Mark Clare, formerly of British Gas, is set to put Barratt on the acquisition trail
Game on. Barratt’s announcement last week that its next chief executive was to be Mark Clare, the managing director of British Gas, told the market far more than just the details of a change of personnel.
In fact it sent three messages: first, that Barratt intends to move away from its organic growth model to become more acquisitive; second, that it wants to break into the FTSE 100, to which it is tantalisingly close; and third, that it is going to renew hostilities with Persimmon in the struggle to become the UK’s biggest housebuilder.
“There are plenty of dyed-in-the-wool housebuilders that could have been appointed chief executive,” says David Taylor, housebuilding analyst at Teather & Greenwood. “What skills is this guy bringing? His track record is financial [he was British Gas’ finance director before he was managing director] rather than operational. That’s a skills set associated with acquisitions.”
Clare, 48, although known as family-orientated and friendly, has developed a reputation for making tough decisions. He became a visible target when he warned Britain: “The era of cheap energy is over.” This was not mere rhetoric. The tabloid press called him the “price rise boss” after he increased gas bills by 18% in September and 22% in March.
The move didn’t make him popular with his customers, but it earned him respect in the sector. Clive Roberts, energy analyst at Charles Stanley, says: “British Gas made a loss in the second half of last year in gas and electricity supply, and would have continued haemorrhaging losses, so he had to push the cost on to the consumer to make the business sustainable.”
Clare became a visible target when he warned Britain: ‘The era of cheap energy is over’
Another recent appointment at Barratt was Mark Pain, who was poached from Abbey National to become finance director. He is thought to be another acquisitive soul – and further evidence of the new, hungrier Barratt.
The thinking underlying these appointments is contained in New Structure for Growth, the strategic plan for Barratt drawn up by David Pretty, the present chief executive, and implemented on 1 January. This was produced before Persimmon propelled itself into the FTSE 100 with the £643m purchase of Westbury late last year.
The plan slims down the company’s operational board and gives senior operational figures greater control of the purely housebuilding part of the business, thereby allowing the non-specialist executives, Clare and Pain, to improve the business side.
As Pretty puts it: “It’s up to Mark and the rest of the board whether they continue growth organically, through acquisitions, or a mixture of both. With his all-round experience and the operational experience of the team, it should be a great blend.”
But the board already seems to know what direction it wants to take the company: a fortnight prior to the announcement of Clare’s appointment, Barratt revealed that it had bought Guildford-based developer Squire Bridge for £25m. It was really a land deal, rather than the sort of purchase that enlarges a major company. There is little doubt, though, that Barratt has fired a warning shot and will shortly be back in the hunt.