Adrian Ringrose sees fresh opportunities
WATCHING the former head of Virgin Galactic give a presentation to Interserve’s top management last year, Adrian Ringrose was struck by the public trust placed in a brand with no track record in a given sector.
“You can get people to believe that you really are going to build a spaceport and get people to commit six years in advance of their flight, on the strength of it being Virgin and it will work, with no other tangible stuff on which to base that spending decision,” he says.
While Interserve’s ambitions stop short of space travel, the outsourcing and building group aims to expand its reach further into probation services, housing and healthcare – making its public persona an increasingly pressing question for Ringrose.
He has been in charge of the FTSE 250 group since July 2003, and thinks the coalition’s spending overhaul has created a huge chance for his firm to break into new sectors. “We want to be quite near to the cutting edge of what is market based versus what is not outsourceable,” he says. “Ten years ago the boundaries of that were catering, cleaning and maintenance – then it moved to a strategic role in looking after property.
“Now we feel we’re at another evolutionary point; that interface between the government is moving on again and we want to make sure we’re not left behind in that dynamic.”
Ringrose sees his firm’s recent £26.5m purchase of a nursing staffing firm, Advantage Healthcare, as an example of how private firms can offer NHS Trusts a more joined-up service.
“We expect to extend our activities in health in the coming years, both organically and potentially inorganically as well,” he says, adding that there is space for rivals such as Mitie and Serco to also grow. “Basically we’re paddling our own canoe.”
This growth and ventures abroad helped Interserve weather tough years in construction, where it makes over a third of its £2bn annual revenues.
Ringrose, who chairs the CBI’s public services strategy board, says the chancellor should be doing more to boost construction in this week’s spending review. “The easy bit is building stuff; financing it’s quite easy too. What we need is that visible demand… The thing that we’re missing at the minute is the visible pipeline of demand, the shovel-ready projects.”
Another part of the spending review that could have big implications for Interserve is the possibility of cuts at the Ministry of Justice.
Interserve has already been at the sharp end of such savings drives, as one of several firms applying to take over Durham Prison when the MoJ took bids last year. The government opted to keep the jail when it became clear the project would not deliver the cost cuts and upgrades it hoped for.
“The way we’ve chosen to look at it is while it’s frustrating, it’s given us the opportunity to build a team, get known, develop some competency and to have a couple of more years of learning before we go for the big one.
“So, am I trying to put a polish on a disappointment? Yeah, probably I am. We would have loved to have got some business out of that experience. [T]he fact that nobody did makes it a slightly less bitter pill to swallow.”
He is now in discussions about taking on some of the probation service, which the MoJ aims to privatise in autumn 2014.
Ringrose is also weighing up options for “between £150m and £200m of firepower to develop the business”, funded from the leftover windfall from selling PFI assets as well as debt facilities. Even more money could be found if the deal was compelling.
“There’s not a burning desire to bulk up for the sake of bulking up but for the right skillset and the right market reach, bigger transactions could be on the agenda. And the money will always follow a good deal,” he says.
Investors have endorsed Ringrose’s expansion plans, doubling Interserve’s share price in the last year. But does he worry that he could over-reach and end up like G4S during the Olympics?
“As we push the boundaries of our business further and further towards the citizen, you’re dealing with unpredictable situations that are directly affecting people’s lives. So the risk is clearly there. I think we would try and have the self-discipline not to bite off more than we thought we could chew.”
Interserve might not be a household name, but Ringrose’s search for growth has plenty of rocket fuel left.
CV ADRIAN RINGROSE
Based: Splits time between Interserve HQ in Reading and London, with around half a dozen trips a year to overseas businesses
Education: University of Liverpool, BA(Hons) in Political Theory & Institutions
Career: 1988 - Market researcher then analyst at London Electricity
1997 - Joins facilities management firm Building & Property Group
2000 - B&P taken over by Tilbury Douglas, which becomes Interserve
2003 - Promoted to deputy chief executive in January, before taking top job in June