The new firm, to be called Odyssey Property Services, will be launched next week. It is understood that the pair, which have been working together since the last quarter of 1999, are already in detailed negotiations over two corporate PFI deals in the £75-100m range.
Barry Lucas, managing director of Jarvis Projects, the contractor’s PFI arm, will become chief executive of Odyssey.
Lucas said the operation had substantial capital backing from Jarvis Group and the international resources of its partner.
He said Jarvis saw private sector PFI as an untapped market. “There is no private sector PFI deal yet at close. When the first couple are done, it will open the floodgates.
“An increasing number of corporates with large property portfolios will be looking at realising their shareholder value, and we want to cast our net around for these opportunities,” he added.
He said Jarvis had set up Odyssey to compete with outsourcing firms such as Trillium (backed by Goldman Sachs). However, it would not compete for high-profile projects such as the £1bn contract to manage the Department for Social Security estate, won by Trillium in 1998, or the £2bn contract for the Customs and Excise and Inland Revenues estates.
Instead, Jarvis would “work with our own and our financial partner’s network of contacts to create opportunities”, Lucas said. Odyssey will target financial services companies, multinationals with subsidiaries in the UK and Europe, and large retailers. It is seeking contracts of £100m or more to rationalise property portfolios, including new-build schemes, sale and reoccupy deals and, possibly, sale and leaseback.
“We are a services company. We will only own property in order to deliver services,” said Lucas.
Jarvis saw corporate PFI as a less painful process than public sector PFI, he said. “The private sector is better at negotiating creatively with bidders because it is not constrained by legislative procurement rules.”
Odyssey would expand as it entered into detailed contract negotiations. “Staff will be recruited, or if a client has an existing service delivery arm, we will take on those personnel,” he said.
Lucas said there was no target for the number of contracts Odyssey would bid for in its first year. “We will pursue anything that comes out of our marketing activities,” he said.
Odyssey will probably reveal its financial backer when it closes its first PFI deal. “As long as we are beating bushes we may decide to keep a low profile, and then make a splash with the first deal,” said Lucas.