Terry Murden: New chairman has a business–selling pedigree

PHILIP Bowman, who has taken over as chairman of housebuilder Miller Group, will be joining a company that has undergone a major restructuring and shift in ownership.

As he has built a reputation as a deal-maker and seller of assets, there is bound to be some speculation about his presence on the board, though it is too early in the reshaping of Miller’s balance sheet, finally completed last month, to be thinking much beyond a period of stability.

He will want to harness the expertise in one of Scotland’s biggest firms, now underpinned by the £160 million refinancing arrangement with Blackstone subsidiary GSO Capital Partners that enabled it to slash its debt to a third of the previous total.

But there will be some intrigue around Bowman, best remembered in Scotland for his stint as chief executive of ScottishPower. He was one of the triumvirate of Australian businessmen – alongside Trevor Matthews at Standard Life and Mark Selway at Weir Group – who were instrumental in bringing transformational change to their companies.

Bowman was the last CEO to run ScottishPower as an independent entity, a fact not lost on those who accompanied his arrival at the utility in January 2006 with speculation that he was there to offload it.

An offer from the German firm E.ON had been thwarted the previous autumn and, because Bowman had just sold drinks giant Allied Domecq to French rival Pernod Ricard, it was assumed he would revive talks with bidders. Instead, he issued assurances to staff that he was there to grow the business rather than sell it.

How quickly things change. By November ScottishPower was in talks with Spanish firm Iberdrola and, just over a year after arriving, Bowman was gone, replaced by one of the Bilbao firm’s high-flying executives.

Later that year he was installed as chief executive of the engineering conglomerate Smiths Group and his reputation continued to follow him. The firm’s shares rose to a three-month high immediately he was named amid speculation of a break up.

Blackstone says it is in Miller for the long term, but like all private equity groups it will have an eye on its exit route. When the time comes, it may just have the right man on the board.

High-flying new owners have makeover template

THE sale of Edinburgh airport on time and at the top of the range reflects well on the facility. It was always expected to attract a blue-chip list of bidders and when BAA chose it over Glasgow as the Scottish airport it would sell it knew perfectly well that Edinburgh would command a better price.

Edinburgh’s passenger growth is twice the rate of Glasgow but there was some surprise at the £807 million price, considerably higher than the £600m figure punted in recent weeks.

It’s been said that one of those that withdrew early in the process – Carlyle Group – pulled out because it felt the price – equivalent to 16.7 times ebitda – was a little too lofty.

I understand the last remaining rival offer, from JP Morgan Asset Management, came in at around £735m, some 10 per cent below the winning bid. It means the final price paid is right at the top end of the 13 to 16 times ebitda paid for European airports.

GIP now has to show it can get a sufficient return on assets to prove it has not overpaid. Edinburgh offers good growth potential and attention will quickly turn to how it builds new routes and improves relationships with existing clients, including Ryanair, whose boss, Michael O’Leary, has announced cuts in a dispute over landing charges. Central to the whole sale process is whether it improves competition for airlines and passengers.

Its track record so far on improving performance at Gatwick and London City has impressed. At City, punctuality has improved, runway capacity has been increased and there has been a 50 per cent rise in departure lounge space. It has enhanced security and cut average queues for passengers to just four minutes.

Gatwick became the first UK airport to offer special security assistance to families and those with disabilities. GIP worked with airlines to reduce average check-in times. Security complaints are down by 50 per cent.

Michael McGhee, the GIP partner who led the acquisition of Edinburgh, is playing his cards close to his chest, but Gatwick and City provide a template for improvement.