Voice-over: This is Leaders in Finance, a podcast where we find out more about the people behind a successful career. We speak with the leaders of today and tomorrow to discuss their motivations, their organizations, and their personal lives. Why? Because the financial sector could use a little more honest conversation. We’d like to thank our partners for their ongoing support. They are Kayak, EY, Mogelijk Vastgoedfinancieringen, Roland Berger and Lepaya
Jeroen: Welcome, listeners, to a new episode of Leaders in Finance. I’m delighted you’re listening. In this extra episode, I’m interviewing Danny Vroegop, who’s the co-founder, chief executive, and investment officer at Colesco. Welcome, Danny, to the show.
Danny: Thank you. Thanks for having me. It’s great to come out here and meet you.
Jeroen: Wonderful. I’m very happy you’re here. First of all, before we dive into the content, I always love to get to know the person I’m interviewing. That’s, as I said, Danny Vroegop today. Tell me more about you and really where your career started. Maybe that could be a good starting point.
Danny: Well, from my heritage, I grew up in an entrepreneurial family, a small business. I think that’s where I probably got some of my drive and ambition to try and build things. I had a university degree, and then I actually started working in the financial industry. While I was studying, I quite quickly knew that I wanted to work in banking because I was fascinated by the fact that you could be important to a company, but also see different businesses from the inside, meet interesting people, all of that, which was very romantic, I guess, at the end of the 90s. Some of that came true, some of that didn’t, but I was fascinated by the idea that you get a grasp, you get a touch of lots of interesting things, and meet interesting people. That’s kind of the red thread through my career and still what I like about my job. It started a long time ago. I’ve been working in banking and capital markets for over 20 years. Before I started Colesco, that was at Rabobank—so actually only one name, one bank—but always developing yourself and stepping into new opportunities. When you start your career, you think, I’m never going to stay here that long, but before you know it, it’s 20 years later. That doesn’t just happen, but you go from one big thing to another big thing. There’s always opportunity in larger organizations that are open to new opportunities. I was quite lucky to be there, to make use of that, enjoy it, and develop myself.
Jeroen: Do you recall what attracted you to financial services in the first place?
Danny: Well, one, it’s obviously about—I was good with numbers. You work with very smart people, but also, again, the clients and the customers you meet, very interesting people who can challenge you. There are problems that need to be solved, and you can actually—I know people say it’s a 30-year industry and you provide capital, but you do help make something happen. That’s also, I think, a big role that finance providers have. I also see that we, as an industry, can make things happen for the better.
Jeroen: With all that experience in banking, could you name one, or maybe two, jobs you’ve had within Rabobank that, with the benefit of hindsight, you learned the most from?
Danny: I had lots of interesting things to do. I met lots of interesting people. But I think the big thing here is certain moments in my career, where in the first one, two, three years, you really have to invest in getting to know people, building a network, getting to know the content you’re covering, to actually become relevant for your clients or the relationships you have. And you get really good at that job, and you see that in the appreciation, in the income you generate, all of that. But at some point, you’re getting into a bit of a comfort zone, right? You’re good at your job, people like you, customers like you, and then there’s a risk you stay there because you think there’s nothing better. And I’ve had now a couple of times where, I was like okay, you make a switch and you start all over again. And then the learning starts again. And that really gets you going, gives you new energy. The learning curve is something that, yeah, I would say is really important in somebody’s career. And you need to change sometimes to actually start a new learning curve or make it even a bit steeper.
Jeroen: You mentioned the word “clients” a couple of times, which is not always the case in this podcast, I must admit. In all the jobs you’ve had, were there always clients involved, or were you also purely on the risk side, for example, within the bank, or in another job that didn’t involve clients?
Danny: Well, to be fair, when I started in banking, actually all the smart people that went into the job market were—this is going to say something about my age, of course—working on Y2K and Euro issues. So I actually started more in the back office, with reporting and IT and all of that. And I know now we have artificial intelligence and data warehouses and data lakes, et cetera. But even back then, a lot of these things hadn’t changed. So starting on that end of the banks, I still benefit from the knowledge I picked up at that point. I started in the back office, slowly moved over, had a job in group strategy, and that’s actually where I started having conversations with bigger clients the group had with the bank. And that’s how I also rolled into, let’s say, more the relationship side of banking.
Jeroen: Right. So I’m really, really curious how Colesco came about. And when I introduced you today, I said co-founder, so it’s clear that you’re one of the people who actually founded the organization. Could you take me back to the moment you knew you were going to go in this direction, or how it all started?
Danny: Well, that’s a long time back, to be honest. In 2015 already, I did an executive MBA at IMD. And there, they really tried to push you: what is it that clients are looking for, how do you research the market, et cetera, et cetera. And I think that’s where the idea actually started. When you talk to clients—what is it that you look for, what do you need, how can we contribute, what successes are competitors having? At that point, private credit and the fund industry were really starting to be up and coming, or getting established, in the US. It hadn’t yet made the jump to Europe, but that was the period when it started. So the idea actually came from there.
Then we had a couple of iterations, a couple of times we pitched it, tried to get support for it—it didn’t work, so we had to adjust the idea. It all had to do with what was happening in the market, what clients were looking for, what the actual job to be done was, and how we could do it best.
So this has been quite a while in the making. We started it as a project, more of a side hustle or a side project, and that turned into a department, and that turned into a business. It wasn’t an overnight thing, and it wasn’t something we fully thought out on day one. We had to listen to people, take input, and then develop it. And that’s how Colesco got started.
Jeroen: A couple of follow-up questions. First of all, so it’s really thanks to your time off, “at business school” that you came up with this idea?
Danny: Is it the business school? Is it not? My ambition when I went to business school at that point—I’d been in banking for 15 years—was not so much about learning to think outside of the box, but outside of the bank. Because you’re very focused on risk management: what are the risks, what are the mitigants. So for me, this was also about getting some exposure to other people and other ways of thinking. And yes, I took that with me into Colesco.
Jeroen: The other follow-up I wanted to ask you is, you said we—so who were the other people that came up with this idea together with you, founded the business, and also got the support from Rabobank?
Danny: So the idea came at the start of 2015, and I presented it to the board. Then we had it again in 2017 and 2019. By then, we had started with one or two people taking time out of their schedule to start Colesco. And yeah, where we are now—you meet people in your career, you think, oh, those are good people, we need to try at some point to hook up. That’s how we got the others involved. So it started with that idea. And then also within Colesco, we’re very much—not a cooperative like the parent—but we do like cooperation. So people contribute to get to this end result.
Jeroen: We’ve been speaking for about eight or ten minutes now, and I’m really, really looking forward to learning more about Colesco, because so far we’ve been talking about how it came about. What actually is Colesco?
Danny: So Colesco is a private credit specialist. Our mission is to unite capital and purpose. What we try to do is combine institutional capital from insurance companies, pension funds, and big professional parties, and marry that with entrepreneurial ideas, ventures, and opportunities. But the central theme for us is that we’re looking for businesses that want to contribute to a better world or have ambitious sustainability plans. That’s the niche we operate in.
If you look at how we’re organized and the people we work with, in many ways we’re still doing what we’ve always done—20-plus years of experience in lending and capital markets. But now we’re not doing it on behalf of a bank balance sheet. We’re doing it for our customers: institutional investors, pension funds, and insurers. And that’s what we do—we originate, we structure, and then we manage credit on their behalf.
Jeroen: So what kind of credit is it? Is it mainly lending, or only lending?
Danny: Yeah. We’re indeed a private credit specialist. So it’s lending, it’s loans, which can cover different parts of the balance sheet—from senior secured to a bit more subordinated or riskier on the yield curve. But it’s all fixed-income lending products.
Jeroen: There’s no equity, right?
Danny: No, there’s no equity.
Jeroen: And what kind of customers?
Danny: Yeah. So at Colesco—well, actually, maybe also a bit of background. The original long name is Colesco Capital Collective, so three C’s. Colesco is actually Latin for “growing together.” And that’s also the thought behind it: we want to grow business, we want to grow the economy, we want to grow sustainability and good behavior with companies. Capital is obviously how we do it. And the collective part is about the fact that we like to do things together, right? We’re not a cooperative, but we do like cooperation. So we do it together with the institutional investors, which is a client group. We do it together with the borrowers, which are usually businesses—could be private equity–owned businesses, could be family-founded and -owned businesses. And obviously with the team that works at Colesco. So those are the three main stakeholders for us in our business universe.
Jeroen: And tell me more about one of those three—the borrowers. What are the typical characteristics of a borrower in terms of size, sector, geography, or any other factor?
Danny: Yeah. So for Colesco, we have a European mandate with the investors. That means we can find businesses all over Europe.
Jeroen: And it’s not just the European Union, right? It’s Europe.
Danny: Yeah. So including the UK—we don’t go to Eastern Europe, but it does include the UK, also post-Brexit. So it’s European businesses, what we call mid-market, which we define as anywhere between 10 million EBITDA and 100 million EBITDA. That could be smaller businesses, but also already a bit larger businesses. And usually we get on board when they are doing something strategic, right? Something exciting—when they’re bought by private equity, or when they’re buying a competitor, or when they’re doing a really big capital expenditure expansion plan. Those are the moments when we try to help and be there for the borrowers.
And the nice thing about this mid-market is, also when we’re talking about sustainability, for instance, these are businesses that are managed quite directly, right? The people who are actually at the table, at the desk, they’re the ones making decisions, they’re the ones doing the work. If they say, “We have an ambition to reduce our carbon footprint” or whatever it is, they will have to do it. If you’re a big listed company, you probably have a sustainability department with specialists who know how to talk, what to write down. But here you’re talking with the management that actually runs the business. And that makes it fun and exciting and quite direct—because if they are convinced, “We’re going to do this,” it’s probably going to happen.
So those are the elements that are really, really nice about this particular segment in the mid-market: you meet entrepreneurs, you meet investors, and they’re all looking to grow something, to make something bigger out of what they have.
Jeroen: And you talk about 10 to 100 million EBITDA. So in terms of lending, how big are the loans?
Danny: Yeah, so usually we start looking at a financing package of 50 million and upwards.
Jeroen: And typically alone, or in club lending, or in syndicated loans?
Danny: We typically try to be, let’s say, the leading party in whatever financing is going on. That usually starts by doing it as a sole lender. But we’re also open to working together with others if the client wants that, right? Very often we also work with banks that join the financing. So we’re kind of open, but I think the big thing for us is to have control of the capital structure—at least the debt structure. Just in case things don’t go according to plan, at least we are the ones that control our own destiny, so to speak.
Voice-over: This is Leaders in Finance with Jeroen Broekema.
Jeroen: I should probably ask one of your customers, but you probably know the answer yourself as well: why do they choose to work with Colesco? Why do they get a loan from you versus from, for example, a bank?
Danny: There are a few ways of answering that. Banks provide a different product than funds, right? What we see is that banks often need to club together to reach a certain amount, whereas we can usually do that amount ourselves. That means there’s a one-stop shop for negotiating, explaining, all of that. Usually, when they are looking for more speed, it’s faster to go to a fund solution than to a bank solution. Another thing clients often mention, and really appreciate, is not just speed and flexibility, but also confidentiality. The fewer people you involve in the process, the better.
Jeroen: Especially in M&A transactions.
Danny: Exactly, yeah. Obviously, there are lots of parties involved, and sometimes just being a day early, a week early, or keeping something secret when you make a bid can make the difference between winning and losing it. So confidentiality is highly valued. There are situations where we get a call ahead of the markets, and people say, look, we’re looking at this—could you take a look? What do you think? Do you want to work on this with us? Then we can keep it in a closed circle and get it done.
And for us, it’s very important to be quick. If you think, this is not for us, or this is not going to work, you need to say that at the start, not at the last minute. That’s part of your reputation: giving a quick answer. And if you give an answer, that’s the answer you should follow through on. Nobody likes a time-waster. You’re part of their success, and you’re there to support them. That’s clearly what we need to do. That’s where the value-add is.
Jeroen: Makes sense. And for this speed and flexibility—as well as confidentiality, which in some cases is even more important—do they pay a higher interest rate? Or is it hard to say whether you’re cheaper or more expensive than a mainstream bank?
Danny: The standard answer is: way more expensive than the bank, right? That also has to do with the investors, because investors are looking for a yield pickup. They’re clearly looking for a premium above market rates. Private credit is an instrument that provides that to them.
Jeroen: So does it also mean that maybe some customers come to you because they find it very hard to get a loan from a bank? Because I assume, from a risk perspective, that’s not the kind of business you necessarily want to attract.
Danny: No, yeah, you’re definitely right. The credit underwriting part of the job is one of the most important bits, because it’s very easy to provide a loan. It’s more difficult to get it back, right? Those are some of the basic principles. So yes, we need to be very diligent and also quite controlled in what we say yes or no to, because saying yes today makes or breaks your success tomorrow. That’s something we take very, very seriously. But at the same time, we do see that customers are willing to pay a bit of a premium to get that service.
Jeroen: Right. And in terms of risk management, I’m very curious: who signs off on a loan?
Danny: The management and decision-making is done within the fund structure, the classical fund structure. So it is all done, let’s say, independently.
Jeroen: What does that mean exactly? Just give me a concrete example. Independently — does it mean there’s a committee, or is it just the co-founder alone?
Danny: No, no, no. People usually ask this to see whether the bank takes the decisions or not. No, there is a committee within Colesco, which has representatives from various angles. So we have, let’s say, the business; we have a risk-conscious person in there. But we also have our responsible investment officer, who also has full voting rights. And then, how is the decision-making done? It’s on a unanimous basis. We all need to agree that this is a good deal, or we don’t do it. That means the risk officer could say no to a transaction, but the responsible investment officer could also say, “I don’t like this, we’re not doing it.” We think it’s a good basis to decide unanimously, because we need to preserve capital and be really convinced that, okay, this is a good loan to make. And this way of decision-making works for that.
Jeroen: So how many people in total make the decision on whether you do it or not?
Danny: We need to have a minimum of four to do that. Four people, right.
Jeroen: And you said speed is really important. So apparently you’re quick in your decision-making. Does that mean you can decide within 48 hours, or is it two weeks? What kind of time frame should I be thinking about?
Danny: No, these transactions usually happen under a bit of time pressure. Depending on the starting position, from the start to a credit decision to actually signing a document with a customer and taking a commitment — we can do that in a period of three weeks.
Jeroen: I guess that’s really fast, especially when it’s tens of millions, right?
Danny: That is really fast. And because you still very much need to do your homework—do your diligence, do all the research—which is partly done because we get the buyers also providing us with information on the diligence they’re doing. But the other bit we’re also doing is our own investigation: having feelers and conversations with people from the industry to make sure, OK, do we understand this credit from back to front? So actually, there’s a lot of work going into that. Three weeks can be done. Sometimes it takes longer, because the processes that are set take longer than that. But you need to do your work before you can take a decision.
Jeroen: So I don’t know if you’re allowed, or able and willing, to tell us—but how much have you done so far?
Danny: At the beginning of the year, we published that we’ve got a bit over 800 million, let’s say, on the platform. And we’ve already lent out a couple hundred million at where we are today. More to come before the end of the year, I dare to say, yeah.
Jeroen: Right. Do you feel a lot of pressure to actually get all the capital to work? Because ultimately, you don’t want to lend to stuff—like you mentioned earlier, lending is easier than getting it back. But at the same time, you don’t want to waste capital you have in your pocket, right?
Danny: No, certainly, deployment is important for investors. But we do think that sometimes you have to do your diligence, but you also have to be disciplined. Sometimes you have to sit on your hands because you think, well, it’s not a good asset. That could mean it’s not a good credit quality, or the sustainability story doesn’t add up to us, or we don’t understand it, or we don’t agree with it. Or it could also be that it doesn’t have the right risk–return profile. Great company, great story, but not enough to justify putting the investors’ capital to work at these rates.
Jeroen: And if it happens—I don’t know if it already happened, but if it would happen—that it doesn’t all work out, do you have your own financial restructuring or recovery department, or a couple of people who work on that? Or is that in cooperation with another firm, or with Rabobank? How does that work in practice?
Danny: No, so if you look at the team—relatively small team—but we have very seasoned people on board. We’ve all gone through a couple of cycles: when things go well, but also when things go bust or not so well. So it works that when you originate a loan, you also manage the loan—even when it’s more difficult. That’s all done in-house. And then we have people with backgrounds in financial restructuring, people with backgrounds at law firms. So I think, in the mix, we have all the capabilities on board to actually manage that in a proper way.
Jeroen: Did you already lose money?
Danny: No, we didn’t lose any money.
Jeroen: No, you’re not going to—you’re smiling, so that’s good.
Danny: No, but it could happen, right? It’s a lending business. You can’t tell in advance, and there will be instances where it’s going to become a bit more exciting. But so far, I think we made the right calls.
Jeroen: Happy with the progress?
Danny: Yes. We’re never really happy because we’re always more ambitious. But when you stand still and think, okay, are we happy with where we are right now? I think so. Are we happy with where we need to go tomorrow? We have more ambition.
Jeroen: No, I get it. So you already mentioned the team, which you say is relatively small. How many people work at Colesco?
Danny: Yeah, we’re now 17 at the moment.
Jeroen: So I understand you can be fast, because within a bank there are often hundreds of people working on this.
Danny: There are a lot of people working in a bank because they need to follow protocol and systems—that’s how it’s set up. And that’s also how they manage the big balance sheet with all the complexities there. I think one of the things we try to do is take the things that work really well within the bank and design them a bit differently at Colesco. Very much the credit, and credit underwriting, is one of our core processes and core capabilities. We’ve invested heavily in that. A lot of the other things we’ve outsourced. So we actually have the flexibility and also the quality to handle a loan book, to report on it, to administer it—all of it done to the highest professional standards. But the team can focus on what is important: the clients and the lending. The team doesn’t have to spend too much time on all the other processes that normally also need to be done.
Jeroen: You mentioned earlier that you have someone in your team who specifically focuses on: do we actually want to do this? Is it in our sector focus? Or does it fit our—my words—but our moral standards, et cetera. Does it often happen that you want to do something from a business perspective, but ultimately don’t because of the reasons I mentioned, or for moral decisions?
Danny: Well, more…
Jeroen: “Moral” is maybe a strong term. What term would you use?
Danny: No, but if you look at how we process and assess transactions, I think half fall away because the credit quality isn’t what we want. And then of what’s left, there’s another good part where we say, well, the sustainability story doesn’t add up for us. Normally, if you work at a lender, it’s all about the credit quality, the return, and then: okay, it doesn’t meet the sustainability standards. For us, it starts the other way around. We start with: what is the story here? Does this company contribute to society? What are they doing to improve what they’re doing? That’s about 50% of the analysis we do, alongside the credit analysis. Because we run a no-compromise model: the credit quality needs to be good, the sustainability quality needs to be good, and the return needs to be good. All three need to be green. Otherwise, we don’t proceed.
Jeroen: It’s quite a high standard. So a lot of stuff—you probably end up not doing many things if you have this no-compromise model, as you mentioned.
Danny: You’re quite strict in the acceptance criteria. But yeah, there’s a big market, and we don’t need to do everything, right? We need to find what our investors want us to find for them. And as long as they’re happy with us, we’re doing a good job.
Jeroen: Before we go to the other side—the people that actually give you the assets to do all of this—just a couple more questions on the borrower side. I’m really curious: how do you acquire new customers? What are the ways you find them, or how do they find you?
Danny: I think most of what we do comes from, let’s say, network connections that you have. You know, when people start—like I mentioned—when people start doing something exciting, they think, okay, now it’s time to look at whether we can actually finance what we’re intending to do. And then you get that phone call from a partner, the private equity firm, or from a management team. Sometimes you get it from their lawyer or from their accountants. So yeah, it’s actually all coming from personal connections, not so much from marketing or other ways.
Jeroen: So you need to spend a lot of time on networking, getting to know the right people, right?
Danny: That, or you should have been doing that for the last 20 years.
Jeroen: That helps.
Danny: I’ve got the network already. You’ve got the network already. And obviously, yeah, what we do is our reputation. So we also need to keep that at a high standard and deliver on what we promise. As long as you keep doing that, your network keeps growing and people keep remembering you, right?
Jeroen: And I guess once you’ve done one M&A trajectory and they wanted to acquire something new, they will probably go to you again first.
Danny: No, exactly. So people look for, if you deliver, then obviously a solid, trustworthy partner. And that’s what we’re trying to be. And we probably don’t service the whole market. We need the relationships — we appreciate that, and they appreciate us. And then you’ve got a solid partnership.
Jeroen: Do you have a bit of a view for me on where your exposure is, in which countries and maybe which sectors most? Is it mostly in energy transition, or in food, or in inclusive society? I mean, these are the things that you particularly focus on.
Danny: Yeah, indeed. So these are the three focus areas. Sustainable food, which is around how can we feed the growing population with only one planet. Energy transition, of course. And I think there’s also very much a move into — everybody’s now saying we need to invest in defense, but I think probably one of the main drivers of our liberty and being able to defend ourselves is actually energy security or energy independence. So this whole topic around energy transition is also quite important from that perspective. And inclusive society is very much around education, healthcare, things that are necessary services for the broader population. And what we see now is that there are transactions in all these sectors, where I must say that the energy transition is the one that’s been most active, let’s say, this year for us.
Jeroen: And geography-wise?
Danny: Geography-wise, we have a European mandate, but it’s fair to say that all the assets we’ve done so far are Dutch assets.
Jeroen: Are Dutch?
Danny: Yeah.
Jeroen: Okay. So you still need to go further to other countries, or is it that one of your main funders is actually saying you have to do it in the Netherlands?
Danny: No, I think you can draw a parallel. If a direct lender has its head office in Paris, most likely a large part of the portfolio will be French. If the lender has a head office in the UK, probably in London, then it’s likely going to be a lot of UK assets. We obviously come from the Dutch Benelux market, so that’s where our network is strongest, and many opportunities will come from there. One of the partners started just before summer, and we’re now actually beginning European coverage. The pipeline for that is growing, but until 2024–25 we’ll mainly be active in the Dutch market.
Voice-over: This is the Leaders in Finance podcast with Jeroen Broekema.
Jeroen: I’m curious—when you start working with a new customer, are you allowed to tap into all the knowledge that Rabobank has on that customer? Because often that must be the case, right? You’re in sectors where they’re also very active, especially food.
Danny: I think there are a few questions in that question. The main point is that there are information barriers. We cannot access information the bank has about a certain party, and the bank cannot ask us for information about the relations we have with a party. That said, if the client asks us to team up with Rabobank, then that would be possible. The third point is that Rabobank is also a knowledge bank. They have large teams of people who follow, study, and research the food and agri value chains, as well as energy transition and sustainability. There’s a huge knowledge network within the Rabobank group, and that is accessible to us. So, we wouldn’t have access to information on particular companies, but if we were asking, “What’s going on in this market?” then there’s probably someone who can help us understand it.
Jeroen: And that’s all on the content side, which you’ve explained very clearly. But, for example, relying on the KYC they may have already done is not allowed. You need to do it yourself again.
Danny: Yes, and that also has to do with your fiduciary duty towards investors. They want the KYC process to be in control and carried out by the fund. So that’s all separated and set up to the required standards.
Jeroen: From a regulatory perspective, could you tell me a bit more about how this is all regulated?
Danny: Yes, funds are regulated. We have an external AFM that helps us manage the funds. We also have an external administrator, as I mentioned, who administers the loan book for us and also does the fund administration. So we’re very much front-office and client-focused. Regulation-wise, it’s under the AFM or Luxembourg CSSF, but it’s not the same as bank regulation that we’d have to comply with.
Jeroen: Which maybe also helps you to be faster?
Danny: Well, yes and no. The benefit we have is that we are small and agile. We can be the speedboat—we’re not the big ship that takes a long time to turn. So it might not be a fair comparison to say we’re more agile, but that’s also because we’re newer and we designed it differently from the start. I like to say we’re like a focused restaurant: we only do one product, which is lending, but we do it really, really well. That also means we’re small, and while we need to run the processes, we can actually make sure they run smoothly and quickly, one after another.
Jeroen: Great. I love the focused restaurant. You’re not serving pizza, French fries and all kinds of other food. So I already mentioned earlier, I also wanted to talk with you about the other side—the people and the organizations that supply the capital. Could you tell me more? I saw in the Dutch Financial Daily a huge deal with APG. Is that the main funder of all you do? Are there many funders?
Danny: As I mentioned, we’re quite ambitious. So we’re, let’s say, continuously in fundraising mode. We started in a very beneficial place, also with the shell that we have. Rabobank is a big investor, APG is a big investor. There are other investors, but unless they agree that their names be shared, we don’t talk about that. But yes, we’re continuously looking to grow the pool of professional investors we have to fuel the strategy we want to put out.
Jeroen: Is it only institutional investors, or can it be family offices as well, and those kinds of funders?
Danny: Yeah, so we’re not excluding family offices, but right now we’re focusing on the big institutional clients, mainly because from a regulatory perspective, that makes things a lot simpler.
Jeroen: How do you look at 800 million? Because on the one hand it’s a lot of money, but in institutional country, it’s not that much at all. Do you think this is just getting started and you want to do tens of billions, or is this already very large for a startup?
Danny: It’s definitely very large for a startup, because I think at the moment we’re the biggest—or one of the biggest—funds in Europe with a strategy focused on the sustainability edge. So we’re the biggest in that, but the ambition is to grow further. And I know for many others it’s all about scale. I don’t know if we’ll reach tens of billions, but we do think this strategy deserves more capital than we have right now. So we keep pushing, we keep trying to get people to support Colesco, so we can finance more businesses.
Jeroen: And not having the capital on your balance sheet means you need to serve two kings or queens all the time. What’s harder at the moment? Is it harder to find all the funding because you’re continuously raising funds? Or is it harder to actually deploy to the right, I mean the good companies?
Danny: I think both sides take quite a lot of work at the moment, right? Because yeah, you can make a wrong decision when you’re providing a loan, and then you create problems two years down the line. So that remains a key focus area. But the fundraising part—that’s also a bit of the entrepreneurial side of Colesco. We came into this business knowing everything about credit, but the fundraising part was new to us. Hence the learning curve. And as you go along, you learn. It’s quite a challenge because we’re not a first-time fund, but we’re not a first-time team either. We have very experienced people, and it’s set up to blue-chip standards, also thanks to the parent company. That’s how we try to convince people. But at first glance, they might say, “Well, we don’t do first-timers.” And you have to overcome that hurdle. Once we’re in the room, they understand that we’re serious, that we’ve thought about everything, and that it’s set up the way it’s supposed to be.
Jeroen: Isn’t it much easier now? I mean, ultimately, if you have APG, one of the largest institutional funds or pension funds in the world — that’s somewhere, I don’t know, 600 billion or something — on board, that’s a huge stamp of approval, right? Across the globe.
Danny: Yeah. Once we put the press release out, the phone also started ringing instead of us just dialing out. People started approaching us. I know that’s obviously a huge stamp of approval. They were very diligent in the process we had to run, and you don’t get that stamp of approval easily. But yeah, that clearly changed the game for us as well.
Jeroen: You’re very strict — I mean, relatively strict, or maybe very strict depending on where you’re coming from — on what kind of borrowers you want to serve. Is that also the case on the funding side? Do you care where the money comes from? So, for example, if the state fund of China wants to invest in you, would you also take that money? Or any other example you can think of?
Danny: Well, when they…
Jeroen: Difficult one, right?
Danny: That’s a difficult one, right? Because if they stand on your doorstep with a check and they say, will you say no? We probably would say no. Our aim is to get the money from European institutional investors. That universe is already enough for us to take a bite out of, and also enough to fuel the strategy we want to pursue.
Jeroen: You have this great insight into all these companies you’ve seen over the past decades, and also now. What’s your take on the geopolitical situation? Very, very difficult and broad question, but you must have some idea of how the economy is doing, right? Because you see all these businesses — I mean, they’re a big part of the driver of the economy. Are they very concerned about what’s happening, for example, in the US, or the wars in Ukraine and Gaza, and the tensions around import tariffs, et cetera, et cetera? The list is very long.
Danny: At the moment, what you see is that people are also looking for a bit of stability, right? Doesn’t need to be much, but they do need a bit of stability before they take big decisions. And having said that, the last five years have been like a roller coaster for lots of businesses, right? COVID, inflation, Ukraine, tariffs. And I think if you look at where we are now compared to where we were five or seven years ago, these companies are a lot more robust, and they’ve actually diversified away from lots of exposures that they had. So I think in general, they should actually be in good shape to manage the challenges that come across. Obviously, we had, for instance, something in the credit committee in November, December. We said, well, they have a huge potential in the US market, and they have exposure there, and there are people there, and it was all great—up until, let’s say, Trump came along and said, well, we’re going to tariff the hell out of this, that, and the other supply chain element. Nobody saw that coming, right? So this happens, but then you look at the companies, they react to that, they can be innovative, they are problem solvers. And then six months down the line, yes, it was a problem in January, February, but by now, they’ve actually found a way to work with it. And also that resilience and that motivation to deal with whatever comes across is obviously also an inspiration for us, but it’s also part of the credit underwriting. If you finance a company, you also finance a team—do you think they are capable of handling these types of challenges?
Jeroen: Are you very close to the entrepreneurs once you’ve given, lent them the money? Are you very close to the management, or are they really hands-off as long as they repay you, including interest?
Danny: Well, I think we prefer to have a good relationship with the borrowers and with the management teams. They are the ones that know how the business is run, and they are the ones that, in the end, make sure that we get our repayments when the time’s there. So we like a close relationship, but you also need to know when you need to be close, because you don’t want to be a distraction to them either. So it’s always a bit of a balance or a way of building a relationship: what are the set times to be in contact, when you give each other a ring. We’re always open to having that close relationship, and sometimes it’s there from the start, sometimes it builds over time. But also when you go through a few, let’s say, exciting times—which could be good or bad—and you’re there for them, that clearly helps, and that’s how you build a relationship over time.
Jeroen: Before I’m going to wrap up by asking you a couple of semi-personal questions in this whole journey, I would love to zoom a little bit in on your relationship with Rabobank, because they are the main shareholder—the only shareholder? How is that relationship? I can imagine that, you know, on the one hand, it’s great. On the other hand, maybe it’s difficult. I don’t know. I’m just assuming some things here.
Danny: The relationship with Rabobank is actually very good. I think we talked about how this started, and obviously, yeah, they give you—despite the fact that it’s a big corporation, a big bank, and, you know, lots of things are regulated and stuck in processes—they do like entrepreneurial people, and they did give us the trust to do this, right? And obviously, there’s a trust-but-verify element to this, which at points in time was challenging for us. But at the same time, you know, as we just mentioned, if a big pension fund comes and does their diligence, they like the fact that the trust-and-verify bit was there. And we actually got our house in order for managing these amounts and their money. So, yeah, it’s a two-way street, the way this works.
Well, they’re an investor in the fund. And, as I said, they trusted us with the money. So we take decisions also on their behalf. And then there’s the fact that we can still use network knowledge, people, resources. So yes.
Jeroen: Are you ever competing with them on a particular customer?
Danny: Well, in the end, the customer decides what they want, right? Whether they want the bank solution or a fund solution. So is there competition? Yes, there’s competition. But it’s the customer that decides.
Jeroen: Quite a strange situation where, you know, the equity is held by the bank and maybe the funding also partly comes from the bank, but ultimately, they choose to go with you or they choose to go with the bank. It’s a different product, probably.
Danny: No, it’s a different product. And I think part of the rationale or the thinking at the bank was: is there demand for this by clients, by customers? Can we help customers in this way? And clearly, this is something that the bank doesn’t offer. So that was also the rationale. We want to stay in the market, be relevant, do things for our customers. So also setting up Colesco and having this opportunity to actually keep it, let’s say, within the family is better than losing it to an outsider, right?
Jeroen: I promised some semi-personal questions. So first of all, you’re living in the UK, if I’m not mistaken.
Danny: Yeah, I live in London.
Jeroen: Most of the loans are done here so far. The shareholder is here. How does that work? Does it work well?
Danny: Well, for one, this is partly a virtual world, right? We’re managing remote teams. Before I started Colesco, I was the global head, so we also had teams in New York and in Australia. And, yeah, you manage a business in an international way, and it doesn’t stop at the Dutch border with Belgium. In London, there’s still a big pool, still a big network of financial sponsors and private equity that do business all over Europe. So that’s the main reason why we also have people in the UK. We’re in the UK, we’re in Belgium, and we’re in the Netherlands. And that’s kind of the triangle on which we cover Europe.
Jeroen: I lived in London myself, and I think there’s a bit of a difference in working culture. Are you more on the British side, like 80 hours a week, or more in the Dutch 40-hour one?
Danny: Well, I try to be as efficient as possible. I don’t think we’re going to manage 36 hours. And sometimes you need to work more, or a lot more, but sometimes it’s necessary, and other times you might actually want to do something else. So we try to be sensible about it. But yeah, the culture is somewhat different.
Jeroen: Do you feel like a full entrepreneur? Because it sounds like you’re completely running your own business with your team. Or do you still feel like a banker?
Danny: I think if you look at the people that work at Colesco, some of them came from Rabobank. But I think we’ve always felt the responsibility to run a business as if it’s your own. There shouldn’t be a difference when you make decisions, whether you do it for your own wallet or for somebody else’s. You need to make sensible decisions. So I think that sense of ownership has always been there. The entrepreneurial side here is that we took the solid gold brand off the door, and now we need to make it on our own as well. That’s the challenge, but it also feeds the ambition and runs the engine, right?
Jeroen: I’m not sure I got an answer. Is it the bankerpreneur or something? Or a combination of the two? But anyway, if someone wants to work for you, what would be a reason why they should, and what would be a reason why they shouldn’t?
Danny: What would be a reason why they should, and what would be a reason why they shouldn’t? Well, we’re entrepreneurial people. The thing we want to give to people on board is freedom to develop, responsibility, and the chance to work on exciting transactions. So there are lots of reasons to want to work at Colesco. But you also need to be prepared to put in the hours, and sometimes handle a bit of chaos, because we’re always doing new things and we’re not very protocolized. So yeah, we’re looking for entrepreneurial people. And if that’s what gets you going, then we could be a good employer for you.
Jeroen: Great. Is there something you love to read or listen to? What kind of media do you take in, particularly for this job? Is there something you could share?
Danny: Yeah. So obviously there are podcasts out there, right? Also like this one, because if you learn about people, it motivates them. You also learn about what’s going on. There’s lots of Financial Times, of course. And other publications coming out. We actually follow our competitors quite well, right? You need to keep all the sensors open to get the information in. Sometimes there’s reading coming out, or certain people are in the news. On one side, it’s all about the economy and the big movements — the bigger trends. But on the other hand, it’s good to listen to your clients, because customers are actually close to the ground and in the market. So yeah, those are very important sources for making decisions. And you always have to be open to new things, right?
Jeroen: Last question from my side. I said I was going to record 30, maybe 40 minutes, and it’s already 54. Doesn’t matter—because it means I really, really enjoyed it. But before I start thanking you, Danny, is there something we should have discussed but didn’t? Something you feel really needs to be mentioned?
Danny: Well, I know you often ask guests about career advice for people just starting out. If I were to give some advice, it would be: you have to make it happen. Just keep at it. And if people say you’re wrong, maybe you’re not wrong—it just takes a bit more time to get there.
Jeroen: Is that the perseverance part you mentioned earlier?
Danny: Exactly, the perseverance part. You shouldn’t wait for someone to hand you an opportunity. It’s better to make your own sunshine instead of complaining about the rain.
Jeroen: That’s a great end for this podcast. There are so many things I’ll remember. I especially liked your comment that I should think outside the bank instead of outside the box—that really stuck with me. But there were many other great insights. It was truly a pleasure to speak with you, Danny Voeghoop, co-founder and Chief Executive and Investment Officer at Colesco. Thank you so much for taking the time. I have a small present for you after this recording as a token of my appreciation for coming to our studio today.
Danny: It was a pleasure. Thank you.
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