Having quit high-powered positions at PFPC , Joan Kehoe and five colleagues are setting up Quintillion, a hedge fund administrator with big ambitions, writes Una McCaffrey

Joan Kehoe doesn't do the high-powered, no-nonsense female executive look. There is no big hair or power suit, no high heels or gold jewellery and no fierce demeanour.

Instead, you get a soft sweater, a low-key bob and a smiling face that belies her 40 years, the last 22 of which have been spent in the world of high finance. The only thing that might mark her out in a line-up would be her energy and enthusiasm, which she would find hard to disguise if she tried.

Until January of this year, this jack-in-the-box zeal was used to build the business of PFPC in Dublin's IFSC.

Kehoe used to be managing director of the operation, which is one of the largest fund administrators in the Republic and the subsidiary of US financial giant PNC. She demonstrated some skill in this role, helping to grow funds under administration from $5 billion (€3.9 billion) to $70 billion in the six years she was involved in the business.

As a reward, PFPC put her in charge of part of its US business too, bringing a further $25 billion under her ambit. She was boss to no fewer than 850 people at a peak.

From the outside, it was all going perfectly, but internally Kehoe and some of her colleagues were getting itchy feet.

They saw an opportunity in hedge funds and wanted to expand PFPC's presence in the area. To an extent, the US parent agreed and a possible new venture was explored.

In the end, though, the plans did not proceed, leaving Kehoe feeling rather unfulfilled. But instead of putting up with it and continuing with her well-paid, well-positioned career, she decided to take the leap of her life: to leave.

"I felt that I couldn't go back," says Kehoe now, eight months on and a few weeks into her new venture, Quintillion, a hedge fund administrator. "In the back of my mind, I had always wanted to run my own business," she says.

For the record, Quintillion means a billion billion, with the name designed to reflect large-scale ambitions.

Happily, Kehoe hasn't had to make the jump on her own. After she decided on her own departure, no fewer than five of her colleagues (effectively the top management team in PFPC) said they were joining her.

"I wasn't looking for anybody else to make the decision with me," she says, noting that when she had resigned, all she had known was that "something would come up".

Within a matter of weeks, all six - Kehoe, Linda Gorman, Charles Gillanders, Garrett Breen, Paul Feely and Ken Sommerville - handed in their notice.

The next step was to come up with their plan, bearing in mind that all the individuals involved had different skills.

This involved a medicinal trip to O'Casey's pub on Dublin's Abbey Street, where Kehoe admits that there were "a lot of tears".

"We decided very quickly that we were going to have a go at setting up our own business," she says. "We also decided that it was not going to be a little tiny one."

The notion was thus born that the new company, a hedge fund operation, should be large and scalable, with office space to match.

First though, there was the money issue. Kehoe says the team considered going the private equity route and also looked at setting up on a small scale.

Neither held the appeal of attracting an institutional backer, however, so this was the road first pursued.

While the six colleagues were on "gardening leave" from PFPC, which allowed them to work out their notice period at home, the team drew up an investment memorandum with the help of CIB Partners and sent it off to four US institutions, two of which had already been in touch.

The memo was followed with two days of meetings in New York in early spring, with three out of four resulting in immediate requests for exclusivity.

Kehoe says the team needed "quite a bit of money" but was not prepared to hand over much of the prospective company in return. A quarter was about their limit, so a bit of Dragon's Den-style negotiation was needed before any dotted lines were crossed. The equity on offer was, after all, in a company which did not yet exist.

The 25 per cent limit was important because, says Kehoe, the six wanted to be independent. They did not want only to handle business from one source but rather to be able to pitch for it to the world at large.

And just as this control was of crucial importance, so was a tentative plan to offer equity to staff who would eventually join the company.

Bear Stearns, the global investment bank, emerged as a 25 per cent "seed" backer; Kehoe and her team would own 51 per cent of the business; and the remainder would be dedicated to employees when they were hired.

Job advertisements placed in this newspaper a couple of weeks ago were peppered with what Kehoe describes as "subliminal messages" hinting at this staff participation. Large numbers of applicants picked up on this in their responses.

Some 20 staff should be in place by the end of the year, with an additional 130 to be hired within two or three years.

If more people are required after that, Quintillion will look into regionalisation, a policy that worked well for PFPC when it established operations in Wexford.

Bear Stearns is not represented on the board of Quintillion but Kehoe says she and her colleagues will obviously "take advice" from the company.

Heads of terms reflecting this were agreed in March, by which stage Quintillion had already taken 1,393sq m (15,000sq ft) of offices in the IFSC and had sourced the high-level technology platform it would need to build the business.

By the end of last month, the company had won regulatory approval and the deal was formally signed, thus taking pressure off the six-figure overdraft the six executives were supporting.

The management team has signed up for a minimum of seven years, by which time perhaps Bear Stearns will have shown an interest in buying them out or another buyer will have stepped in to make them really rich.

Or the whole thing could have failed. Kehoe admits this is a possibility, but she clearly doesn't believe it will happen. Either way, the top team has youth on its side, with Kehoe the eldest among them. "You have to believe in it yourself," she says.

The business will open properly in September, with Kehoe holding meetings with potential clients at the moment. No new business is in place yet, however, and revenues are not expected until January.

Getting to this stage has cost about €3 million, most of which is likely to have come from Bear Stearns. The US company, which already has a bank in Dublin, must be as confident as Kehoe.

Industry figures suggest there is solid foundation for this faith in hedge funds, with IFSC companies already servicing more than $1,000 billion (€785 billion) in hedge fund assets, or more than one-third of the global market for this type of investment.

Kehoe describes the products as "anything that goes beyond plain vanilla". In other words, they are more complex investment structures that require more sophisticated servicing. This all delivers a higher margin to companies such as Quintillion, which performs roles such as calculating daily asset values.

The company will not be "the cheapest kid on the block", but will instead compete on quality. This same quality requirement will mean Dublin can always win against cheaper "offshoring" locations, Kehoe believes.

As for the Quintillion six, she says there have been "no falling outs at this stage", despite their having been holed up in the same cramped serviced office space for the past eight months or so.

One thing that may have kept them going (apart from collective visits to the zoo and cinema) is the realisation that they are, in a sense, trailblazers. Home-grown businesses have been set up in the IFSC before, but not on this scale - at least not by individuals.

"Now you're at a stage where Irish people can do it," says Kehoe, more than aware of her role in this little bit of business history.

Factfile

Name: Joan Kehoe.

Age: 40.

Position: Chief executive of Quintillion, a start-up IFSC company.

Background: Born in Wexford, she gave up on a languages degree in UCD after a year to join IBI in 1984. In 1990, she took a shareholder servicing job in Morgan Grenfell, which later became part of Deutsche Bank. Within three years, she was headhunted for PFPC, then an IFSC start-up. In 1999, at age 32, she became managing director.

Family: Married to Ciarán, a banker, with four children under 10.

Hobbies: Spends all her spare time with her children.

Why she is in the news: Quintillion is about to open for business.