The independent stockbroker's new Icelandic owners have an extraordinary background in Russian brewing, writes Arthur Beesley, Senior Business Correspondent.

They kept it very quiet. Talk of the town this week is the sale of Merrion Capital to Landsbanki. But not a murmur leaked out before the Icelandic bank agreed to buy Dublin's newest stockbroker for €55.3 million.

The deal marks a triumph for Merrion founder John Conroy and the team that famously walked out of NCB Stockbrokers six years ago. It may yet herald the beginning of a wider Irish expansion by their adventurous buyer from the tiny volcanic island of ice and snow.

This is a bank whose daring owners defied adversity and danger to build an international empire of considerable scale in telecoms, pharmaceuticals, shipping, real estate and financial services - all from the remnants of a failed Pepsi franchise.

Its prime backers are Thor Bjorgolfsson (38), Iceland's first billionaire, and his father Bjorgolfur Gudmundsson, a resurgent giant of Icelandic business who survived disgrace and a suspended prison sentence over his part in Iceland's biggest business collapse to be accepted as chairman of its former central bank. Son and father recently bought out their friend and closest associate, Magnus Thorsteinsson, bringing their stake in Landsbanki to more than 45 per cent.

Possessed of an uncommon entrepreneurial zeal, all three dodged the murderous Russian Mafia in St Petersburg to create a beer company from scratch that Heineken bought for $350 million (€298.7 million). They used this fortune to buy into Landsbanki when it was fully privatised by the Icelandic state in 2002.

But that is not all. Thor's private equity fund, Novator, has telecoms interests in Bulgaria, the Czech Republic, Finland and Poland. He is also the single biggest shareholder in Actavis, now the world's fourth-biggest producer of generic drugs. This business was formed from the merger of an Icelandic research and development laboratory with a privatised drug plant in Bulgaria.

Crucial to its growth was the exploitation of the failure of big international pharma groups to take out copyright in Iceland.

With operations in 23 countries and a flotation on the cards, its most celebrated manoeuvre was chartering six Boeing 747s to fly a consignment of drugs to Germany at a minute past midnight on the date after a patent expired.

These bold men don't do timidity. "He's a fairly dynamic business type, confident and ambitious, a very smooth and dapper looking guy," says one person who has met Gudmundsson. In a booming Irish economy, with big profits the norm in financial services, his bank is unlikely to stop with the acquisition of Merrion Capital.

IIB Bank, Irish Nationwide or any of the other smaller institutions might yet come into its sights. There could be more too, given the Icelanders' prodigious appetite for expansion. Landsbanki is said to have spent a lot of time scoping out the Irish market before their engagement with Merrion. At a press conference this week, its joint chief executive, Sigurjon Arnason, said the Irish market was of strategic interest "due to its size, location and characteristics".

Conroy et al broke the clubby mould of Dublin's stockbroking establishment to create, in Merrion, a firm renowned for its independence. Landsbanki's owners are possessed of a similar kink, not to mention a well-honed survival instinct, one that brought them on the 20-year odyssey that helped establish Iceland as a centre of world commerce.

Just as Ireland was an economic laggard until the 1990s, Iceland was stuck in the slow lane until it joined the European Economic Area (EEA) in 1994. That gave it access to the EU's internal market, without surrendering fishing rights that full EU membership would have required. Business boomed as the economy liberalised with a series of privatisations, including Landsbanki's.

In the EEA, Iceland's economic growth was second only to Ireland from 1994-2004. With strong inward investment, and a massive expansion in outward investment, consumer demand is growing at a rate 11.8 per cent in the year to September. In a land with a population of 290,000, income per head is ahead of Japan, Sweden and Britain.

Among the beneficiaries of this growth are an elite cadre of young business people such as Thor Bjorgolfsson and his contemporary, Jon Asgeir Johannesson (37), whose Baugur group has an Irish presence through interests in the Oasis, Karen Millen and FCUK fashion chains.

These are the best-known entrepreneurs to transform Iceland's image, with daring raids from the land of midnight sun and hot springs, but they are not the only ones. Icelandair, for example, has an 11.5 per cent stake in EasyJet. The Bakkavor food group, with operations in France, Belgium, Spain and South Africa, bought the British salad and ready meals group Geest for £623.2 million last May.

Landsbanki's chief rival, Kaupthing - the biggest bank in Iceland - has made extensive forays in Sweden, Denmark, Luxembourg and London in deals totalling hundreds of millions of euro.

It's no accident that Landsbanki is also in Luxembourg with ownership of a private bank. In deals earlier this year, which prefaced the Merrion transaction, Landsbanki spent a total of €156 million buying the London stockbroker Teather & Greenwood and Kepler Equities - a firm with offices in each of the big financial centres on the continent.

Like Landsbanki, Teather & Greenwood has been trading since 1885. That Merrion Capital is just six years in business has not gone unnoticed in Dublin and the firm has grown to have a current net asset value of more than €17 million.

The dominant force behind its new owner is Thor Bjorgolfsson, Iceland's richest man. With a distinct penchant for risk, he has commerce in his genes. One great grandfather, master of a dozen businesses, survived two bankruptcies to become one of Iceland's biggest landowners. A grandfather was boss of Shell Iceland. Privilege is always a help to an entrepreneur setting forth in business. But the family's reputation in Reykjavik's tight-knit business community was all but ruined over his father's arrest and 28-day detention for his involvement the 1985 collapse of Hafskip, Iceland's second biggest shipping line. The case was heavily politicised, as Iceland's then finance minister was a former chairman of the firm and a shareholder.

Gudmundsson was eventually sentenced in 1991 to 12 months' imprisonment, suspended for two years, for his role in the affair, which resulted in the enforced rescue of the Fisheries Bank. Most of the 400 charges against him were dropped and he has described the remaining 20 charges as technicalities.

"Today in Iceland, this case is seen as a storm in a teacup," said a source close to him.

That may be, but the case was a signal setback. The irony is that it ultimately made the family. The father went on to take a job with the Pepsi franchise owner Pharmaco, whose fizzy drink unit was semi-bankrupt. He sold off the drink licence in the early 1990s and, with his son and Thorsteinsson, moved the bottling equipment to St Petersburg.

They would fall out with their business partners, but emerged from extensive litigation in the Russian and Icelandic courts with ownership of what was then the Baltic Bottling Plant.

With constant devaluations of the rouble and frequent power failures, business conditions were less than ideal. But they ultimately sold this business to Pepsi in 1995 and used the proceeds to form Bravo International, a firm that specialised in alcopops before it built a German-style brewery.

When the mafia ran amok in St Petersburg, in the drinks industry particularly, some brewers who fell foul of the underworld paid with their lives.

Bravo avoided such strife and its Botcharov brand, with the help of slick marketing, went from strength to strength. Beer boomed in the new Russia as drinkers shied away from vodka. From nothing, Bravo won 17 per cent of the St Petersburg market and 7 per cent ofthe Moscow market by 2002.

Enter Heineken, who stepped up with a cheque for $350 million after Deutsche Bank signed off Bravo's books. According to Heineken, one of the factors in this purchase was the absence of any corruption in Bravo. This deal catapulted Bjorgolfsson, Gudmundsson and Thorsteinsson into the big league.

With this money, they made their triumphant return to Iceland with an audacious bid for Landsbanki. Questions raised by some about the appropriateness of Bjorgolfsson taking the chairmanship did not stop the transaction. Their vehicle, Samson, now has investments in three other top ten companies in Iceland.

As small islands on Europe's periphery, the parallels between Iceland and Ireland are manifold. The Irish boom, heavily subsidised by multinational investment, created an entrepreneurial generation that spent its fortune on property at home and abroad.

Icelandic entrepreneurs looked elsewhere - and now they are here.