Vultures circling to cherry pick jewels

Private equity groups and buyout firms are aiming to cherry-pick assets from failed construction company Carillion after one of the UK’s most politically sensitive corporate failures.

Some private investors include Canadian Fund Managers Brookfield and British private equity group Endless, which specialises in turnarounds, are circling the liquidator PwC as the government is struggling to protect thousands of jobs after the collapse.

The value of Carillion, which continued to win public contracts despite its mounting debts and last year’s profit warnings, fell from £2bn in 2016 to £61bn this month, making it the biggest UK collapse in the construction industry.

According to Gary Wilson, CEO of Endless, “ Investors will be looking for the jewels in the damaged crown and if the deals are not done quickly, the value will disappear as contracts will be terminated.”

Another investor is of the opinion that several potential bidders believed some units in Carillion “ got lost in a huge company”.

Last week, at the Canary Wharf law offices of Clifford Chance, management of Carillion sat down with 160 bankers and advisers to avert the collapse.  By end of December 2018, Carillion was asking the government for a £150m short-term loan to stave off collapse.  Last Sunday on 14th January 2018, Carillion were seeking just £25m in forward funding,  at the Government Cabinet Office meeting, interim chief executive Keith Cochrane lost confidence in the company and vital support from the government had finally run out.

This is the company that built the Channel Tunnel and then it got involved in household retrofits in Swindon, and when it became big, Carillion was a mess, as it didn’t even have a record of all its building contracts.