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In Focus: The club that Jack built
Today is the 10th anniversary of the death of Jack Walker, one of the most successful self–made businessmen in the North West of England. He made his fortune from the sale of his steel stockholding business Walker Steel to British Steel, at the time the largest acquisition of a private company in UK corporate history.
That British Steel – now named Corus – is now owned by Tata, an Indian conglomerate, says much about the changing balance of power in the industrial world.
But while there are no statues erected to Walker for his efforts in the steel trade, there is one at Ewood Park - home of Blackburn Rovers Football Club. The club was Walker’s passion and the recipient of his philanthropy through the last decade of his life.
In 1994, his fortune was enough to build a team capable of winning the Premier League title. Now, of course, his family trust is neither sufficiently interested nor sufficiently wealthy to make any kind of impact in a league table dominated by Arab sheikhs and Russian oligarchs.
Debates may rage over pints in Uncle Jack’s pub or at Pleasington Golf Club, which he also helped out, over what the great man would have wanted. But that is sentiment, not business. The Jersey-based trustees have a straightforward fiduciary duty to protect the assets of the beneficiaries – and in the long term they can’t keep funding Rovers.
And though they stump up £3m a year as a donation, they want out.
For the last four years, Rothschild has been fielding calls from the usual band of chancers - time wasters and fantasists that football attracts. But now, the day before the 10th anniversary of Jack Walker’s death, they seem to have caught a live one and signed an exclusivity deal with Western Gulf Advisory (WGA), a Bahrain-based investment business with offices in Switzerland.
Here’s what we learnt yesterday. In a bizarre statement sent by a PR company in London representing WGA, and written as if it wasn’t, we were told the following:
“It is understood that a negotiations team from Western Gulf Advisory ("WGA"), the Bahrain-Swiss-based investment company which recently made a formal approach to Blackburn Rovers, will be at Ewood Park on Monday, 16 August to sign a memorandum of understanding (MoU) with Blackburn Rovers, and to discuss the potential business and investment strategy including the transfer of new players. For a period of four weeks, beginning on 16th August, WGA will explore the financial situation of the club. Over this four week period WGA has been granted exclusivity which means no other bidder can buy the club or look into Blackburn’s book (sic).
“WGA has earmarked approximately £300m to acquire the club, cover its outstanding debts and provide the necessary capital to buy new players and invest over the longer term so it can once again become a title contender.
“Sources close to the deal confirmed that there will be a photo opportunity at Ewood Park (Blackburn End Stand) this Monday at 10am where WGA’s negotiations team as well as Blackburn Rovers’ chairman and CEO John Williams will be present. As reported, Jean-Claude Darmon, the French football marketing pioneer, has signed a consultancy agreement with WGA earlier this week and will be part of WGA’s negotiation team.”
So, aside from the strange cloak and dagger journalese, what? Or more to the point, who is Western Gulf Advisory? According to the notes to the same statement, WGA is owned by Indian-born, Bahrain-Zurich-based entrepreneur Ahsan Ali Syed and is targeting the UK for investments and it plans to invest a significant amount over 2010. “The company does not receive any fund inflows from external resources but uses internal capital only, as WGA acts as wealth manager to its shareholders exclusively.
“Reflecting WGA's strategy of expanding its investment activities internationally, it has recently made a number of investments in Australia and Europe. By providing liquidity at a time when access to finance is highly restricted WGA provides companies with financial stability and a platform to exploit new growth opportunities.”
The annual report reveals that WGA operates much like a sovereign wealth fund. In 2008 it made $24.8m in net profit and had an asset base of $275.5m on the back of doing deals and sharing the leverage with a network of investors and sovereign clients.
But the extraordinary change to the balance sheet of the business is revealed in the 2009 annual report where it reveals a loan from founder, chairman, chief executive and owner Ahsan Ali Syed of $1bn. It also states that during the year 2009, Western Gulf Advisory earned a net profit of US$92.1m, an unprecedented growth of 777 per cent over the net profit of US$10.5m in the previous period.
The report is scarce on detail - it doesn’t list assets under management or give a clear indication of an investment strategy. It is just lots of mission statements and core value propositions. However, it does reveal a few areas of intended expansion for the future. Nowhere does it mention the 10th best football team in England but it does include: a business in Monaco, investments into Georgia’s finance sector, providing funding access and extending credit lines to companies in steel, IT, real estate, mining, alternative energy, hospitality and the finance sector.
It could be a very exciting four weeks waiting for the deal to be done.
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