It’s an equitable life for outgoing m&s chairman

Luc Vandevelde is just one of several retail bosses to favour private equity above public capital markets. It’s an inevitable trend, says George Pitcher

I want to take a look at Luc Vandevelde, the chairman of Marks & Spencer (M&S), who has let it be known this week that he is to leave the hopeless old high street behemoth to spend more time with other companies. Headhunters have been instructed and Vandevelde hopes to be out by the annual meeting in July.

And I bet he is. Having claimed to have turned M&S around, he made a number of high-profile appointments, only for a trading statement last month to show that core sales had collapsed again. That won’t be an easy AGM.

But there I go again. I have a record of knocking M&S and I don’t want to have another go. Rather, I’d like to suggest that Vandevelde’s departure is a paradigm for something that is happening irresistibly in the retail market – the ineluctable shift towards private equity. Then I will conclude with just one remark on what this might mean for M&S – but it’s quite an interesting point, honestly, and not just another rehearsal of how M&S’s offer is now beyond redemption.

For those of you who haven’t skipped to the last paragraph, the point I would make about Vandevelde is that he is not only following the trend to pluralism or “portfolio management”, but is also showing signs of joining the swelling ranks of those who eschew the public capital markets in favour of private equity. It was former Asda magician Allan Leighton who made the first high-profile virtue of pluralism. I seem to remember him sitting astride a motorbike in press photographs (though I may be imagining that) saying something to the effect that the days of single-issue management were over and that the truly enlightened would manage a portfolio of interests.

This may be true. A glance at the vacancies in big retail companies may suggest that it will have to be. There’s not just the M&S job to fill now, but a chairman-designate to find to replace Sir Peter Davis at Sainsbury, since Sir Ian Prosser’s appointment to that post was vetoed by City investors (Prosser is an old-school, single-issue manager if ever there was one). Then there’s the chairmanship at WH Smith that Richard Handover is trying to vacate – but private-equity vehicle Permira has a bid on the table that may take Handover’s and chief executive Kate Swann’s jobs out of the stock market anyway.

Now look at the people who are mooted for Vandevelde’s job at M&S. There’s Stuart Rose, who sold Arcadia to Philip Green two years ago. He will have seen the success that Green has made of his private empire – and the noise that Green has made about the benefits of not having publicly listed shares. Would Rose take on M&S? Only, I think, with the prospect of taking it private.

Then there’s Leighton’s old mucker from the Asda days back in the Nineties, Archie Norman. The Tory grandee-in-waiting has become a portfolio man in politics and business. Norman’s foray into capital investment during the dot-com boom was ill-fated. He teamed up for cheesy photo opportunities with three buccaneering colleagues – hi-fi tycoon Julian Richer and property magnates Nigel Wray and Nick Leslau – to launch takeover vehicle Knutsford which, ahead of the millennium, was worth nearly £1bn on whispers that it was to launch a bid for M&S or Sainsbury. In the event, the “Awesome Foursome” turned out to be the “Dour Four”, Knutsford reversed into business information shell WILink and is worth less than £23m today. Wherever Norman’s ambitions now lie, they are unlikely to be with large, listed companies that need turning around and he is said to have ruled himself out of the running.

Other candidates for the M&S job are thought to be Paul Myners, chief executive of fund management group Gartmore, Derek Higgs, City banker and sometime finance director of old insurance dreadnought Prudential, and David Varney, who had a career at Shell before presiding over the break-up of British Gas and now heads telecoms combine mmO2.

But it is almost universally acknowledged that M&S needs a hot retailer, not a City or a utilities mogul, important as M&S’s relationship with the City will continue to be. And all the important retail action is in the public-to-private route – let’s not overlook that Debenhams was taken private last year.

Which brings me to my final M&S point. Vandevelde is chairman of Change Capital, a private-equity fund that notably acquired household products chain Robert Dyas recently. He is also a director of Carrefour and is effectively the board representative for the Halley family, which commands a 11.5 per cent interest in the French chain.

Vandevelde is essentially now a private equity man. Could he one day be involved in taking M&S private? I don’t know. But should M&S be taken private? Yes – and the sooner the better.

George Pitcher is a partner at communications management consultancy Luther Pendragon


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