‘There is a great opportunity to grow the company and do more – what’s not sexy about that?’

Barratt’s telephone negotiations to buy Wilson Bowden had reached their most sensitive point when… the lines went dead and the lights went out. A power cable had been severed at the Great Western Quarter site in Brentford, west London, where Barratt’s new chief executive Mark Clare had his office. While construction workers sought to reconnect the power lines on the mixed-use scheme in the making, Clare and his team were left on tenterhooks.

This moment of drama did not prevent the deal from being done with Wilson Bowden, but it was one of the factors that prompted Clare to move office. Although Barratt’s HQ remains in Newcastle, Clare and his management team will within weeks be headquartered in London’s West End, well away from the potential disruption of site works at Great Western Quarter.

Clare is clearly a decisive man, as is evidenced by his acquisition of everything from businesses to office space over his first six months at Barratt Developments. When he joined the company last October he had declared his intention to grow the business and almost his first task in the job was to enter the bidding for Wilson Bowden when it went up for sale in November. He eventually secured the company for £2.2bn, winning out over serious competition from George Wimpey and the HBOS/Sir Tom Hunter bid.

Barratt and Wilson Bowden are seen as a good fit, their operations complementing one another. The combined business will have an output of about 20,000 homes a year and, thanks to Wilson Bowden’s strong commercial arm, the capability to develop all elements of a mixed-use scheme, not only the residential. The enlarged company will take a close second place to the proposed George Wimpey/Taylor Woodrow merger in a rapidly emerging super-league of housebuilders.

Although Clare has a lot of hard work ahead integrating the two businesses and delivering on the expectations of the City, shareholders and the industry, he looks like he is having the time of his life. “It’s great fun,” he says, beaming with a cartoon-character grin. Clare’s cheerful disposition today contrasts sharply with the battle-worn face seen on television screens a year ago when, as head of Centrica’s British Gas business, he was taking the flak for steeply rising domestic gas prices.

Now he talks enthusiastically of the fresh challenge of housebuilding and regeneration, environmental issues – one patch of common ground from his previous job – and the need to invest in and nurture talent in the integrated business. The Wilson Bowden acquisition has already set Clare well on the way to meeting the objectives set out in the company’s interim results, and he seems quietly confident about where he is taking the business.

Q&A

The acquisition came a lot faster than anyone could have expected. How has that fitted with your business plans?

We went through our own strategic review, identifying the key things that we needed to focus on [see box, right]. The prime aim we set was to grow the company fast, and that is the opportunity I saw coming into the business. That is what I have been doing from day one with the team, identifying the key things we need to do. One of them was inorganic growth and we have ticked that box and in a way that has helped accelerate some of the other things.

I was expecting an industry that was less regulated – but it has a greater variety of regulations

We know we have to deliver integration and get on with the plan we have set. We are trying to keep all the plates spinning. One analyst’s view of the acquisition was that it was a higher risk strategy than others that have happened, but that if we can pull it off, it provides greater opportunities than anybody would have imagined. That puts it quite nicely. There is a higher risk here, but the potential rewards are very substantial.

What are your aspirations for the integration of Wilson Bowden?

It is important that we find a way of nurturing the David Wilson brand and delivering that into the future. The land position, given our ambitions to grow and the challenge of ever longer planning processes, gives us flexibility in being able to use land as appropriately as we can and deliver more volume. The strategic land team, something we don’t have, will give us the expertise we need to invest in the longer term.

We are engaging with the commercial development business already about how we might deal with big schemes in the future. We will be able to deliver mixed-use schemes in their entirety. Given that more such sites are coming through, we think there is some competitive advantage to us in having the commercial and residential expertise in one company.

What were your initial perceptions of the industry?

I came from a very highly regulated sector and my expectation was that this industry would be far less regulated. In terms of a single set of E E regulations it probably is, but it has a greater variety of regulations – some of it formal like the Building Regulations, some of it informal like what comes from Cabe, and then there is the whole planning system. Planning is a big challenge and one the industry is trying to rise to. Some would say we need to simplify the system, but waiting until it changes is not an option – we have to find a way of making it work.

On staffing, the industry seems to feed off each other, but there are not enough good people to go round, so how is this collectively solving the problem? We’re recruiting and the most important thing is that the whole organisation now talks about people and talent. There is also an acceptance that we could recruit some people from outside the sector.

I think there are areas where housebuilders have not had resources at all. On environmental issues, for example, we do not have the expertise in the company but this is going to become mainstream. This isn’t something that we can add on at the end, it needs to be part of the next set of housetypes that we produce.

The more we get this right, the faster we can grow the company so we come back to that basic objective of growth, which nicely fits the government objective of how we build 200,000 homes. I have seen the way the energy market has changed over the years. Housebuilding is changing, too – with consolidation, with emerging sites getting bigger and more complex, with environmental challenges, notably zero carbon. Housebuilders are having to take a very different approach. I believe the larger players with the most skilled people will win through. I don’t believe housebuilding is different to any other industry.

Housebuilding is no different to any other industry – the larger players with the most skilled people will win through

Why did you come into housebuilding?

I had spent 10 years in defence electronics, 10 years in telecommunications and 12 years in energy. I decided it was time to move on and I knew I wanted to take a chief executive role. I sort of identified from the FTSE 150-based companies the ones that would be interesting to work for, but that list was influenced by those companies that I knew something about.

I got a telephone call, looked at the Barratt annual report and started to do my due diligence. What I saw was a well run, well respected company with the biggest brand in the market, but with masses of opportunity to grow in a constrained market. I saw from the outside an opportunity to make a difference. I met quite a few people from the company before I joined and got a sense of the company culture, of its focus on quality and service and some of the things that unfortunately Barratt isn’t known for – perception lags reality quite seriously. I spent time with the executive directors setting out the stall on what I thought I might be able to add in terms of value, and that suited what they were looking for. I have to say that it has turned out to be everything I’ve hoped for and more.

So you were not deterred by the City’s poor perception of housebuilding?

I could see the City didn’t have a very high respect for housebuilders and couldn’t understand the P/E multiples [price/earnings ratio] when I arrived, but they have gone up quite dramatically since then. This was described to me as a not particularly sexy industry in terms of recruiting into, and I think the City’s view is the same.

But the pride that people, from sales people through to site workers, have in what they are doing is enormous and that was quite a big draw for me in joining the industry. And whatever you think of it, this is quite a well paid sector. There is a great opportunity to grow the company and do more – what’s not sexy about that? I think HBOS shattered that illusion when they bid for Crest Nicholson and acquired McCarthy & Stone because they used conventional methodologies to value the company. The way we looked at Wilson Bowden was as a conventional acquisition – we didn’t say what’s their asset value and multiply that.

So in the future do you see your business as being a developer or a housebuilder?

After a week in Barratt I decided it is both. We’re a property developer competing against all the other developers in London. Outside London and the big cities we compete with standard housebuilders. Wilson Bowden clearly adds to that.