Driving up the combined turnover of the newly-merged WSP Genivar from £1.1bn to £1.3bn is the immediate goal of the new firm’s first chairman and former WSP chief executive Chris Cole. He talks exclusively to Mark Hansford.
WSP is a company defined by acquisition and that it should choose to continue down this path by brokering the ultimate acquisition - selling itself to Canadian consultant Genivar - has an almost beautiful karma to it.
But Chris Cole, founding director of WSP in 1969 and still there more than four decades on as chairman of the new WSP Genivar, is not a man for such ethereal thoughts. He is a pragmatic businessman through and through and fundamentally saw a deal with the Canadians as the only way get his strategy of growth - stalled since 2008 because of the global financial meltdown - back on track.
Let’s be clear: the deal was driven by Cole and the combined firm will trade as WSP Genivar with Cole as its executive chairman.
Enhanced balance sheet
Through the deal with Genivar WSP gains access to an enhanced balance sheet and a more upbeat stock market that will allow it to fund Cole’s acquisition hunt.
Genivar, which is listed on the Toronto Stock Exchange, is valued at almost twice WSP with a market capitalisation of around C$824M (£518M), despite it being around half WSP’s size.
“It would be very exciting to be the chairman of a global consultancy with the objective of taking revenue above £2bn. That is the first objective”
Chris Cole, WSP Genivar
“British companies just don’t have the share value or access to debt they need and I couldn’t see when we would have the access to debt or share price that would allow us to do deals,” says Cole. “The banks are rubbish and our share price was languishing with the rest of the stock market.
The combined firm
WSP, with 9,000 staff working from over 200 offices in over 30 countries is significantly larger than Genivar, which employs 5,500 staff and works predominantly in Canada.
But it is obvious that Genivar is the one operating in the strongest market. In 2011 WSP reported revenue of £717M, up 1% on 2010 but down 5% on its pre-recession 2008 peak; Genivar by contrast reported revenues of C$652 (£416M), up 12% on 2010 and a massive 68% increase on 2008.
Genivar’s stated aims in 2012 were to “broaden our expertise, develop our employees, expand our presence in Canada, lead major projects, boost our international presence, invest in high-potential growth sectors and strengthen our client service offer”.
So it’s easy to see why Cole was pushing at on open door. Buying WSP gets Genivar instant access to international markets and use of WSP’s global reputation in tall buildings. It has acted as lead designer on some of the world’s most iconic buildings including London’s Shard and New York’s One World Trade Center through its US operation WSP Cantor Seinuk.
But WSP gains much too; not least specialist skills in the growing oil & gas, mining and energy markets and - most importantly - access to Genivar’s clients which include all of Canada’s PFI investors.
“Canadian clients are increasingly seen throughout the world as they are the ones with all the money,” says Cole. “It is well known that the pension funds are the richest in the world.”
And Cole expects WSP people to get fully involved. “Undoubtedly, our people will get involved with Canada and get to work with the Canadians,” he says.
All in all, it’s a good fit for two companies clearly focused on growing globally - around 85% of the combined firms’ revenues will now be earned outside the UK, with Sweden and Canada its two biggest markets.
“WSP and Genivar fit well together, with aligned strategic ambitions, a shared entrepreneurial spirit and our resolute focus on clients,” says Cole.
“As a people business, we have a complementary culture and shared values, and our people demonstrate the same dedication and enthusiasm, thriving on excellence, innovation and great working relationships.”
“Canadian banks didn’t get involved in the liquidity crisis, so choosing Canada over the US was very strategic,” says Cole.
In an exclusive interview with NCE, Cole says that his short-term target was to rapidly expand the business through acquisitions with a UK programme management firm one of his first targets.
He has also fixed his eye on expansion in the booming Australian market.
He outlined his immediate plans to NCE ahead of last month’s formal completion of Genivar’s £278M buy out of WSP.
Cole had previously made it clear that selling up to the Canadian operation was driven by his desire to get WSP growing again (NCE 14 June). WSP, like many UK-based consultants, has been hit by the UK downturn with turnover, profits and staff numbers all falling in the last three years.
This has stalled its growth, disheartening Cole.
“It’s been a frustrating time these last four years,” says Cole. The last acquisitions made by WSP were in 2008, just before the global financial crisis hit.
“For a while it’s good because you are surviving,” he said. “But going sideways loses its excitement after a while.
“I like growth. It would be very exciting to be the chairman of a global consultancy with the objective of taking revenue above C$2bn (£1.3bn). That is the first objective,” he says.
Cole said that he had no intention of changing the focus of the firm from the “pure” consultancy and design that both Genivar and WSP specialised in.
“The intention is to remain a pure play consultant. I am not attracted to being a contractor in any shape or form”
Chris Cole, WSP Genivar
“The intention is to remain a pure play consultant. I am not attracted to being a contractor in any shape or form,” he says.
But Cole accepted that the firm is currently lacking in programme management skills. “Would we buy into programme management? Yes, we would, but only to provide a service to the group,” he said. “We do have some skills in this area and have got some people on it, but yes, particularly internationally, the one-stop shop is what clients want.”
Cole would not say who was on his shopping list, but admitted that a UK player was likely. “You have only got to look at the places where they [programme management firms] are - especially in the UK and parts of North America.”
Other acquisitional targets are firms that would increase WSP Genivar’s presence in the US and Australia, and in the transport and energy sectors.
But Cole cautions that the first acquisition would not be made until 2013, with the remainder of the year focused on settling the new company in.
“This year we have got to spend some time bedding this down. In 2013 we can start to open our arms to other things,” he says.
But he was clear that acquisitions would happen soon. “Genivar are themselves hugely acquisitional,” he says.
He’s not kidding: Genivar bought a total of 10 firms in 2011, enhancing its range of services and geographic reach in Canada and adding 355 employees to its workforce in the process. It had already bought three more this year before the WSP deal came in. So when Cole says “it’s almost us calming them”, you can see his point. But his eagerness to crack on is palpable.
“We start this journey at about £1.1bn; we are aiming to have a business doing £1.3bn of pure consultancy, making us the largest firm of our type in Europe and one of the top 10 in the world in the process. It is a satisfying ambition to be chairing a business that soon moves into that region,” he says.
Cole, who founded WSP in 1969 and has led it ever since, says he has no intention of retiring until that ambition had been achieved.
“I am going to be here for a few years yet,” he says. “I have two key objectives - the stewardship of the integration of WSP Genivar and to guide its growth to the next stage.
“So no, I’m not going sailing,” he states. “I don’t even have a boat. And I don’t want one.”