‘We’ll get our fair share…’ The Wates pair hatching a plan to create a £250m fit-out business

“I never thought it would be the end of me…” Lee Phillips had turned 54 a month before ISG collapsed into a heap last September.

He had been there a few weeks shy of nine years – an earlier stint in the 1990s when the firm was known as Interior and headed up by David King accounted for a further three – when the business, having long since teetered, finally toppled. Overnight, he found himself without a job having been in charge of the fit-out part of ISG, the one considered to be the jewel in its crown.

“I had to take some time out, to play things over,” Phillips admits, “but I’ve always believed in myself.”

ISG’s collapse, he says, brought some sort of closure. Its fall had been preceded by months of rumour, changes in leadership and then the hope that a saviour was on the way. But that all melted away one evening last September when a late-night email from chief executive Zoe Price told staff that it was all over.

“You found yourself in a bit of whirlwind,” he says of those final few months at ISG. “There were all sorts of things in the press, the rumours. In a way, I’m pleased there’s [now] closure.”

After the firm’s demise was confirmed, he says: “I had two things on my mind: to make sure our people were OK and all of our supply chain was paid where practical and in the best way possible we could.”

His period out of work proved short-lived. Phillips was courted by several firms – eight in all – but it was Wates who won the race for his signature.

He met his boss, the firm’s executive managing director of construction Steff Battle, in October last year a few weeks after ISG went down. Wates already had a fit-out business, Smartspace, which focuses on public sector jobs and frameworks.

But, along with its core contracting business and Smartspace, Battle felt the firm needed a major fit-out business, one which concentrated on commercial schemes – the sort that ISG was once winning.

“This integrated offer is something I think Wates could have done better,” Battle says. “I picked up the phone to Lee and we met within a couple of weeks.”

Lee was more worried for everyone in his team than for himself. He never once spoke about how he was personally affected – that says a lot

Steff Battle, executive managing director, Wates Construction

They agreed to meet in a basement bar in Mayfair. “We did our first business plan on the back of a napkin and, within four weeks, we shook hands on a proper business plan.”

Battle was impressed with Phillips’ concern for others in the immediate aftermath of ISG’s implosion. “Lee was more worried for everyone in his team than for himself. He never once spoke about how he was personally affected – that says a lot.”

Battle ran the proposal for the new business past chairman Tim Wates and chief executive Eoghan O’Lionaird. “We went with a headline business plan. We moved very quickly to secure a very prominent leader in this space. Lee’s ability to bring a team in accelerated our plans.”

The business was launched just over a year ago with 10 people and branded Wates Fit Out. Staff numbers doubled to 20 by Christmas. “We were tendering jobs in January,” Battle adds.

In the spring, there was a glitzy launch at the Lookout, the bar at the top of 8 Bishopsgate, and earlier this month Wates Fit Out made its latest high-profile hire, bringing in Martyn Peters from Overbury as its divisional commercial director.

The firm, which is based in the City off Cornhill, close to the Bank of England, currently has around 60 staff. Phillips, now the managing director of Fit Out, says this will expand to 100 by next spring.

Under its business plan, it is eyeing a turnover target of £250m by 2028 and, for now, will concentrate on the London market in sectors such as banking, finance, legal, tech and life sciences.

Phillips, who says his favourite job at ISG was its work at Battersea Power Station, adds that it will cast its net beyond the capital in a few years’ time, but “we have enough to go on [in London] right now”.

Its main markets in the capital are the City, Canary Wharf and the West End. Right now, he says, the City is busier than the Wharf, adding that the range of sectors working in the Square Mile is more disparate.

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Phillips and Battle both stress that Smartspace and Fit Out will be kept separate. “The tendering lanes won’t cross over,” Phillips says.

The business he is in charge of is bidding for blue-chip deals, with the largest it is currently tendering a job in the City worth £200m, believed to be the refurbishment of the London Stock Exchange at Paternoster Square.

With ISG gone, Phillips says: “That market share is up for grabs.” And, presumably, market leader Overbury, where Phillips spent 15 years, can’t do everything in the way Mace and Multiplex can’t build every tall tower. “We want to disrupt the industry in a nice way.”

He adds: “We want the right culture and behaviour. We’re not short of people banging on the door [to join].”

Inevitably, Phillips has recruited former ISG colleagues – who also suddenly found themselves looking for a job last autumn. Those arriving have included former ISG major projects divisional director Jason Sharp as well as former commercial director of ISG International, Scott McCulloch.

My biggest thing now is to give some of my experience, method, manners to the next generation coming through. You can’t keep hanging on

Lee Phillips, managing director, Wates Fit Out

Ross Ellmore, who worked at ISG Agility – which specialised in the sub 50,000sq ft sector – was recruited too, as well as two more former ISG staff, Mark Worrall as divisional commercial director and Darren O’Brien as divisional director.

Battle says: “Naturally, a number of people Lee knew from ISG have been brought across. But this isn’t ISG 2. This is about the Wates values and culture.”

Phillips adds: “I had a great fit-out business [at ISG]. My biggest thing now is to give some of my experience, method, manners to the next generation coming through. You can’t keep hanging on.

“I go to the BCO and, where I used to know 900 of the 1,200 in the room, I know 300. That’s just life. New people are coming through.”

After his experience at ISG, Phillips knows more than most the value of the bottom line. “We need to make a profit. I wouldn’t want to see another tier 1 [contractor] go the wrong side of the line. We need to get the contract terms right, risk should be shared. If we do that, we make ourselves a profit.”

And, as for making sure that business is done in the right way, Phillips has this to say: “You’ve always got to go over the bridge and come back. You can’t procure away a problem, you can only collaborate.”

Currently, the firm is on site with its first major scheme – a contract it is not allowed to mention but one Building has previously reported on; it’s in the City and is for credit rating agency Moody’s, which is leaving its Canary Wharf home of the past 16 years for a new office at 10 Gresham Street.

Phillips says that more jobs will surely come. “We’ll get our fair share, without a doubt.”