Archive for March, 2006

Bernie & Max – Formula One’s Odd Couple

March 29, 2006


Give Bernie Ecclestone (right) due credit…..he knows how to eat his cake and keep it.

He has sold for an undisclosed sum the commercial rights of Formula One motor racing to private equity firm CVC Partners after months of negotiations but stays one as chief executive and a shareholder to further build the business.

Where that leaves Max Mosley,(left) the other half of Formula One's Odd Couple, remail unclear.

What is more certain is that at 75, and after more than 30 years Ecclestone is finally loosening the stranglehold on the business he created and which has given him and his wife Slavica wealth running into billions of pounds.

Not bad going for the Suffolk trawler skipper’s son  who left school at 15;  although he ultimately got a chemical engineering degree from Woolwich Polytechnic, even as a teenager he was competing in motorsports, both on motorcycles and eventually racing a 500cc Formula 3 Cooper on a regular basis until an accident ended his career in 1951.

He went into team management and eventually took over the whole of F1. A bond issue in 1999 and the sale of 75% of the business a year later netted Ecclestone £1.9 billion. That money was transferred to Jersey-based trusts controlled by  Slavica. But when German media giant Kirch, which had bought the 75% stake, went bust, its bankers took the shares. A court battle followed because they wanted thei money back and it has never been clear.

According to the Sunday Times, whatever happens, Ecclestone has some choice assets to enjoy, including a £75m yacht, a £12m jet, a £5m London home and his own hotel and chalet at Gstaad. BusinessF1 magazine valued him at £2.323 billion in late 2003.

Where the new deal leaves Max Mosley,  Ecclestone’s “other half” is equally unclear but you can be certain he will be in the winner’s enclosure.

From their resumes, you would not have predicted Bernie and Max as a match made in heaven.

Max, in his university days, was secretary of the prestigious Oxford Union and became a respected lawyer before venturing into Formula One. Like Bernie, Max also dabbled as a driver in Formula 2 and as a club racer. Max also came from a storied family in the British aristocracy: his father was  Sir Oswald Mosley the British Fascist leader of the 1930's mother was Diana Mitford, sister of Nancy Mitford, the writer.

The Odd Couple have been linked since the early 1980’s when they and the constructors formed a group called the Formula One Constructor's Association (FOCA) to fight a  common enemy: the Federation Internationale du Sport Automobile (FISA), the governing body of Formula One that was forerunner of what is now the Federation Internationale de l'Autombile (FIA).

The so-called FISA/FOCA War: was for control of  the commercial and promotional rights to Formula One racing. Eventually after some very public squabbling a deal was struck. 

Max went on to run the FIA where he is currently in his fourth term as president so his umbilical cord with Bernie remains unbroken for the foreseeable future.

Thanks for reading Big Business.

David Davis


The Quiet “Professor” is Macquarie’s Mastermind

March 28, 2006


The Bloomberg News Service carried a piece yesterday about Macquarie Bank and it is certainly worth reading. 

It doesn’t, however, tell you much about the man who has masterminded the bank’s rise from virtual obscurity to a global financial powerhouse and which recently made an audacious bid to take over the 300 year old London Stock Exchange.

So let me fill in some CV detail of Allan E Moss, who is 57 and has been Chief Executive of Macquarie since August 1993.

According to colleagues, he is quiet, balding and bespectacled –  something of a bumbling professor – tripping over phone wires, spilling cups of coffee and falling off desks.

"He's no Donald Trump," quips one senior executive. But what he lacks in social graces,  Moss more than makes up for in financial nous. With a small top team, it he has been the adrenaline that has driven Macquarie's global expansion.

Educated at the University of Sydney and later at Harvard Business School, his early work was with the Australian Industrial Development Corporation but the bureaucracy didn’t suit Moss and he returned to the world of academia.

Then, nearly 30 years ago, he joined the local fledgling operations of Hill Samuel, the UK merchant bank from which Macquarie has emerged.  He, in fact, led the team responsible for preparing the submission to the Australian Government for the formation of the bank.  After moving up the managerial ladder he became Chief Executive in 1993 – and from then on, there has been no stopping the bank’s march to the top. 

Hardly a day goes by when Macquarie is not making another deal, mainly the acquisition of public utilities, among them a string of airports from Brussels to Rome to Hainan Island, China;  roads and bridges across Australia, Europe, Asia and North America, including the Chicago Skyway, a 7.8 mile elevated highway and the Indiana Tollway. 

The failure to acquire LSE was a rare setback for Moss's global ambitions but nonetheless Macquarie is now Australia's only independent, full-service investment bank operating in 23 countries

Despite its growth in recent years, Macquarie has been able to retain an entrepreneurial, decentralised culture, according to analysts and rivals. Moss is credited with nurturing this, at the expense of his own profile. He and his wife, Irene, who until a year or so ago was commissioner at the ICAC, Australia's anti-corruption watchdog, lead singularly career-focused lives.

With a pay packet of $30 million over the past five years, he is now reputedly one of Australia’s richest men – he has a private stake in the Gold Coast Airport and quite a taste for waterfront property.

But he is generally less conspicuous when it comes to spending it. While his investment banking peers drive sports cars with personalised number plates, Moss drives a regulation-issue Mercedes-Benz. He is almost totally absent from Sydney's furious, money-driven social scene.

His wife, it appears, is his constant companion. He met fellow arts/law student Irene Chee over a photocopier and later they sat next to each other in class. Together they decided to tackle the American Ivy League institution, Harvard; he a master's of business administration, she a master's in tax law.

Three decades on, Allan and Irene Moss spend the first part of the day together, getting in an early morning walk around their waterfront home on Sydney's North Shore, bought in 1999 and which has never had a registered mortgage.

As one friend puts it: "He is ego-less. He doesn't see why he is important, he just sees the bank….he likes people to underestimate him."

Thanks for reading Big Business

David Davis

Peter de Savary in the Lions’ Den

March 26, 2006

de savary.jpg

First, a confession.  I am a life-long supporter of Millwall football club, the one that no one likes. So when Peter de Savary was appointed chairman I wondered why a person with his controversial business background who confesses to know nothing about soccer, should take on this onerous task of rescuing the Lions.

I had my suspicions when it was announced he has already sold and leased back the training ground; pessimists are saying he has eyes on the New Den, the club's modern ground which was built a just a few years ago.

Now, I know more of de Savary's plans..  This week he sent shareholders a 112 page document in connection with a £5m placing to put some much needed cash into the club. 

Not only does it disclose for the first time the full extent of de Savary’s financial failures of the past, it reveals a neat little option deal he has come up for himself.  Read what the Sunday Times Business News has to say.

To describe Peter de Savary as a colourful character is a serious breach of the Trade Description Act. He warrants 1,240,000 Google references… are just three I have picked at random to whet your appetite.

The Cigar Lover
Back on The Rich List
Big plans for Land’s End
Thanks for reading Big Business

David Davis

Aviva’s £7 billion bid bungler

March 26, 2006

 richard harvey.jpg

Whatever happens to Richard Harvey during the rest of his illustrious business career, he will always wear the tag of the man who bungled the £7 billion takeover bid for Prudential Insurance.

Harvey, group chief executive of Aviva, the world’s sixth largest insurance group, posted the bid for the Pru but somehow it got leaked, then Harvey let it be known that he wouldn’t sweeten the terms but this was corrected a short while later via a statement to the London Stock Exchange.

Then the Aviva board formally withdrew the offer.

Such a foul-up is most unusual for Mr Harvey who, at 55, is one of the most successful leaders in the global insurance business.

Born in Gloucester and educated at the University of Manchester where he achieved a degree in mathematics, he has come a long way in the past 14 years. In 1992 he was running the far-flung New Zealand outpost of Norwich Union, a medium sized mutally owned British insurance.

Three years later he was spotted by the board as a star for tomorrow and  appointed to the Norwich Union board, becoming group chief executive in 1998.  Mirroring the dramatic transformation of Norwich Union through a series of mergers, including Commercial Union, the ‘don’t make a drama out of a crisis’ company and more recently the motoring group  RAC, he found himself in the top job at Aviva.

In the lead up to the bid for the Pru, he surprised the City by announcing Aviva’s best-ever performance in general insurance – an operating surplus of £2.9bn, well ahead of the £2.65bn consensus forecast of analysts and 29 per cent higher than 2004.

Industry observers expect Harvey to dust himself down and then look at the Pru again at some time in the future.

Thanks for reading Big Business

David Davis

Capita Chairman Aldridge Resigns Over Labour Loan

March 23, 2006

Rod a.jpg
Ron Aldridge today became the first victim of the Labour loans scandal. 

He resigned after 22 years as executive chairman of Capita Group Plc, saying that the company’s “reputation is being questioned because of my personal decision to lend money to the Labour Party”.

Aldridge, 56, added “There have been suggestions that this loan (£1 million) has resulted in the group being awarded government contracts. This is entirely spurious.”

Capita, the U.K.’s biggest supplier of administrative services, in February reported a record annual profit after the London-based company renewed contracts and won new business, including orders from the Government.

The company manages payments for London’s congestion charge that drivers pay for using central streets. Capita, which also collects television license fees for the state-owned British Broadcasting Corp. and works with companies such as Alliance & Leicester Plc, has won four contracts worth £360 million pounds this year, including one with the Department of Trade and Industry and a 10-year human resources project with the BBC.

Some newspapers have reported that in recent years  Capita has gained Government contracts worth more than £2.5 billion.

Aldridge, who will become non-executive chairman until the end of July, has led Capita since its formation in 1984 within the Chartered Institute of Public Finance & Accountancy (CIPFA). In 1987, he headed the management buyout of the business from CIPFA and Capita became a public company listed on the London Stock Exchange in April 1989.

Prior to Capita, Rod worked in local government for ten years at East Sussex County Council, West Sussex County Council, Brighton Borough Council and Crawley District Council. In 1974, he joined CIPFA where he was the Under Secretary with special responsibility for technical services.

He was awarded an OBE in the 1994 New Year’s Honours List and was given the Freedom of the City of London in March 1996. He is a Trustee of the Prince’s Trust and a Board member of The Prince’s Trust Trading Company.

Thanks for reading Big Business

David Davis

Sir David Arculus: Resigns before official CBI announcement

March 20, 2006


The next president of the Confederation of British Industry, Sir David Arculus has surprisingly resigned before taking up the leadership of Britain’s employers’ organization.

The reason?  Severn Trent Water, the main subsidiary of the FTSE 100 water group Severn Trent that he chaired between 1998 and 2004, is under investigation by the Serious Fraud Office.

Severn Trent Water was recently £42m fine by the industry regulator, Ofwat, for supplying bad debt figures that were “either deliberately miscalculated or poorly supported”. As a result, Severn Trent Water’s customers have been overcharged.

Sir David’s plc board was exonerated of blame, but were criticized for its handling of the company’s internal investigation.

He has resigned ahead of the CBI issuing its own agreed statement later today; he feels he has done nothing wrong but does not want the CBI’s reputation being tarnished by any newspaper campaigns against him.

Educated at Oriel College, Oxford Sir David, whose first job was as a Voluntary Service Overseas teacher in the Falklands Islands, has also just stepped down as chairman of mobile group O2 following the takeover by Telefonica, the Spainish company.

Sir David, 60 in June, will continue to look for a FTSE 100 chairmanship. He lost out for the top job at Lloyds TSB and has turned down Trinity Mirror because he regarded it as a backwards step. In the meantime he is a non-executive director at Barclays Bank, and Pearson, the publishing group and he also remains on the Telefonica board.

Thanks for reading Big Business

David Davis

Clare Furse sits tight – and the price goes up

March 16, 2006


The Economist got it right when it said in 2001 of Clara Furse’s appointment as the first woman chief executive in the 228 year history of the London Stock Exchange:

“Pretty in pink, petite and partial to pearls: it would be easy to misjudge Clara Furse…she has built her career in the world of derivatives-broking on a reputation for ruthlessness.”

Today, the woman. long regarded by some as awkward, charmless and argumentative, her obduracy is at last reaping full rewards. Courted by Australian, German and French exchanges, she has steadfastly refused to relinquish the LSE’s independence, even though not long ago some advisers were urging her to do a deal at half today’s share price.

The 47-year-old investment banker started her career in the City of London almost two decades ago and has played a lead role in the growth of the financial futures industry since 1990 when she was appointed a director on the board of Liffee, the London International Financial Futures Exchange, and until May 1999 she was deputy chairman.

Mrs Furse was born in Canada to Dutch parents before being educated in Colombia, Denmark and England.

She is married with three children and lives in South London.

Mrs Furse studied economics at “the other LSE” – London School of Economics – then joined Philips and Drew as a commodity broker in 1983.

In later years she was appointed a director of the company, which subsequently merged with Union Bank of Switzerland and changed name to UBS Phillips & Drew. The bank changed name again following its merger with Swiss Bank in 1998 this time to UBS.

By the time Mrs Furse left the company following the merger she had been a managing director at UBS for five years and global head of futures for four of them.

She stayed in her next job as chief executive of Credit Lyonnais Rouse until December 2000, moving to the LSE the following year into what many regard as the hardest job in the City of London.

Thank you for reading Big Business

David Davis

Outsider Sam Laidlaw is Centrica’s new chief executive. Is a bid on the way?

March 14, 2006


The appointment of Sam Laidlaw as chief executive of Centrica , by-passing two hotly tipped internal candidate, signals that  the owner of British Gas expect to be involved in the energy industry’s current enormous consolidation.

With speculation that Russia’s Gazprom is said to be mulling a bid and the $72 billion merger between Franco-Belgian energy group Suez and Gaz de France, observers believe Laidlaw has been chosen because of his experience in big deals – just 50 he is best known for revitalizing and later selling out Enterprise Oil to Shell in 2002 for £3.5bn before becoming president of America’s Amerada Hess.

He joins Centrica from oil giant Chevron where he was executive vice president of global business development.

His appointment sees the company overlook finance director Phil Bentley, who was an original frontrunner, and Mark Clare, deputy chief executive and managing director of British Gas, who was also considered, to replace out-going chief executive Sir Roy Gardner who is expected to become chairman of catering group Compass.

Laidlaw received a master’s degree from Cambridge University, was admitted to practice law as a solicitor in 1979 and obtained a master’s degree in business administration from the European business school INSEAD in 1981.

He has been active in various industry and civic organizations, including serving as president of the United Kingdom Offshore Operators Association, chairman of the Petroleum Science and Technology Institute, and a member of the United Kingdom Energy Advisory Panel. He is a member of the United Kingdom Council of INSEAD; a non xecutive director of Hanson PLC; and a trustee of RAFT, a medical charity. Laidlaw also serves as a fellow of the Royal Society of Arts and a director of the Business Council for International Understanding.

Thanks for reading Big Business

David Davis

Rise & Fall of Sir Christopher Gent

March 13, 2006

With thanks to this BBC chart, the rise and fall of Vodafone’s share price over the past nine years reflects the career of Sir Christopher Gent, the man credited with turning the company into one of the world’s top mobile phone operators.

In the wake of the row that has split the Vodafone board, Sir Christopher is now giving up the honorary post of life president, the title he was given when he stepped down as chief executive and left the company at the end of July 2003.

Sir Christopher, who is 58, always looks the part as a British corporate captain. Trademark pinstripe suites, expensive shirts, the colour just a touch too loud and braces, mostly red.

He was educated at Archbishop Tennison Grammar School, a stone’s thrown from the Oval Cricket Ground in south east London. He left at 18 to become a management trainee at Natwest Bank and four years later he left for Schroder Computer Services; in 1979 he moved to Baric, another computer services company.

In 1985 he joined Vodafone as managing director of the UK network and within three years was appointed to the board, becoming chief executive in 1997. At that time the company had a market value of £7.5bn; when he resigned as chief executive ut was a £77bn mobile phone behemoth, operating in 29 countries, and with more than 100 million subscribers.

In 2001 he was knighted for services to the mobile communications industry.

The secret of Sir Christopher’s success was simple. During his acquisition spree, snapping up one mobile phone operator after another, he rarely paid cash.
Most deals were settled in return for Vodafone’s high-flying stock.

But then the telecoms bubble burst, the share price plummeted, profits become losses. With the appointment of a new chief executive, a relatively unknown Arun Sarin, the era of grand acquisitions was declared over and the company’s strategy now is organic growth.

The share price continued to tumble and a public war broke out at the top of the company as ‘Gent’s men’ left….finally Gent himself announced he was giving up the life presidency.

It’s a sad ending to a great business story, yet don’t feel too sorry for Sir Christopher who has become a very rich man, earning as much as £12 million a year (including share options) at the peak of the company’s fortunes.  Moreover he is now non executive chairman of pharmaceutical giant Glaxo Smith Kline and sits on various other boards, including bankers Lehman Brothers.

Thanks for reading Big Business.

David Davis

Billionaire brothers’ website

March 13, 2006


Property investors David and Simon Reuben (left and right)  with a combined wealth of  £2.1bn are among the British newcomers to an expanding list of billionaires compiled by Forbes magazine for 2006, highlighting what has been another bumper year for the world’s super rich.

What is even more remarkable about the Reuben brothers is that, unlike most other super rich, who are normally reclusive, they have a detailed and comprehensive website that traces their lives and how they made their money over the past 35 years.

They started in metals, a business they sold in 2000 and moved into property in the UK and overseas. For the rest of the Reubens story click here

Thanks for reading Big Business

David Davis