Exposed: Who gets what from Eversholt's great gravy train

Click to follow
The storm over rail privatisation intensified yesterday when it was confirmed that four directors of the rail leasing company Eversholt, along with senior venture capitalists, were to share a pounds 50m cash bonanza from the group's sale to the HSBC banking giant.

In addition, a wide range of investors including the Metropolitan Museum of Art in New York, an investment account run by Wolverhampton Borough Council, and the California, Utah and Massachusetts Institute of Technology pension funds will share indirectly in the bonanza.

Top of the list of personal windfalls was Andrew Jukes, Eversholt's managing director who invested pounds 110,000 in the buyout, and will receive a total of pounds 16.5m in cash, of which pounds 6m goes to a trust fund set up for his three children.

Senior executives of two venture capital firms, Candover and Electra Fleming, will share up to pounds 6.7m of immediate profit for a personal investment totalling less than pounds 45,000, and further gains - running into millions - in future years .

Eversholt was sold to its management last February for pounds 580m, but just a year later it has been bought by HSBC for pounds 726.5m, an increase of pounds 146.5m over the sale price. After a change in the financial structure, the actual gain was pounds 386m for the shareholders, who put up a tiny pounds 2.5m for the ordinary shares just over a year ago.

The move follows the huge public outcry over the sale of Porterbrook Leasing, another rolling stock company, to Stagecoach last year for pounds 825m. The Porterbrook affair resulted in profits of pounds 300m and netted pounds 36m personally for its managing director, Sandy Anderson.

The individual windfalls in the Eversholt sale are slightly smaller, but still represent a 15,000 per cent increase on the price paid in the management buyout last February. The pounds 726.5m paid by HSBC includes the repayment of pounds 273m of debts and a further pounds 67.4m to pay off preference shares held by venture capital funds.

One senior director of Eversholt has lost out on the cash bonanza, however. Hugh Griffiths, the former commercial director, is believed to have left Eversholt following a dispute with other directors, just before privatisation last year, and never held shares in the company. An Eversholt source said: "His face just didn't fit in the job."

Mr Jukes fiercely defended his windfall, insisting he had taken a substantial personal risk in the venture. "The picture in 1995 was of pessimism and cynicism about the whole process. Experts predicted that it would not run smoothly. We went against the grain at the time and took the risk. It's paid off."

Last night it emerged that Colin Habgood, finance director, is to depart in the next two or three months, pocketing pounds 12.1m based on his last documented pounds 80,000 stake.

Peter Harper, Eversholt's chairman, has also resigned from the group with immediate effect. A former senior Hanson executive, his one-year stay at Eversholt has netted him pounds 2.99m from a stake of less than pounds 20,000.

Of the profit made by venture capitalists, up to pounds 5.5m was made by Electra Fleming's management team, chaired by Michael Stoddart. Their stake is believed to comprise a large part of the 36,665 Eversholt shares held by a company called EF Nominees Ltd. Electra Fleming is the management company of Electra Investment Trust, which has the former Defence Secretary Tom King on the board.

A further pounds 1.2m was made by Candover's management, which is chaired by Roger Brooke, with Stephen Curran as chief executive and Gavin Fairservice his deputy. Of the pounds 1.2m, pounds 375,000 was made by Colin Buffin and Robert Clark, who are on the Eversholt board.

The Candover and Electra Fleming venture capital teams teams stand to gain millions more in future years from a share in the pounds 200m profits made from the deal by partnerships their firms manage on behalf of other investors. Candover was the lead investor in setting up the Eversholt buyout from British Rail.

Executives including Mr Stoddart are entitled to a 10 per cent share in the profits made by Electra Private Equity Partners, which made pounds 104m profit on a pounds 696,000 investment. The executive profits kick in above an unspecified threshold level of return.

Candover has a similar arrangement for its executives, who share in the profit - above a threshold rate of return of 10 per cent - made by private limited partnerships managed by the company. In 1995, executives shared pounds 18m in profits from the investments of a 1989 Candover fund. It is through these partnerships that many other other investors including the Metropolitan and Wolverhampton share in the profits.

HSBC's leasing arm, Forward Trust Group, argued yesterday that it had paid a "fair market price" for Eversholt. Asked why it had not made a bid during the original privatisation last year, Graham Picken, chief executive, said: "At that stage privatisation was very much in its infancy. The situation has now changed enormously."

Forward Trust will take over Eversholt's fleet of 4,000 electric locomotives and commuter trains, giving it the largest fleet of the three rolling stock leasing companies. Mr Picken said he wanted to increase investment and expand staff numbers from 66 as a precursor to bidding aggressively for an estimated pounds 1.5bn of new orders planned over the coming years by the 25 privatised train operating companies.

Additional research by Patrick Masters.

Jukes interview, page 3

Comment, page 21

Sharing the spoils in the rolling stock lottery

Investor Investment Profit

Advent (Boston, Mass) pounds 209,000 pounds 31m

Alpinvest Holdings (Naarden, Netherlands) pounds 264,000 pounds 40m

Roger W Aylward pounds 60,000 pounds 9m

The Aylward Childrens' Settlement pounds 20,000 pounds 3m

Berrylands Nominees (London) pounds 91,000 pounds 14m

Barclays Industrial Development pounds 91,000 pounds 14m

Clink Street Nominees pounds 9,000 pounds 1.4m

Candover Investments and limited partnerships pounds 725,000 pounds 109m

Candover Trustees (executives of Candover) pounds 8,200 pounds 1.2m

Electra Fleming Private Equity Partners pounds 696,000 pounds 104m

EF Nominees (executives of Electra Fleming) pounds 37,000 pounds 5.5m

Gartmore Private Equity Growth pounds 80,000 pounds 12m

Colin W Habgood pounds 80,000 pounds 12m

Peter J Harper pounds 19,800 pounds 3m

Andrew J Jukes pounds 70,000 pounds 10.5m

The Jukes Childrens Settlement pounds 40,000 pounds 6m

Royal Bank of Scotland pounds 32,000 pounds 5m