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Bond gets to grips with Rydon buyout

PROFILE - It has been a hectic year for Bob Bond, who has just led a buyout of the Rydon group. He talks growth plans and PFI strategy with Steve Menary

'I FEEL like I've put on weight, ' says Bob Bond. 'I used to swim four times a week and I haven't been at all in the past year.' There's no sign this lack of exercise is having any effect on the youthful looking Mr Bond, who is 49. The probable reason: stress over the past 12 months during which Mr Bond has spent engineering a buyout of Rydon Group has kept the weight off.

A year ago he was managing director of the £115 million-turnover construction division at the Sussex-based group.

The decision by Graham Turner, Mike Gearon and Derek Dennard to sell the group they founded in 1976 had not been a total surprise to Mr Bond. The three had previously worked at family-owned house builder and contractor Croudace, and Mr Bond had known them when he was a junior employee.

He was tempted to join Rydon after 17 years with Croudace.

Mr Bond says: 'At Croudace I was like the tea boy and they were gods. I was in my early 30s and really liked it but I'd been promised things would happen and they hadn't. I was also interested in an equity stake but that was never going to happen and that was one of the reasons I left.' Starting as a construction manager, he graduated to Rydon's main board in 2000 but the owners' decision to sell up placed him in an awkward position.

With consulting giant PricewaterhouseCoopers taken on for advice, a float was quickly discounted and an auction set up.

An information memorandum was sent out to interested parties, including a number of major contractors and house builders attracted by the 2,000 strong landbank for the group's housing arm.

The problem for Mr Bond was that while interested in buying the business himself, he also had to open the group's books up to prospective bidders.

He says: 'I had to do presentations to all these other bidders and to tell them things I'd rather not but that was my duty as a director.' The three owners were initially circumspect about a management buyout and the ability of Mr Bond and co-directors John Kitchin and Paul Wright to raise the finance.

Mr Bond persuaded them to let him explore the possibility. He says: 'I wanted to look at loads of banks but I couldn't, they wouldn't let me. Eventually in agreement with the vendors I saw two banks but I had to be chaperoned by PwC.' Mr Bond opted for banking giant HBOS, which took a 30 per cent stake in the bid. The remainder of the prospective shares were to be held by Mr Bond and his co-directors.

He says: 'We employed KPMG to advise us but we had to put in a blind bid. I've no idea what the other prices were.' His bid vehicle, Rydon Holdings, bought all the 16-odd companies that formed part of the original group.

This deal, described as a £100 million MBO although no price has been disclosed, did not include Rydon's PFI stakes, held in a seperate vehicle, Ryehurst. Rydon was one of the few small to medium sized contractors to have successfully built up stakes in a number of PFI concessions.

Mr Bond intends to return to the policy of retaining stakes in all PFI concessions Rydon wins, with a target of 50 per cent.

As group chief executive he does not plan sweeping changes. He hopes for 15 per cent a year growth from the group's current £195 million turn over and to generate profits of about 5 per cent. John Kitchen has taken over at Rydon Homes as Derek Dennard had previously been running this business. Paul Wright will continue in his old job as finance director. The financial year is being moved to September as the group changes its accounts policy on housing with sales booked only on completion and not on exchange of contracts. The maintenance arm will continue to avoid schedule of rates work and stick to partnering.

Rydon's construction arm has only worked for Ryehurst but Mr Bond is mulling over offers to work on other companies' concessions.

The main change has been the consolidation of the 16 or so businesses acquired into four distinct divisions: construction, housing, maintenance and PFI.

The reason Mr Bond can eschew a more adventurous approach is the attitude of HBOS. 'They don't want a quick exit, ' he says. 'It's not like an equity house that wants out in three to five years.' This is backed by a deal that involves HBOS taking a 30 per cent stake but only getting 20 per cent of voting rights.

'They don't want to run the company, ' concludes Mr Bond. That, a dozen years after he joined, is down to Mr Bond.