Select Committee on Treasury Written Evidence


Memorandum submitted by Hogg Robinson Group

EXECUTIVE SUMMARY

    —  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 systems.

  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 business.

  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 and succeed.

May 2007





 
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