Travelex: Lloyd Dorfman

The billionaire Travelex founder on the fine art of exploiting an opportunity

Facing me across the boardroom table of his modest yet stylish offices in London’s Kingsway, Lloyd Dorfman cuts an unassuming figure. It’s only when we delve into the remarkable rise of Travelex, the world famous foreign exchange brand he built from scratch, that I discover the steely determination that has steered the firm through impressive diversification, global expansion and an acquisition of a scale that would terrify the average business owner.

“Knocking down doors is a recurring theme,” Dorfman acknowledges. Doors are one thing, but in building a firm that has revenues of £650m, operations in 105 airports, and an enviable slice of global trade payments, he’s knocked a few walls through as well.

Leap of faith

Dorfman’s school friends at St Paul’s in London would read the newspaper backwards to get the football news first, but he’d be straight into the financial pages. “I always loved business, and when I started to think about my career, I realised I’d be disappointed if I spent my life having not even tried to start my own,” he says. After a “comfortable, middle class” upbringing, he spent three formative years in the City during the mid-1970s, a time at least as challenging for the Square Mile as the current liquidity calamity.

By 1976, the 24-year-old Dorfman had a new wife and baby to support, enough to influence most to postpone their empire building, never mind the dire economic circumstances that were engulfing the country. But for Dorfman, there was no better time to make the leap. “I decided if I was going to try it, this was the time. I can’t produce the 30-year business plan for you or show you how it was going to happen,” he says. “When you start a business from scratch, your first hope and desire is that you can at least earn a living. As it settles down and you find yourself generating revenue, you start to think about expanding, and building capital. First, it’s a leap of faith.”

To paraphrase Warren Buffett, in a climate of fear, Dorfman felt the time was ripe for greed; the Queen’s Silver Jubilee in 1977 was about to pack London with tourists. His first bureau de change kiosk, in Southampton Row in central London, was financed with a £25,000 loan from a family friend. At first, growth was slow and space was tight. If he needed the toilet, he had to shut the shop and run to the nearby Bonnington Hotel.

Terminal opportunity

The industry Travelex had entered was dominated by some of the world’s largest financial organisations. “I didn’t know we’d become what we did, but if you don’t start the journey, then you will never know where you’re going to end up,” he says. Dorfman could win business by providing a cheaper and more convenient service than his rivals, but this alone would not deliver the scale he hungered for.

While banks had the airport, travellers’ cheques, international payments, and their own branch businesses sewn up, these were all areas that Travelex would eventually enter. “There were various milestones along the way,” he says. “The first bureau de change in London; opportunities outside London; targeting the travelling public as opposed to tourists. Then we broke into ferries and sea ports.”

All significant steps, but the company’s first giant leap, and the genesis of Dorfman’s reputation as a great deal broker, involved breaking into the brand new Terminal 4 at Heathrow in 1985, giving the company its first airport presence. At this point, the pre-privatisation BAA only appointed clearing banks. “I had to fight to reverse two refusals just to be able to participate in the tenure,” Dorfman recalls. “Eventually, I was arguing with this lady at BAA, and the fairy godmother of aspiring business builders shone down to put her in the right frame of mind.”

Allowed into the tenure, the bid to be the first independent foreign exchange operator remained a huge long shot. “It wasn’t just another terminal at another airport, it was the new terminal at the busiest airport in the world.”

So why start so big? “I thought we’d never be a serious business if we didn’t break into airports, and this was the only opportunity available,” he replies. “I told BAA we’d do it better than if they had 85 sodding clearing banks in their ruddy terminal.”

It was a huge breakthrough. Today, Travelex has a presence in 105 airports and 40% of the world’s airline passengers go through terminals that it operates in. “No one comes even close to us in terms of the size of our business,” says Dorfman.

Through the wall

Travelex might be the world’s most recognised foreign exchange brand, but the talismanic exchange kiosks in fact only account for one fifth of the firm’s business. After geographical expansion of this core business, including the “crazy idea” of putting exchanges in domestic airport terminals in Australia (now the firm’s third largest market), Dorfman launched what became the company’s international payments business. What began as “a couple of guys sat around a desk” in 1993 was quickly scaled up through acquisitions of payments firms in the US, New Zealand and, last year, Ruesch International, the second largest firm in the industry for $440m.

Now the world’s largest non-bank provider of international payments, Dorfman is delighted that these diversifications not only gave scale to Travelex, but also balance. Thanks to the acquisition of Barclays’ foreign currency processing business, TransPay, in 1999, the company also provides foreign cash orders to the branch networks of high-street banks. “If you go into your local bank and order £500 worth of US dollars, chances are it comes from us,” Dorfman notes.

Yet Travelex’s land grab pedigree is best exemplified by the mammoth £440m acquisition of Thomas Cook’s Global & Financial Services business in 2001, distilling Dorfman’s titanic ambitions, never-say-die determination and sheer balls.

“They were triple our size, we were fierce competitors and again, I had to battle to be allowed into that auction as we’d been barred by the Thomas Cook management,” says Dorfman. The price tag made things a little hairy, too. “It was certainly huge,” he says. “We were seen as the young upstart and I was the personification of the enemy as far as they were concerned.”

Dorfman ploughed his way through this particular wall with the help of a huge loan from Barclays on a 12-month bridge, and an inability to take no for an answer.

On the morning the Thomas Cook employees came in to find out who their new owner was, Dorfman says they were “hoping and praying” it wasn’t going to be Travelex. Their worst nightmare came true.

As integrations go, it doesn’t get much trickier. “We had to try to win their hearts and minds,” says Dorfman. “It was an interesting challenge. On that first morning, I addressed 70 managers and emphasised this was the first time they’d been owned by someone whose core business was the same as theirs. I said: ‘If this is what we can be as two businesses beating up each other, what can we be as one business working together?’ I told it from the heart. I’d bet my business and my lifetime’s efforts to date on the success of this relationship. I said: ‘A problem for you is a problem for me. We won’t get it all right first time. For those of you who want to be a part of that, great, for those of you who don’t, sorry.'”

To call it a deal of a lifetime is an understatement. Within seven months, all the £440m had been repaid, while Travelex was one of the UK’s largest private companies and a truly global player with the scale to match.

Inspiring Trust

Today’s Travelex is a £30bn turnover company, an entrepreneurial firm that tussles with huge corporates – and wins. Yet Dorfman insists that the principles of sound enterprise practice still apply. “Was the Thomas Cook deal daunting? Yes. In the run up, we were surrounded by armies of professionals,” he says. “But in the end, and this applies as much to a £440m acquisition as starting your own business, it’s not just about persistence, it’s also about self belief. However daunting the task ahead, it’s only you who can dig down and think: ‘If I’m up for anything, I’m up for this.'”

Particularly interesting is Dorfman’s advice that “you can never control the timing of quality opportunities”. It’s a principle that’s at the core of all of Travelex’s growth milestones, and one that has served him well in one of his other high-profile capacities, as a patron and deputy chairman of The Prince’s Trust Development Board. “We’ve got a great brand, a great president and a proven track record over 30 years, covering 70,000 businesses,” he says.

As well as contributing time and money, Dorfman is now acting as ambassador for the trust’s Enterprise Fellowship group, which aims to encourage donations from entrepreneurs. The scheme is part of its strategy for filling a funding gap that has been created by the devolution of central government support.

“We can’t let the trust’s work suffer because the government is too stupid to realise that devolving funding was counter-productive,” he says. As far as Dorfman is concerned, it’s another nail in the coffin of the government’s record on enterprise. “You haven’t got to be the greatest political strategist or the greatest economist to think the trust is a good thing for the economy, and yet we’re banging our heads against a brick wall,” he complains.

The Prince’s Trust needs £1m a month – a tall order, but if Dorfman and his colleagues can persuade more entrepreneurs to get involved financially, it’s likely they’ll bring the kind of added value that other patrons can’t, by mentoring fledgling business owners. “These are people who’ve been there, done it and become successful,” says Dorfman. “They understand how hard it is and are interested in supporting the trust’s work helping disadvantaged young people to start their own businesses.

“It’s about producing accounts, dealing with banks and management issues as the businesses grow, and the idea that young ambitious people can draw on the advice and experience of others to hold their hands through that process is invaluable. It’s a fantastic thing for people to give their time and money to. I’m voting with my feet.”

Selling out

It would be tempting to assume that Dorfman can afford time out for The Prince’s Trust and his other commitments (seats on various boards and high-profile involvement with arts organisations, for example) due to diminishing responsibilities at Travelex. In 2005, he sold 57% of the firm to private equity giant Apax for over £1bn, helping to make him one of the richest people in the UK. His personal fortune currently stands at an estimated $1.3bn.

“I still had one big egg in one big basket and I just felt it was wise to take at least a slice of that egg out,” he says. “I’ve never been into dynasties.” Yet he retained a 28% stake in the business, and still likes to keep his hand in.

“If I was staying with the business, I wanted to be a partner in it,” he continues. “To have just 3% is not what gets me up in the morning. I’m still the second largest shareholder.”

Before the deal, Dorfman was chairman and chief executive. “I told them at the time that I hadn’t worked for anyone else since I was 23 and I’m not too sure how good an employee I’d make, so we let someone else be chief executive and left me as chairman, helping the guys build the business,” he explains.

So Dorfman now also has the time to pursue things outside the business he started in a kiosk, both for profit and not for profit. “I regard myself as someone who has the best of both worlds,” he says.

In his own words

On starting Travelex from a single kiosk

It was a one man and no dog story.

On the Lack of government support for the Prince’s Trust

The government is very quick to say that it wants to encourage entrepreneurship. Here we are doing it and the government has cut the funding. Well, that’s not very bright.

On Getting involved

I wouldn’t get too hung up on knowing what the script is for the next 25 years. The most important thing is to get involved. When you do this, things happen. You meet people, you come across opportunities and the dynamic tension of all that creates things.

On The economy

It’s going to be tough. What we’re seeing at the moment is unprecedented. But if business was easy and straightforward, everyone would do it. This climate sorts the men from the boys.  

On Advice for entrepreneurs

In this environment, batten down the hatches. Don’t do anything too far away from your core business and stick to what you know and who you know.

On mission statements

I always want to be the biggest or the fastest, so why pin it on the wall?

On Encouraging business owners to donate to the Prince’s Trust

There’s no such thing as a bad charity. They’re all wonderful things but you have to make choices and pick things that mean something to you.


(will not be published)