I HAD some preconceptions before I met Bill Forrester, chairman of John Laing, the building company turned infrastructure specialist, in his “heartland” near Sheffield — but none matched what I found.
Arriving near dusk at Bakewell in Derbyshire, I was not greeted by the “no-nonsense, workaholic, burly Scottish industrialist” I’d been warned about, but by his wife, Heather, and her friend.
I was quickly settled by the fire, drinking tea and discussing Derbyshire life, grandchildren and the local fashion-show charity event they’d been at. Then Forrester burst into the kitchen complaining loudly about the cold.
Bald and red-faced, wearing yellow cords, a green jumper and matching socks without shoes — he looked far more the country gent than the man behind projects such as the Second Severn Crossing and the Chiltern Railways franchise.
“I was shooting partridge this morning,” he said. “Then I was collared by your photographer. We went straight off — it’s bloody cold. Right, I can’t say too much about the bid but let’s get started.”
It’s been less than a week since Laing received a £958m bid from Allianz, the German insurer. The move torpedoed the agreed bid from Henderson fund managers, which was tabled at 355p a share or £830m after a year’s planning.
Laing’s shares have soared on the expectation of a bid battle — not just between the two financial companies but one that could be joined by Macquarie, the Australian bank that recently bought Thames Water; Spain’s Ferrovial, new owner of the airports operator BAA; or Goldman Sachs. Hedge funds have also piled in and now own about 30% of Laing.
Isn’t this too much fuss for an old-economy construction company that just five years ago was at the centre of building fiascos such as the Millennium Stadium in Cardiff? “It’s tricky to shake off perceptions but John Laing is no longer a building company,” said Forrester. “We have a strong building pedigree going back over 150 years but, now that we have become a PFI (public finance initiative) specialist, the company has 300 experts in finance, law, corporate finance, planning and project management.
“Now we agree to build something — a school, hospital, road — but we contract out the actual building and manage the project instead. Essentially, we’ve taken out the risk, which was the building work.”
The move, pioneered by Forrester when he joined Laing as executive chairman in 2001, has coincided with a surge of interest in PFI, once seen as a government stunt to offload spending, and with investor thirst for infrastructure assets.
“The demand comes from investors who want these assets as cashflow,” said Forrester. “But there’s also a fundamental shift in attitude towards investing in the public sector.”
But if it’s so good, why sell? “The truth is that the UK market is slowing and we want to do far more overseas,” said Forrester. “To do that we need a lower cost of capital and cash. This is why a tie-up with a financial group makes sense.”
All being well, the deal with Allianz will be another success in the career of a man known as one of Britain’s biggest industrialists — but who in fact ought to be more accurately recognised as a turnround expert.
He is also chairman of Linpac, the £1.1 billion packaging firm that he is helping to revive in preparation for a flotation next year. He is also on the board of Dignity, Britain’s biggest funeral business.
One investor said: “Forrester is good with industry but he’s even better at leading companies and dealing with shareholders — the sort of stuff most people hate.”
Forrester was born in 1940 as the youngest of four boys of a farmer in West Perthshire. “Growing up was great fun,” he said. “And the four of us wanted to go into farming too. My father was able to sort the elder three out with farms, but I had to go to be educated.”
Forrester thought the next best thing would be becoming a vet, but failed to get into Glasgow or Edinburgh vet schools and did mechanical engineering at Strathclyde instead.
His first job was as a graduate trainee at Caterpillar, the construction-vehicles company. Then he joined BP Rockwool, a start-up joint-venture experiment by the oil giant.
“BP wanted to be seen as a responsible player in the energy business. The idea was to sell insulation — thermal, noise and fire,” said Forrester. “The real innovation was the warehouse and factory we built in Wales. It was a modern, efficient plant from which we were able to change the market and suddenly the business took off.”
Both the venture and Forrester started attracting attention. He was offered the chance to create a similar plant in Kuwait and left for the Gulf state with his wife and two young children.
“My family loved it — but the truth is I didn’t,” said Forrester. “I did it for the money really. I went from being averagely paid to substantially paid. I learnt how to deal in foreign markets, which was great. But I was never really happy.
“Then out of the blue one of my suppliers from my Rockwool days came out to Kuwait to see me. He said his family insulation business SIG was having a rough time and would I come and sort it out. So, for a chunk of the equity, I did.”
But in his enthusiasm to return home, Forrester didn’t realise that the company was almost bankrupt. “On the Monday morning I asked for the books — and immediately thought I had made a horrible mistake. The company was losing money fast, everything was wrong.”
Forrester started selling parts of the business. “We had a company in America that was losing money. We had a flat-pack-kitchen arm and something that did laminated worktops — I mean, what the bloody hell did this have to do with insulation?” Forrester’s no-nonsense approach paid off: SIG floated in 1989 and grew to a £1 billion company and the best-performing firm in the FTSE 250 over several years. But every company needs change and, after 22 years at the helm, Forrester decided to make way for the “young lions wanting their turn”.
Within months, however, he was contacted by bankers at ING Barings who wanted help with the bigger problems at John Laing. Forrester oversaw the sometimes painful restructuring. The traditional construction and housebuilding divisions were sold and the company embraced PFI. “Although others were having a tough time with it, I suddenly had a great feeling about PFI,” he said.
It was the right decision — the type he feels he can replicate. Because, even with Laing up for sale, he has no intention of retiring. “I want to do it again, for sure. But only in the private sector — you have to pay to make things happen, a fact the public sector hasn’t quite accepted yet.”
Vital statistics
Born: July 29, 1940
Marital status: married, with one son and one daughter
School: McLaren High School, Callander
University: Strathclyde
First job: designer at Caterpillar
Salaries: £300,000 total
Homes: Derbyshire and Algarve
Cars: Range Rover, BMW
Favourite book: Salmon Fishing, by Hugh Falkus
Favourite music: Puccini
Favourite film: A Man For All Seasons
Favourite gadget: Blackberry
Working day
THE chairman of John Laing is up early at his home in Bakewell, Derbyshire to catch the 6.15am train. Bill Forrester takes phone calls on the way to his London offices in Victoria and is at work by 8.45, dealing with correspondence and e-mails. He then carries out reviews with the chief executive and finance director.
The rest of the day is spent speaking to non-executive directors and shareholders, reading and reviewing major bids and proposals and dealing with board committee items. Lunch is usually a sandwich at his desk. Forrester aims to catch the 5.30pm train so he can make it home by 8pm.
Downtime
BILL FORRESTER, who was brought up on a farm in Perthshire, still spends a large part of his spare time enjoying countryside pursuits.
The chairman of John Laing is keen on fishing and shooting, but also on walking and gardening — all of which he can do from his home in Derbyshire.
His other big passion is sport, particularly playing golf and watching Scottish rugby.
When he is not outdoors, Forrester likes spending time with his grandchildren and drinking good claret.
Andrew Davidson is away
