GoCompare gets a spin-off, but at what price?

My Week: Mike Ashley’s bravura performance before MPs; and what can we expect from Sir Philip Green?

Gio is back on our TV screens, but the company may soon be demerged

I don’t have time to watch much telly these days. It’s a bad thing in my job, because you lose touch with what our big consumer brands are up to.

At a City event the other day, the chairman of eSure, Sir Peter Wood, was asking my opinion on the return of “Gio” to our TV screens. I didn’t have a clue what he was on about until he patiently explained Gio was that opera singer in the GoCompare TV ads. “Oh, that Gio,” I mumbled.

If you’re like me, while you know they’ve either got meerkats, opera singers or dirty dancing builders in their ads, the size and service of these price comparison websites is a mystery. But, as it became clear this week, they’re actually very different.

Sir Peter has decided it’s time to spin off GoCompare from his eSure insurance group. Deutsche Bank’s brilliantly named Irishman Tadhg Flood is running a “strategic review”, we were told. Flood is a red-blooded dealmaker who once worked on Barclays’ thankfully-failed bid for ABN Amro. You know, the deal that sunk RBS.

This time, though, I can confidently predict that Mr Flood’s review will result in deal, one that will see GoCompare “demerged”; in other words, split off so shareholders will end up with separate GoCompare shares which they can then sell if they so wish. The idea is that eSure is growing slower than GoCompare, so management hopes hiving off the pacier website will see it valued at a higher price.

The question is: what price? When the deal was announced on Monday, I went around the market asking analysts for a view on how much Gio and his friends might be worth, only to find a meaningless spread of estimates. One broker compared it with Moneysupermarket, or Moneysoup as I prefer to abbreviate it, and you get a valuation of £620m. Another worked off the price it was valued at last year and got down towards £400m.

The fact is, it’s nigh on impossible to compare. Moneysoup is bigger and better than GoCompare, with a wide range of products beyond insurance. But GoCompare’s value a year ago was almost meaningless, too. The valuation arose because eSure was buying the remaining 50 per cent stake in the business that it didn’t already own. As such, it was always going to get a relatively cheap deal. Furthermore, Sir Peter’s a clever guy and you can bet he battered down the price in that negotiation.

Also muddying the waters is the fact that the business had been coasting for a while before eSure took full control. In the year since, it has put in a pretty hefty turnaround, including the marketing push with the curtain call for Gio which Sir Peter was so proud of.

Frankly, until Mr Flood has tested the marketplace, it’s impossible to say how much GoCompare’s going to be worth. Not, as that meerkat might say, simples.

Ashley’s empathetic display

Mike Ashley, founder of sports clothing retailer Sports Direct (Reuters)

Part of the reason I shun the gogglebox is because there’s never much on worth watching. That wasn’t so this week, as the Parliament TV channel proved utterly gripping thanks to the BHS buffoons and Sports Direct’s Mike Ashley.

It was gripping stuff. Mr Ashley has rarely, if ever, spoken in public for more than a few snatched minutes. But any suppositions that he might be a shrinking violet were way off the mark. By the size of him, he sure ain’t shrinking, and his tubthumping body language was more violent than violet.

I don’t know if Sports Direct has much of a complaints department, but what Mr Ashley did – so skilfully – was that route-one customer services trick: when you’re facing an angry punter, apologise, apologise, apologise, and empathise, empathise, empathise.

You’ll have experienced it when complaining about dismal service from your utilities or insurance companies. “That’s terrible,” “How awful for you,” “I’m so sorry we did that”, the voice on the other end of the phone sighs in sympathy. The psychology is simple: humans find it hard to attack someone who’s empathising with them.

For Mr Ashley, the technique worked a treat. Where the committee had doubtless wanted to barrack and chastise him, they ended up laughing along with him. They almost sympathised with his pathetic excuse that workers were treated appallingly because the company had simply grown too fast for him to cope.

It was a bravura performance from Mr Ashley, but a rather feeble one from the committee. While we learned heaps about the tycoon’s showmanship and style, his workers received nothing that will make their lives any more pleasant.

The BHS interrogations bore far more fruit. Frank Field’s committee was far better briefed on the highly complicated questions that needed asking about the behaviour of Sir Philip Green and the man to whom he sold BHS, Dominic Chappell.

Mr Chappell’s behaviour in moving money in, out and around BHS and his company Retail Acquisitions looks dubious in the extreme. Yet you wouldn’t have guessed that from his performance at parliament. Mr Chappell, who I hear was drilled by a former MP before his appearance, answered questions with the self-assurance of a man confident he’d done nothing wrong.

His answers came quickly and sounded precise and well founded.

Even when justifying why he’d transferred more than a million quid to Sweden shortly before the company went bust.

Even when he was denying that he was sunbathing on his yacht as the administrators were called in.

Even when he was describing how he’d borrowed money from BHS to pay off a mortgage on his Dad’s house.

Most of the time the MPs asked the right questions, but when they got too detailed they allowed Mr Chappell off with his promises to send them a written answer later.

It’s absolutely imperative the committee makes sure he provides every shred of paperwork and proof he promised them. The truth with this scandal lies hidden in the details.

Up next: Green showdown with MPs

There’ll be more entertainment next week when Sir Philip Green takes the stand. Everybody I speak to is predicting he’ll explode with anger and incriminate himself enormously. I’m not so sure. I have a feeling he’ll be far calmer and run rings around the MPs.

Having said that, the MPs don’t look like they’re going to let him off the hook, or the financial industry around him that allowed him to do his work.

The list of extra witnesses they summoned on Thursday was hugely impressive and well researched – from Richard Caring, Sir Philip’s long-term business partner who took £93m in dividends out of BHS in the early days – to Brett Palos, Sir Philip’s son-in-law who bought one of the BHS stores. From more Goldman Sachs bankers who advised Sir Philip on the sale to his pals at Deloitte.

The thoroughness of these proceedings seem to me unusual in the select committee hearings I’ve covered over the years.

I detect the analytical brain of Sir Paul Myners, Sir Philip’s long term adversary, working behind the scenes. When he was first appointed to advise the committee, I was concerned his blatant conflict of interests would count against the inquiry. Perhaps the rigour he’s bringing cancels that out.