Jim Ratcliffe, founder of Ineos, joined the ranks of tycoons who have made ownership of European football clubs de rigueur when his chemicals group bought a team in Switzerland last week.This content was published on November 20, 2017 - 10:50
But where others have swooped on big-name clubs such as Chelsea, Manchester City or Paris Saint-Germain, the Brexit backer’s star signing is the less well-known FC Lausanne-Sport.
“Today the club is in the middle of the Swiss Super League — there’s no reason it cannot end up in the top four,” says David Thompson, chief executive of Ineos Football, a newly created business within the group.
“Our target is in four years’ time to have a team that can qualify for European football,” he declared.
It is just the latest eye-catching move outside of its core activities by a business better known for refineries, chemical works and oilfields.
Ineos is the world’s fourth-largest chemicals manufacturer by revenue, supplying the basic building blocks that go into everything from burger cartons and carpet tiles to medicines and chlorine for swimming pools.
But it is now diversifying with a string of unusual ventures. These have shone a spotlight on the UK’s largest privately owned business, which, despite its international heft and roughly $50 billion (CHF49.4 billion) turnover has a low public profile.
Last month, Ineos paid an undisclosed sum for Belstaff, a luxury British leatherwear purveyor of handbags, shoes and motorcycle jackets.
Not long before, it had announced plans to start manufacturing from scratch on what Mr Ratcliffe called the “spiritual successor” to the Land Rover Defender, the workhouse off-road vehicle withdrawn from production last year, which the entrepreneur is an avid fan of.
Together they have raised questions about the reasons for this expansion into seemingly unconnected areas — and whether it is a sign of hubris that carries risks of over-reach.
Ineos said the purchase of FC Lausanne-Sport, which enjoyed its glory days between the 1930s and 1960s, followed several years of investing in youth and community sports in canton Vaud, where it has headquarters for many of its businesses. It is not looking to make a profit from the club or run it as a “business proposition”.
Tom Crotty, an Ineos director, told the Financial Times its other forays were motivated by a desire for growth.
“The logic [is] a commitment to manufacturing and broadening our base away from just chemicals and oil and gas into a completely different area of manufacture,” he said.
Dealmaking is central to Ineos’ DNA. Founded in 1998, it quickly developed through a series of acquisitions, snapping up unwanted bulk and petrochemical assets from companies such as ICI, BP and BASF, as producers in developed economies came up against low-cost Asian competitors.
“We have a process that works very well in managing businesses, taking them in, changing them and making them profitable. We’re testing how repeatable that formula is in areas we haven’t previously been in,” says Mr Crotty.
Energy production is turning into another key activity. Ineos became one of the 10 biggest producers in the North Sea this year when it paid more than $1 billion for the oil and gas business of Ørsted, the Danish renewables group previously known as Dong Energy.
Ineos left Britain in 2009 at the height of the recession and relocated its global headquarters to Rolle in canton Vaud. At the time it was estimated that the move would reduce the firm’s tax burden by €450 million between 2010 and 2014. In July 2015, the company announced that was moving its main head office from Switzerland to London. Jim Ratcliffe and Ineos directors are now resident in Britain.
The chemicals giant now operates businesses across 22 countries. Six of its petrochemicals businesses have their headquarters in Rolle, Switzerland, with a combined turnover of CHF20 billion. In total, the company employs 110 staff in Rolle and at a plant at Sins, between Zug and Lucerne.End of insertion
It is also at the forefront of Britain’s nascent fracking industry, after buying several stakes in licences from France’s Total. Mr Ratcliffe has said he believes shale gas can revitalise manufacturing in the UK and Europe.
Behind Ineos’ more unorthodox enterprises are the personal passions of Mr Ratcliffe, the majority shareholder in Ineos with 60 per cent. John Reece and Andy Currie, his lieutenants, each own 20%.
Born near Manchester, 65-year-old Mr Ratcliffe is a triathlete with a penchant for outdoor activities and has trekked with his sons to the North and South Poles. Chemicals industry observers praise his acumen.
“Ratcliffe has been an extraordinarily good buyer of assets at the bottom of the cycle,” says Graham Copley of SSR, an investment research firm. “He’s taken away things from publicly traded companies where the chemicals assets have been a volatile tail on the dog that nobody really wanted.
“[Ineos] run their businesses very, very well and can take the swings and roundabouts of the commodities cycle because they’re not [a] publicly traded stock,” he adds.
This was proved in the wake of the financial crisis in 2007/8, when global demand for chemicals collapsed. Ineos was forced to negotiate with its lenders to ensure the survival of the group, but emerged intact. In 2010, it raised eyebrows by moving to Switzerland to save on tax, although it returned to the UK last year.
Although Ineos does not report financial results in consolidated form, it posted record core profits of €4.3 billion for 2016, as measured by earnings before interest, tax, depreciation and amortisation.
Despite the scepticism of some in the car industry, the company insists that its planned vehicle is not a vanity project.
“This has to make money and Jim will be the first person to say ‘if this isn’t working, we will close it down’,” says Mr Crotty.
However, the company has made clear it wants state support if it is to manufacture the 4x4 in the UK.
People familiar with Mr Ratcliffe describe a quiet and courteous man, who nevertheless drives a hard bargain.
His mettle was shown during a bitter industrial dispute over working terms and conditions at the Grangemouth complex in Scotland in 2013. After the magnate threatened to shut down its petrochemicals plant, the trade union relented.
“He is very honourable,” says one person who has recently worked with Ineos. “But at the same time, he will take tough decisions.”
(c) 2017 The Financial Times Limited
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