Memorandum submitted by Hogg Robinson
Hogg Robinson Group plc (HRG) welcomes
the opportunity to respond to the Treasury Select Committee's
call for evidence as part of its inquiry into private equity.
Hogg Robinson Group is an international
corporate services company that for six years operated under private
equity ownership following a 640 million investment by the
Permira Europe II fund. During this time the company carried out
a successful restructuring of the business that saw HRG refocus
on its core corporate travel and related services.
The funds made available by Permira
allowed HRG to embark on a major investment programme and expand
across Asia, Europe and North America.
Hogg Robinson has since carried out
a successful IPO and is now an established publicly listed company.
HRG's experience of private equity
ownership is wholly positive. Permira's investment allowed Hogg
Robinson to thrive and grow. HRG believes that much of the recent
commentary on private equity misrepresents the experiences of
companies under private equity ownership.
Hogg Robinson endorses the support
given to the private equity industry by the Chancellor of the
Exchequer and the Economic Secretary to the Treasury.
1. Hogg Robinson Group (HRG) is an international
corporate services company that offers travel management and related
services to clients throughout Asia, Europe and North America.
2. In 2000 HRG, which was then a publicly
listed company, accepted an investment offer from the Permira
Europe II private equity fund in a 471 million transaction.
In 2006 Hogg Robinson carried out a successful initial public
offering on the London Stock Exchange.
3. At the time of Permira's investment Hogg
Robinson was a group needing to quickly reinvent itself. While
public ownership had been beneficial in the past, the company
had reached a point where fundamental change was required for
the business to thrive and grow. Changes in the travel services
market caused by the advent of the internet meant that the public
markets were taking an increasingly sceptical view of Hogg Robinson's
future. The company's view was that the dramatic change needed
would be difficult to introduce in a public market environment.
4. The Permira fund's investment in Hogg
Robinson represented a commitment by Permira to HRG's long term
strategy, which was to dramatically restructure and build the
business. The goal was to re-focus on growing the core travel-services
business with the aim of making Hogg Robinson one of the world's
leading travel services groups.
5. The funds made available by Permira allowed
the HRG management to embark on an ambitious international expansion
plan, underpinned by major investment in state-of-the-art ICT
6. HRG now owns in 24 key "driver markets"
throughout Asia Pacific, Europe and North America, supported by
a strong network of managed partners in a further 72 countries
around the world.
7. During the six-year period of the Permira
fund's investment, Hogg Robinson went from being one of many players
in a fragmented travel services market, to being the leading European
travel services firm and one of the top three worldwide.
8. A key feature of the management's strategy
for the group was to re-list on the public market. Throughout
HRG's time under private equity ownership, Permira supported the
continuation of the corporate governance practices that were in
place when HRG was a publicly listed company. Differing models
of ownership have not affected Hogg Robinson's commitment to fulfil
the responsibility to be open and transparent with investors.
9. Hogg Robinson's current status as an
established, publicly listed company reflects the continuing success
of the management team's strategy. HRG is now enjoying the differing
benefits of a public listing. HRG's presence on the London Stock
Exchange gives enhanced credibility and a higher public profile
with customers and the wider investment community.
10. HRG believes both public and private
models of ownership offer major and material benefits. While the
private equity model provided the ideal environment to change
and grow, now that HRG is an established, successful business,
the public market is the right place for Hogg Robinson Group.
11. In our view much of the recent commentary
on private equity misrepresents the experiences of companies under
private equity ownership. Hogg Robinson thrived during its period
under private equity ownership, becoming a leader in the corporate
travel services industry, and a major success story for British
12. Hogg Robinson endorses the support given
to the private equity industry by the Chancellor of the Exchequer
and the Economic Secretary to the Treasury. HRG's view is that
the operation of private equity benefits the UK economy by providing
an alternative environment in which companies can change, grow