Profile: Angler takes the hook: Brian McGowan had planned a life of leisure. Then came the call to lead House of Fraser to market. David Hellier reports on a retirement postponed

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The Independent Online
THE telephone call that lured Brian McGowan out of an early retirement came on the evening before the Test match at Lord's in the middle of last month. It was from Derek Higgs of Warburg Securities, one of the best known merchant bankers in the City, who wanted to meet the next day to discuss offering McGowan an exciting but potentially problematic assignment.

McGowan said no, he could not meet immediately because he had already arranged to watch the cricket.

Few people would have been so cool, but then few people are in Brian McGowan's position. A grey-haired but young and fit 48-year-old, he says he does not want or need to work. Or not every day, at least.

Cancelling a day at the cricket would have been quite the wrong way to start his retirement. Unlike other calls he had had, though, he did not dismiss it altogether.

When he surprised the world in May by announcing that he wanted to leave Williams Holdings, the conglomerate he had built up with Nigel Rudd over the previous 12 years, McGowan explained that he wanted more time to do the things that he enjoyed, such as skiing, playing tennis and fishing.

So much for fishing, or any other recreation. Last week he spent much of his time explaining to a bemused business world why he was now so filled with enthusiasm for Higgs' offer, which he had accepted after a few weeks of negotiation. As non-executive chairman, he is to lead the House of Fraser stores group (minus Harrods and a few other gems) to a share flotation next year.

McGowan has been selected to lend credibility to a business that is sorely in need of it if the group is ever going to attract new capital from outside shareholders. He is a good choice. As the man credited with being the dealmaker behind the rapid rise of Williams Holdings through a series of acquisitions during the 1980s, his stock is high. What is less clear, though, is why he should want this job.

Brian McGowan was educated at his local grammar school, Isleworth in west London, and later became the first non-public-schoolboy to become articled at the City firm in which he worked.

He met Nigel Rudd when the two were working at London & Northern, a conglomerate, in the 1970s. He then became acquisitions manager for P&O and in 1981 was working as finance director of Sime Darby in Hong Kong when Rudd arrived and persuaded him they should team up. Rudd, who had himself attempted very early retirement after making a large amount of money on a property deal, was determined to build a conglomerate from the wreckage of recession, and thought McGowan was the man to help him. 'He is the best merchant banker never to have worked in a merchant bank,' he says.

McGowan put in pounds 90,000 and Rudd pounds 200,000 to buy a 51 per cent shareholding of W Williams, a bombed-out Welsh engineering business. They turned the company around, renamed it Williams Holdings, and began buying businesses. McGowan played the entrepreneurial role while Rudd was more of an organisational man. Both were cautious, however, which was why the company avoided the fate of many of the corporate wonders of the 1980s. By the end of the decade, it had a place in the FT-SE 100 and its two leaders were being described in terms normally reserved for the Lords Hanson and White.

The 1990s have been something of an anti-climax at Williams, especially in deal-making terms, and may partly explain McGowan's decision to move on. All the same, Williams still looks relatively solid compared with many of the other high-flying companies of the 1980s.

But McGowan, an open, friendly and professional character, now takes up a task to test the toughest entrepreneur. If his stock is high, the same could hardly be said of that of the Fayed brothers, the Egyptian owners of the House of Fraser group. Ever since they bought the company in 1985 from under the nose of Tiny Rowland of Lonrho, their affairs have been subjected to the most intense scrutiny. A DTI report, published in March 1990, concluded that in making their pounds 615m bid, the brothers had 'dishonestly misrepresented their origins, their wealth and their business interests and resources'.

Earlier this year a management team was rumoured to have tried to put together a buyout of the House of Fraser stores that are now to be floated. The team was said to have offered around pounds 290m, considered insufficient for the sale to go ahead. However, a refinancing of the whole group did go ahead, apparently on condition that the stores would be sold or floated as quickly as possible.

Enter Derek Higgs and now Brian McGowan, who feels that the scare stories have been overdone and that the group is in rather better fettle than most people imagine. But why would anyone in his position, who says that he does not need the money, bother himself with trying to persuade a sceptical City that the stores are really worth more than the pounds 290m the management was prepared to offer earlier this year?

According to a normally reliable source, Higgs appealed to McGowan's conscience, pointing out that he had made a lot of money out of the City, that there were large numbers of jobs on the line and that it was an opportunity to give something back to the investment community. McGowan says this is nonsense - that anyone who knows him would also know that appealing to his conscience would be the last way to get him to leave the serenity of his Staffordshire home for centre stage in the City.

He could be being over-modest: it is difficult for tycoons to admit they might have a soft side.

McGowan would not comment on suggestions that he stands to make millions out of a successful share sale or a sale to a trade buyer. He insists he does not need the money anyway.

'I don't have an extravagant lifestyle,' he said. 'I don't have yachts or planes, and I don't gamble. I hope that makes me more independent than I would be if I really needed the money.'

He also says that since 'retiring', he has had plenty of offers worth more money than he is likely to make from his current position. 'And I was not exactly underpaid at Williams.' (His salary last year: pounds 670,000.)

'No, I really was not going to take anything on when I left Williams. I did not want to go on working every day of my life and there's a problem when one of the principal founders of a company like that wants to wind down. You're either in fully or out altogether. I could never have been a non-executive director of Williams.'

Having a batch of non-executive directorships would also have been too onerous, he said.

So the offer from Higgs seemed ideal. It combines the excitement of the build-up to the flotation, where McGowan's public company experience should prove invaluable, with quieter periods when he hopes to be able to enjoy his recreational pursuits. He no doubt also wants to attend to his two sons, aged 22 and 19, about whom he once said: 'They are singularly unimpressed with anything I have done.' He and his wife separated two years ago.

'What I expect will happen is that there will be some intensive bits, with the pace hotting up in 1994, but that once we've floated I will be purely back into a non-executive role.'

Since the first approach McGowan has met the Fayed brothers at their offices in Harrods and found them 'immensely likeable'. But can he trust them not to interfere in the running of the group? He has insisted on complete autonomy and will pursue a strategy that has already been agreed with the brothers. 'Anything they want to know about the group's progress will have to come through me. It is the only way. And if there is any interference I will resign immediately. I have one weapon only.'

McGowan accepts that he does not know anything about retailing. However, he added: 'I don't know much about Polycell either (one of Williams' products). But I know what the profit margins are, and that is what I'm there for.' He also said that he was not very good on detail but was good at long-run thinking.

He is known in the City for his integrity. 'He is a very honourable man,' said Don de Grut, non-executive director of Newage Transmission, a company that was sold to Williams. 'You do not have to worry about putting things in writing when you're dealing with him.'

McGowan expects there will be two main phases at House of Fraser. The first will be to educate the investment community about the potential of the group in an effort to convince the City that it really does have a value worth selling it for. And the second thing, he says, will be to work out where the stores group goes from here.

He knows that neither of these tasks will be easy and he is already aware of the work it might entail. During one of the many telephone conversations with his public relations consultant last week he is reported to have said: 'This is already seeming like hard work.' But then it seems that retirement was proving to be pretty hard work, too. The prospect is easier than the reality, it seems: a really exciting challenge is just too tempting to turn down.

(Photograph omitted)