compliance departments didn’t really exist. When Capel’s short-sighted Risk Committee originally refused to allocate capital to the significant arbitrage opportunity in Japanese Warrants, Dad simply took on the trade himself and paid Capel’s clearing staff in Tokyo and London out of his own pocket to process the trades. Malaysian Rubber stocks also provided a similarly profitable opportunity.

He sometimes lost big, but mostly he won big with his PA trading. He certainly had a reputation as an investor of rare courage and size. More importantly, the proceeds of his dealing allowed him to buy up other partners’ equity. At the time Capel’s was bought by HSBC, he was the firm’s largest shareholder.

Aside from derivatives Dad initially headed the James Capel team that advised Lloyds of London to widen its capital base away from ‘names’ to limited liability institutional corporate capital in a revolution that ultimately saved Lloyds in the early 90s. A Lloyds name himself Dad put his money where his mouth was and became a substantial founding shareholder in one of the newly incorporated investment trusts that sought to provide such capital. Generally my Dad didn’t deal in regret. But I always got the feeling that this one rankled and that he believed latecomers to the Lloyds project ultimately took the credit for a rescue plan that was largely based on his ideas and hard work.

Dad ran his teams at JC on the same basis that he wanted to be judged: simple meritocracies where he encouraged and rewarded those who worked for him and delivered. He earned a reputation as a leader of integrity and generosity in a business known for personal gain, backstabbing and politics. In short, people wanted to work for him - and those that did were fiercely loyal. He did not, however, suffer fools gladly.

But as anyone who has worked at a big bank knows, there is always a corporate political game to be played. When HSBC took over James Capel, Dad’s strident views about the right direction for the firm and desire to leverage HSBC’s balance sheet for trading purposes were not appreciated by HSBC’s conservative bankers. HSBC also wanted their cash equity sales teams to cross sell derivatives to save costs rather than Dad's options specialists (sound familiar to anyone???). His galacticos team of derivatives bright minds and big hitters was largely disbanded and he was removed from the job he loved. And although he was offered other senior positions in the bank - including a role as Vice Chairman on the main HSBC board - he was not interested in corporate politics or in a job away from the cut and thrust of markets and clients, no matter how well paid it was. His subsequent exit was not exactly amicable and felt undignified for a man who spent more than three decades helping to build and transform the firm that James Capel became. I know that he felt deeply betrayed by the behaviour of one JC lieutenant in particular. Within years, the Capel’s franchise had been destroyed.

In a move that smacked more than a little as one at least partly designed to prove the point to his previous employers, Dad then joined Capel’s main competitor and rival Smith New Court as Head of Derivatives - only for SNC to fall to Merrill Lynch some 18 months later in a repeat of the James Capel/HSBC tie up. Despite the profitability of the European Equity Derivatives unit he headed, he was outmanoeuvred again by SNC/ML’s more adroit political animals.

Ironically, this led to Dad taking the role which I believe he found the most rewarding and that brought together the two great strands of his life outside of family: business and his unwavering Christian faith. I share his passion for the former and not the latter and will therefore leave it to those who knew him best during his time as Chairman of Premier Christian Radio in the article attached to outline what he contributed in Christian media circles.

A moral duty to support others

Perhaps the defining moment of Dad’s childhood was his return to London after wartime evacuation with his older brother Malc. My grandparents didn’t have enough money to look after them on their return - so they were largely brought up by my spinster Great Aunts in Muswell Hill. ?It seems clear now that being separated from his parents due to a lack of money and the general struggle of his childhood made him highly motivated financially. ?He always carried a great wad of cash – not to show off – but because it served as some sort of financial security blanket. He clearly saw earning and having money as a way of preventing the hurt he felt as a young child.

Ironically given his success he was a modest man by nature who was never very interested in the potential trappings of what he achieved. ?His desire to be ahead of the game meant he was a perennial early adopter of consumer tech - he had a brick mobile phone with hands free cradle and wired mic fitted in his car years before anyone else I knew - but the flashiest car my Dad ever owned was a SAAB 900 convertible. He once even had ‘Turbo 16’ removed from a different SAAB because he thought it was too ostentatious!

To him, the great pleasure (and moral duty) of his fortunate financial position seemed to be to share it with others and to help both the people and the causes he believed in. Quietly and without show, he gave substantial sums to charity on an annual basis.

His generosity, vision and willingness to back friends and early stage businesses with serious capital were a constant feature and were justly rewarded when a company he had backed became a unicorn and listed on Nasdaq in 2018. True to form, the 1000x return his investment generated at its peak was a source of great pride that he had once again correctly backed a big winner - but he had no interest whatsoever in using any of the proceeds to enrich or improve his own life. The success simply allowed him to give even more to charity and to back even more exciting early stage businesses in need of capital.

I want to finish with a simple story that I believe perfectly sums up my Dad which I heard for the first time just a few short weeks ago and it filled me with pride. A family member wanted to leave his existing employer and set up his own business in the early 90s. Always keen to support a budding entrepreneur Dad offered, unprompted, to finance the capital equipment needed to start the business. When told by the would-be entrepreneur that he was unsure how or when he could ever repay the money, my Dad simply told the family member to consider it a gift and to make sure that he helped someone else further down the road as and when the business succeeded.

Dad, wherever you are right now, I miss you – and hope that these few short paragraphs do some measure of justice to the amazing man you were.

With love, your son

Dan