Growth in travel and cross-border trade has made foreign exchange big business. One company to see the benefit is RationalFX, a commercial foreign exchange company founded by Indian-born entrepreneur Rajesh Agrawal. Starting from a small office in Brighton in 2005 with business partner Paresh Davdra, Mr Agrawal provided foreign exchange and international payment services to individuals. The company has gone on to transfer more than $5bn, becoming the first UK forex broker to offer an online payment system and along the way changing its focus to corporate business and moving to a City of London base. In 2012, Mr Agrawal appeared in the Sunday Times Rich List with a £90m fortune.
Born: India, 1977
Education: St Paul Higher Secondary School, Indore. A BA in business and an MA in business administration from Indore’s Prestige Institute of Management and Research.
Career: Worked for web design company in Chandigarh from 1999 for Rs5,000 (£50) a month. Came to London in 2001 to join a foreign exchange company. Co-founded RationalFX in 2005.
Lives: In northwest London, with his wife Charu and two young daughters.
Did you think you would get to where you are?
I always knew I would do well in life but I just did not know when, where or what. At university I was an extravert and loved drama and debating. I sold a motorbike to pay for a one-way ticket to London in 2001. I had never been outside India before and I did not know anyone in the UK. I was excited and confident. I knew I was on the way to greater things.
When you had made your first £1m did you want to slow down?
I made my first £1m profit in the first year, 2006. It was not a big deal for me. I never thought we would slow down because I never set up the company with this aim. We just carried on, working long hours, but it was a nice feeling. If anything, it motivated us further, simply because we realised the vast potential of the market.
What is the secret of your success?
Provide a good service then everything else will follow, and look after your staff and customers. I have never chased success or money, but you reap rewards by doing the right thing and being passionate about what you do. There is no substitute for hard work. I still do about 12 hours a day.
What was your best preparation for business?
There was none, actually. I did not even have a business plan to be honest, but I did have enough knowledge from working in the industry for three years. I had a gut feeling that it would work. One British company that was quite big in Europe used to bring about €5m to the UK every month and convert that to sterling. When I approached them five years ago I was shocked to find that the banks were making 6 per cent — that’s €300,000 — on a simple conversion. I got those guys on board, and on this particular transaction we worked for a £1,000 fee. The reason is that our costs are low and we are not so greedy.
How long did it take you to identify a gap in the UK market?
Within a year of being in London, I realised the huge potential to improve the way people send money abroad. I had no savings when I quit my job at 27, so I asked a bank for a £10,000 start-up loan but they turned me down. Two days later I went back and said: “You are right, maybe I should not start my own business. I will stay in my job and buy a car.” They then gave me a personal loan of £20,000! This money was my buffer to live on for the next 18 months. Paresh and I moved from London to Brighton, where I found a small office for £350 a month. I also increased my credit card limit, which was a very expensive way to fund a new business.
Do you have time for personal financial planning?
Personal finance bores me. I leave it to my wife who is a corporate tax adviser. But she will always discuss major transactions with me.
What is your basic business philosophy?
Try to recruit people who are smarter than you and give them enough space to flourish and do their own thing. Everyone in your team needs to understand and share your vision, so communication is extremely important in the company.
What was the most challenging period of your career?
For the first three years we focused heavily on private clients, many of whom transferred money to Spain, France or Dubai to buy property. In 2008 the overseas property market took a nosedive and we had only just started to target business clients. Within a few months the private client business dropped significantly, so the challenge was to secure more business customers. It took 18 months to achieve this, with a bigger sales team and more aggressive marketing.
Do you want to carry on till you drop?
I don’t see myself retiring. Maybe I will be involved in a new venture, whether it would be political or philanthropic I can’t say. I would do anything that can help bring about positive change in society.
Have you made any pension provision?
I have made minimal provision, only very recently because I’m in my 30s, and a pension is the last thing on my mind. I was strongly advised to start a plan for tax advantages.
I look at my parents in India, and their pensions are so small. My mother was a teacher, then headmistress, and my father was a government worker, building dams. In India it is usually down to the younger generation to help out.
Many people who work away from their home countries send money back to help their families. They use a bank or traditional money transfer companies, but get stung by a poor exchange rate and high fees. When I used to send money back home, coming from a forex background it was shocking to see how much they charged. Sending money to sub-Saharan Africa, you could lose up to 20 per cent.
Do you believe in giving something back to the community?
Xendpay is the world’s first money transfer service that is totally free. It is up to people if they want to leave a fee. Each year, migrant workers globally transfer $500bn, of which 80 per cent goes to developing countries. When people transfer money using banks or traditional companies, the global average cost is 10 per cent, which means $50bn is being gobbled up in poor exchange rates and fees.
In the four weeks since Xendpay’s launch, 90 per cent of customers are actually paying. Typically they pay 0.2 per cent, which is enough to keep the service going. Thanks to the great technology and relationships that we have built, our costs to send money abroad are extremely low.
I am also a patron of the Prince’s Trust, and the Cherie Blair Foundation for Women that gives help to women micro-entrepreneurs in Asia, Africa and the Far East.
Do you allow yourself the odd indulgence?
Not really. My needs are extremely basic. I spent my childhood mainly in one room, where I slept with my brother and my father, while my mother and sister slept in the kitchen. We would roll up the mattresses during the day.
I do enjoy dining out and good food, not just Indian, but French, Lebanese and Chinese cuisine. I drive a Mercedes but it is nothing fancy. I will probably change it for something a bit more family oriented. For work I take the Tube or use taxis.
Picasso or Art Deco as an investment?
Most of our profit I put back into the business. Our growth comes only from the money that we have in the company, which Paresh and I still own. The more investments you have the more of a headache they are to manage. For me the commitment to the business and charities is enough.
Do you believe in leaving everything to one’s children?
No, because it is very important to give it to society. You don’t have to be old when you start to help charities. You can do it right now. I’ve got a strong philosophical view on this. As parents our job is to raise children and give them a good education and good values. Then it is up to them to build their own lives and be responsible citizens.
Get alerts on Personal Finance Advice & Comment when a new story is published