Every now and then I climb mountains’ is the kind of self-effacing comment you can expect from renaissance man Peter Earl, Harvard Kennedy scholar, UN adviser, pal of Bolivia’s Evo Morales, author of a textbook on cross-border takeovers, and now bringing power to emerging regions/
Peter Earl is a man who thrives on huge challenges, and his trailblazing credentials aren’t in doubt. He has previously led charity sponsors to Everest Base Camp (the famous trek taking explorers into the heart of the Nepalese Himalaya), climbed Vinson Massif, the largest mountain in Antarctica, and tackled Bolivia’s third highest mountain.
Other claims to fame include work for the World Bank and the UN, introducing Richard Branson to his airline hero Freddie Laker, and lately mergers and acquisitions work in the power sector. Followers of small companies will recognise him from AIM vehicle Rurelec, where his efforts are bringing much-needed power to emerging parts of South America.
Oxford to Boston
‘I was a child of the 1970s,’ says Earl, who went from Oxford to Harvard on a Kennedy scholarship (where he sometimes taught Greek), before a switch to economics prepared him for later financial and corporate machinations. From Harvard he was recruited into the Boston Consulting Group, where he kick-started his career advising state-owned companies.
His travels eventually led him to the hot seat in New York at The Carter Center, which is committed to promoting human rights, where in 1994 he acted on a temporary assignment to the World Bank and a United Nations Development Programme in Bolivia. These links at the loftiest levels of the UN put him in the powerful position of being able to advise governments on privatisations in Latin America and Eastern Europe.
Earl’s varied career has seen him tangle with true corporate heavyweights: ‘I actually did the rescue of Laker Airways’ – the airline started by Laker that pioneered the idea of budget flights. ‘We raised the money to recapitalise Laker in the early 1980s, and even Tiny Rowland got involved. During the refinancing I introduced Laker to Richard Branson, who had done ten per cent of the underwriting. Freddie was his big hero,’ recalls Earl. Virgin Atlantic went on to name one of its planes Spirit of Sir Freddie as a mark of respect for Laker, who sadly passed away earlier this year.
Earl eventually ‘switched to mergers and acquisitions work before the big bang hit,’ becoming a director of Fieldstone Private Capital, ‘one of the first US investment banks to come to London,’ where he advised on cross-border acquisitions in the power sector.
Colin comes calling
Then, in ’95, Earl founded Independent Power Corporation (IPC) alongside one of his great contacts, Lord Colin Moynihan, the former energy minister who was part of the team responsible for privatising the UK electricity industry under Margaret Thatcher. ‘Colin basically passed the legislation that privatised the UK electricity industry,’ remembers Earl. The duo had built up plenty of energy industry experience during their advisory work on power privatisations and acquisitions.
Earl recalls: ‘On a trip back from Kazakhstan, Colin turned to me and said, “Look, these guys don’t just want advisers, they want partners, so let’s start up ourselves and act as the principals.” It was then that we decided to set up IPC.’ The venture saw them acting as principals in the privatisation of electricity companies in emerging markets. The duo were far more able to get things done than traditional investors, who failed to understand the risks involved in power projects during the rush to privatise the electricity industry in the early 1990s.
In the beginning, the strategy was to team up with US domestic power companies that had yet to invest overseas, in order to attack emerging markets and use Earl’s and Moynihan’s connections to leverage a position in international power privatisations and buyouts. During the late ’90s, IPC snared partnerships with the likes of Houston-headquartered New Century Energy, and Phillips Petroleum, and became a developer of new-build power plants in its own right.
Earl has gone on to buy out both Moynihan and the American backers from IPC, which has established a track record on four continents as both a developer and an operator of power plants. Its technical capabilities have proven fundamental to the winning of electricity privatisation tenders and concessions to build new plants, because regulators allow only the most technically proficient operators to manage power plants for reasons of national security, economic reliability and health and safety.
Today, on its own and through AIM-quoted associate companies, IPC is working on more than 2,500 megawatts of gas-fired development projects, 400 megawatts of coal-fired combined heat and power projects, and 150 megawatts of ‘combined cycle’ upgrade projects. Rather impressively, it also manages gas-fired power plant capacity for global oil giant BP in Latin America.
Power to the people
Earl’s efforts are now focused on IPC, and its two spin-off AIM ventures. When he took South American electrification specialist Rurelec to market in 2004, ‘it was the first utility to list on AIM,’ he remembers, ‘and we were also early adopters of IFRS, because we are truly an international business.’
Earl adds: ‘Originally, we were about managing rural electrification contracts – we started off in Bolivia, then moved into Argentina – but we have since widened the brief. Rurelec controls four major power plants in Argentina as well as Bolivia, and is running the rule over Chile and Peru with the aim of becoming ‘the leading rural power company in the southern cone of Latin America.’
He says: ‘We are the largest British power generator in Latin America, and by the end of this year we’ll have 40 per cent of the Bolivian market. Oh, and all the projects that we do are very green,’ he adds with a smile. ‘Argentina is growing at nine per cent and Bolivia at almost six per cent,’ says Earl, ‘and both governments want us to accelerate our expansion plans for new power capacity,’ to sate rapidly spiralling power needs.
Fears have lingered regarding political trends in South America, notably Bolivia, though Earl insists he is on good terms with the left wing regime under Evo Morales, the first indigenous head of state since the Spanish Conquest more than 470
Interim figures to June proved that the power generation businesses are performing well, revealing a powerful nine-fold revenue leap to £9.4 million and a surge in profits from £190,000 to £7 million as key projects got underway. Earl says: ‘We really are national news in Bolivia and Argentina now.’
Earl is also pioneering with Independent Power Southern Africa (IPSA), which he listed on AIM in 2005, with a plan to develop and own power generation facilities. And IPSA is looking to buy, refurbish and operate existing power plants in southern Africa.
‘IPSA is pure power development,’ explains Earl. ‘We are building the first privately owned power plant in South Africa, since 95 per cent of South Africa’s capacity is state owned.’ The company is helping to improve lives in a nation where 32 per cent of South Africans have no access to electricity at home, and where peak demand for electricity is forecast to exceed existing power capacity by the end of 2006.
In another first, Earl has just listed IPSA on the alternative exchange of the JSE in Johannesburg, the first AIM venture to make such a move, in order to secure the backing of South African institutions. He also sees opportunities to develop power plants in neighbouring countries such as Botswana, Mozambique and Namibia, which have relied thus far on South African electricity exports. Followers of Earl await his next move with interest.