THE FRIDAY INTERVIEW/Gary McCarthy, managing director of Collins Stewart, Dublin:GARY McCARTHY exudes self-confidence as he outlines ambitious growth plans for the Dublin outpost of Collins Stewart, the London investment bank which is expanding its Irish office with a new corporate finance offering and a new funds business.

Better known in recent times for its takeover of bankrupt specialist lender International Securities Trading Corporation (ISTC), Collins Stewart has had a presence here since 2003 when McCarthy set up a stockbroking and research operation. Having established relationships with 25-30 institutions, the business is now moving into its next phase.

A man with a wide-angle view of the world, McCarthy sees plenty of scope to advance the profits made by the Dublin office but won't say how much it is already contributing to its parent's bottom line.

Although Dublin makes 15 per cent of profits on the research side, his aim with the enlarged operation is to provide 15 per cent of the bank's overall profit within three years. By way of guidance, Collins Stewart's operating profit last year was in the region of £64 million (€80.65 million).

"We want to be an investment bank in Dublin doing the same as Collins Stewart," he says. "We're not trying to replace people. What we're trying to do is add to the party. Ireland's stockbrokers have done a tremendous job marketing Irish companies around the world."

There's commerce in McCarthy's blood. His late father Niall owned Goodall's, the food company. He studied law at Trinity College Dublin, worked as a money broker in Tokyo, joined broking services firm ICAP in London and, later, worked with ABN-Amro in London and Dublin. From there he joined Collins Stewart after approaching the bank with a proposal to provide an entrée into the Irish market.

If the story of the core business centres on a low-profile but determined drive to establish a foothold in Dublin for the bank's research product, the €5 million firesale of ISTC to Collins Stewart brought the company to a new level of prominence last February.

Many well-known members of the millionaire community were burned in ISTC's collapse, but McCarthy believes the company has potential to return to form under its new ownership.

Although he is not primarily involved in ISTC, he says its prospects depend on the markets for bank capital. "I think it's early days," he says. "Clearly there is a huge demand for bank capital and they have a lot of relationships."

At present ISTC is examining how it can "marry up" demand for bank capital with clients. "That's really it at this point. There's a lot more to do," he says. "They have a role to play. People still need them . . . What that role is is what we're looking at but that's really all I can say at this point."

McCarthy has much more to say about the company's foray into corporate finance and the funds arena, both of which he sees as a natural extension of its activities.

The corporate finance unit is trading as Collins Stewart Frontier. Chaired by former ABN-Amro Rothschild director James Kenny, the other principals are former Merrion Capital financier Pat Landy and former Salomon Smith Barney financier Paul McGuinness. That brings as many as 40 to 50 corporate clients into the frame, McCarthy says.

For all the gloom pervading the markets, he takes heart from the €2.3 billion merger of food company Iaws with Swiss baker Hiestand. On the global stage, he sees InBev's $46 billion (€28.7 billion) bid for Anheuser-Busch and France Telecom's $41.3 billion approach for TeliaSonera in a similar light. "These are big, big deals. Interestingly they're looking for serious amounts of debt and funding and they're getting it.

"If they are a very good, very well-run company that generates serious amounts of cash, that's what people can back at the moment. Banks are comfortable with people with track records."

In that context, McCarthy says Irish businesspeople are looking at possible transactions in Britain and further afield as valuations take a hammering on equity markets. That's the opportunity for Collins Stuart Frontier. "I think you're going to see that. Private Irish companies will buy in the UK, buy things off the market. I think there are a lot of Irish corporates looking at UK opportunities."

Furthermore, the weakness of the dollar and sterling could present acquisition opportunities on small-cap markets in the US and Britain. "For people looking to do things in those markets with the benefits of strong currencies, now's the time." In Ireland, he sees deal potential in the tech industry. Other sectors on the domestic watchlist include healthcare, biotechnology, green energy, oil, gas and exploration.

He awaits regulatory approval for the new funds operation, but has already hired former Bank of Ireland Asset Management executive Ivan Fox to run the business.

The aim is to have at least €100 million of Irish and international money under management in just over two years. "It's effectively a long-only equity fund but we can protect capital in some way if we need to . . . It's scalable. You can do this on an international basis."

Clients of the bank's research product, Quest, wanted funds managed according to the same principles, he says. So what's the difference? What is he bringing to the table that clients can't get from other fund managers?

McCarthy says the research methodology aims to go past a company's accounts to examine its performance from the perspective of cashflow and capital discipline.

"If you go on to Quest and look at a universe of stock, maybe Irish stocks . . . implicit in that, 50 per cent of them are sell, 50 per cent are buy . . . This is an agnostic way of saying this is the opportunity set," he says. "You just can't get away with 'trust me, I'm a great guy' these days. They want to know your process."

The engine is revving.

ON THE RECORD

Name:Gary McCarthy

Job:Managing director of Collins Stewart, Dublin

Age:38

Family:Married with four children under the age of seven

Why he is in the news:Collins Stewart's Irish unit is branching out into corporate finance and funds

Something that might surprise:A committed capitalist, he sees the day when he might enter political life. He won't say which party but hints at social democratic tendencies, ie Fine Gael

Something that might not:He says Collins Stewart acted as "strategic opportunists" last February when acquiring International Securities Trading Corporation, the bankrupt specialist lender