AGGREKO today began the search for a new chief executive after Rupert Soames – the charismatic businessman who has overseen dramatic growth at the Glasgow temporary power company over the past 11 years – was poached by embattled outsourcing group Serco.
Serco has picked Soames, a grandson of Sir Winston Churchill, to restore profits and its reputation following high-profile government contract failures.
Shares in the firm soared by more than 12 per cent on the news, adding more than £200 million to its market value.
Soames, who will be paid a salary of £850,000 with a performance-based bonus of as much as £1.4 million, said he had always admired the services delivered by Serco which he will join on 1 June, taking over from Ed Casey.
“I am aware that the company has experienced significant recent difficulties but the work that Serco does is important to the lives of millions of people and I believe that we can find a way through to a bright future,” he said.
Although by market value Serco is a smaller business than Aggreko, it is thought the challenge of turning around the fortunes of the company appealed to Soames.
Chief financial officer Angus Cockburn will assume Soames’ role at Aggreko on a interim basis while a search for a successor, internally and externally, is carried out.
Aggreko chairman Ken Hanna paid tribute to the achievements of Soames. “He has increased the market capitalisation by nearly tenfold, put Aggreko firmly on the map as the world’s leading re-power provider and has been an inspirational leader,” he said. “He is very politically astute, very experienced and obviously the Serco board think he is ideally placed for that role.”
Shares in Aggreko fell by 70p, or 4.2 per cent, to 1,560p on the news, which took analysts by surprise.
Shore Capital analyst Robin Speakman said: “We didn’t see this coming because he’s been so embedded at Aggreko, and so successful. Why would you expect him to leave a successful FTSE 100 company to take over one which is in the mire?
“But if anyone can turn around the fortunes of Serco and redirect a sprawling business in a focused manner, rebuilding its reputation, I think he’s probably the man to do it. Serco’s reputation with clients and decision makers has just gone up two notches on the dial from zero.”
Paul Jones of Panmure Gordon said, although the departure was disappointing for Aggreko investors, Soames would leave the company on a very stable footing. “If he was going to go, now is not a bad time given the strong position he has got the company to.”
Although Serco shares rose 49.7p to 460.5p today, they have still lost more than a third of their value since July when it, along with G4S, was shown to have charged for tagging criminals who were not being monitored, in prison or dead. Chairman Alastair Lyons said Serco consulted the government, which provides 25 per cent of Serco’s £5 billion revenues, about Soames’ appointment but the final decision was made by the board.
Soames became chief executive at Aggreko in June 2003 following spells with GEC and software group Misys.