Fame and Fortune: Shaf Rasul

Entrepreneur from online Dragon's Den says property was his best investment and sees opportunity in social networking

Self-made millionaire Shaf Rasul is one of Scotland’s most successful entrepreneurs and the latest dragon in the online version of Dragons’ Den.
He has an extensive portfolio of businesses focusing on property and technology investments. His main company, E-Net Computers, which distributes blank DVDs, is one of the largest media storage distributors in Europe.
He ranks 1,152 in this year’s Sunday Times Rich List, and is estimated to be worth £48m.
Rasul, 38, lives in Alloa in Clackmannanshire with wife, Nabila, 33, and son Sohaib, 14, and daughter Sarah, 11.

How much money do you have in your wallet?
I asked my PA to take out £200 today. Generally, I have anything between £100 and £200 on me. I tend to use cards.
What credit cards do you use?
My business cards are with Royal Bank of Scotland, but my main personal card is an Egg card. I use a Virgin credit card to book flights because you get free insurance.

Are you a saver or a spender?
I regard investing in property as a form of saving, so probably a saver.

How has the credit crunch affected your property business?
My property portfolio is worth about £30m today, which is down by about a fifth. The worst affected are development lands in Edinburgh I acquired about a year ago. They are down by at least 20%. Income is also down on commercial and residential property, by about 2% this year, but this is still a manageable drop.
Thankfully, I have always paid quite substantial deposits on property so I haven’t breached any banking covenants. If I did breach them — by not having enough equity because of house-price falls, or if my rental income did not cover the cost of my loans by one-and-a-half times or so — the banks could renegotiate terms. I employ 80 people and haven’t had to let anyone go.

Have banks made it harder?
They’re coming out with some outrageous rates if you breach the covenants. A friend renegotiated at something like 8% above Bank rate recently. He was paying about 1.5% above Bank rate only a few months ago.

When would you buy again?
My advisers say a couple of months, but I would say more like a year before the property market really stabilises.
From the people I’ve spoken to, my gut feeling is that the recent stock-market rally won’t last. I’ve got no scientific evidence to back this feeling, though.

I think I’ll probably get back into commercial over residential property as valuations look cheaper. Your overall profits also tend to be higher because the tenant is responsible for insuring and maintaining the property rather than the landlord, as with a residential property, so your overall costs are lower.

So where do you see opportunities now?
I’ve made a number of internet related investments in the past few months, especially in start-up businesses taking advantage of the credit crunch. I invested a couple of hundred thousand in a website called Boffer. It buys stock from struggling firms and then sells them on through an internet auction.
I’ve also bought into Vuru, a social-networking site for entrepreneurs. It’s going live in the next few months.
One of the reasons I joined Dragons’ Den was to find new opportunities like this.

How much did you earn last year?
I paid myself £250,000 as CEO of my companies.
It’s difficult to know exactly what you’re worth until you start selling things. I was recently offered five times what I paid for my stake in Boffer, for example.

Have you ever been really hard up?
Not really, although when I was very young my dad was made redundant from his company near Huddersfield, so we moved to Scotland where he set up a newsagents. He always preferred working for himself and I suppose I’m the same. I trained as a lawyer but didn’t last a day in a law firm.

Do you own a property?
I have one property I live in. It’s a three-bedroom new-build, detached home on the outskirts of Alloa. It’s worth around £300,000, more or less what it was worth when I bought three years ago.
I did buy a 10-bedroom Georgian townhouse in Edinburgh about two years ago for £1m with a view to moving there, but my wife and I decided not to in the end. We don’t want our kids to think they’re well off or can have whatever they want.

Until (compiler) Philip Beresford stuck my name in The Sunday Times Rich List, almost nobody knew I was wealthy.

What was your first job?
I delivered papers for my dad’s newsagents when I was about 10, but I can’t remember what I was paid.

What is the most lucrative work you have ever done? Did you use the fee for anything special
I bought a trademark, Datasafe, for £50,000 just after the dotcom crash. Since then, it has generated about £3m. The logo assures investors about security and it’s licensed to many companies (such as Dell).
I re-invest most of the cash I make in my businesses, although I treat myself with an Aston Martin every few years for anything between £100,000 and £140,000. The last one I bought was a green DB9.

Are you better off than your parents?
Yes. My dad ran a number of newsagents, but he’s now retired. My mother helped out.

Do you invest in shares?
I do, but I tend to get these wrong. When Royal Bank of Scotland shares went down to 48p at the start of the year I bought 220,000 thinking they couldn’t possibly go any lower. About three days later, they went down to 15p. The worse of it is I sold the bulk of the shares when they went back up to 24p, but they’re now back up to where they were when I first bought them.

What’s better — property or pension?
I would say a combination of the two. I have a self-invested personal pension which is looked after by my financial director. One of its main investments is in commercial property.
Property, in the long term, is a rock-solid investment, and one of the most tax-efficient ways of investing is through a pension — it’s the best of both worlds.
I’m meeting with my financial director to discuss what we can do to minimise the effects of the budget changes, including the withdrawal of higher-rate tax relief on pension contributions and the new 50% income tax.

What’s been your best investment in life?
About 18 months ago, at the height of the property boom, I sold a property in central Edinburgh for £5.5m just a few hours after paying £3.3m for it.
’d secured the deal with a deposit about six months earlier, but just after paying for it in full, someone made me the higher offer — it was within a matter of minutes. Recently, the same property was offered to me for £1.2m.

What about worst?
I invested £250,000 in an Edinburgh property fund which focused on Georgian residential property. At the height of the market, my investment rose to £500,000.
When the credit crunch loomed, however, I wanted to sell but the fund manager talked me out it. A few weeks later, the fund went into administration so I lost the lot.

What’s the most extravagant thing you have ever bought?
The Aston Martin. I’ve had my current one about 18 months.

What is your money weakness?
Not taking care of details. If I didn’t have a financial director, I suspect everything would be in an absolute mess.

What aspect of the tax system would you change?
I’m very concerned about higher-rate tax. A couple of people I know, whose businesses are pretty transferrable to another country, have said they will move away from Britain because of it. I’m staying put, though.

What is your financial priority?
Trying to ensure I don’t breach any banking covenants on the property investments. I’m paying an average of about 1.8% above base, which is pretty good.

What is the most important lesson you have learnt about money?
If bad things don’t happen, you don’t appreciate the good things that come along afterwards.