The consolidator boss has been painted as a ruthless operator. But, in his first interview since the Charterhouse deal, he tells Tom Broughton he is just misunderstood. Portrait by Julian Anderson
Overbearing, arrogant and aggressive are all words that have been used to describe Chris Giles – and he doesn’t much like any of them. The consolidator chief executive reckons he is at most “driven” and a little “over-enthusiastic”. He claims there has been a “misunderstanding” about the scale of his ambition. This is in part because he over-estimated the size of his acquisition pot to the tune of £200m, but more on that later. Today – his first interview since Charterhouse bought a majority stake in his company and on the back of three acquisitions in as many weeks – is his chance to tell his own story and outline his expansion plans. Then perhaps, along the way, we’ll all agree that he is a nice bloke after all.
Plenty of people already think that, but it’s not the whole picture. “Chris can be so nice,” says one source who knows him well. “But he will just not take a backward step. He’s the type of bloke who would beat you at a game of Monopoly and then not let you leave the table until you’ve mortgaged off every last piece of property you own.”
Others say his style is simply part of his armoury in the negotiation war with insurers. “After all, it’s just a game isn’t it?” says one. “And he usually gets what he wants and wins.”
Among his broking peers, when he can relax, a different picture emerges of a simple man whose enthusiasm to win can be “a little misunderstood”.
Such misunderstandings can be costly in more ways than one, which would explain why Giles – who lost his closest adviser, Michael Quinn, in November – has hired a City PR outfit to help him polish up his public profile. On meeting the man, you feel he may be worried that talk about his supposedly abrasive character could get back to Charterhouse. Perhaps that’s why he has chosen to tackle the perceptions head on; does he know any other way?
Giles is ready to buy up regional brokers and rival consolidators with a pot handed to him by Charterhouse. Indeed, when the private equity house bought the stake in his company in March, he put out a press release declaring he had £500m to spend. He’s not saying that today. “We could have had £500m to spend on acquisitions,”
he says. But he decided not to use the entire
debt package that was available due to the financing fees.
The latest set of figures for the Giles holding company, filed at Companies House, might have dimmed his ambition. It posted a £2m after-tax loss for the year to 31 August 2007, although consolidators point to earnings before interest, taxes, depreciation and amortisation (EBITDA), as a better measure of their performance.
So what about that £500m pot, then? Giles is keen to correct the misunderstanding. The statement was “misleading” he says – a symptom of the “speed of the transaction” and another slice of “over-enthusiasm”. He adds: “That’s why we’ve brought in a PR firm too, to help us with this stuff, to clarify it properly.”
Giles explains that Charterhouse has invested in him and his management team, and that he is firmly in the driving seat. As for his acquisitions budget, £300m is “a more realistic figure”. He smiles and adds: “It’s also £299m more than anyone else has to spend in this climate.”
The equity house, which bought out its rival Gresham, negotiated a deal with HBOS that included a mix of equity and debt. “Charterhouse bought the business on a forward book ... based on the EBITDA, they negotiated a much better debt package too,” says Giles.
He has already spent about £70m on small brokers, driven by young, ambitious management teams – and those are the kinds of companies he wants more of. “We currently have over £250m of funding available to us for acquisition activity. In addition, we have the in-principle support of our funders to extend their current support should a suitable opportunity arise.”
Making sure the businesses are fully integrated is another priority. Of the 49 Giles branches, 43 are on the Acturis trading system. But what Giles really wants is to make the “transformational deal” that will put his business in the same bracket as Towergate and Bluefin. It is no secret that he is keen to acquire Oval, but Jelf and Heath Lambert are on his hit list too. And along the way, he will prepare the empire for flotation.
To achieve this, he is even prepared to lose the Giles brand – quite an admission given that it is a family business, founded by his father Michael in 1967. It is well documented that Michael once told Chris: “You’re not as clever as you think you are.” Even today, he says, his father rarely offers him any praise. He need hardly add that this has been a keen motivating factor for him since he bought out his brother and two sisters almost a decade ago. “I’ve talked this through with my dad,” he says. “He accepts that one day we may have to lose the Giles name in order to achieve what we want. He can accept that and is comfortable with it.”
Outside the family, the Giles masterplan has been met with some raised eyebrows – and even a little disdain – from his rivals. There was that carefully worded statement from Phillip Hodson of Oval last month, which said Charterhouse had approached him about a merger of the two consolidators.
Under the deal, according to Hodson, the expanded group would have been rebranded under the Oval umbrella. Yet – funny thing, this – Chris Giles wasn’t mentioned in the statement.
“It was me and my management team that led the Oval bid,” says Giles with a wry smile. Of Hodson’s statement, he adds: “Phillip is a very clever negotiator.
“We have an appetite for a deal and I’m very clear about that. What the timing will be I don’t know at this stage, but we’re talking to a lot of people. That’s the nature of this market.”
You have to admire his ambition. He is following Towergate’s model but moulding his business so it is more focused on sales and marketing expertise, rather than emphasising underwriting in the style of Peter Cullum, Towergate’s executive chairman, for whom he has a clear admiration. But the next stage of the company’s development will be critical to its success. He has a new management team, on which he will rely heavily. Not a problem, he says. Andrew Watson, his newly installed trading and placement director, has the technical skills to replace Quinn.
And just in case any doubts remain, he wants to categorically deny that his rather abrupt style affects his staff. “I’ve rewarded all of my staff and I’m committed to looking after them,” he says. “I’m enjoying my work at the moment. I’m an entrepreneur and that’s in my nature. I want to win, but I don’t want to win at all costs.”
It’s just that when you meet him, it really doesn’t feel that way.