Accountant to Take Helm at Invensys

May 12, 2011
Ulf Henriksson Leaves Invensys

The departure of Ulf Henriksson from his post as CEO of Invensys at the end of March, after six years, was perhaps the result of his comments, which the company had to formally deny, about a possible future relationship between Invensys and China Southern Rail. But coming six months after raising the issue, the departure could now be the result of not bringing such a deal to the table for Invensys Chairman Sir Nigel Rudd to add to his long list of successful corporate arrangements.

The departure is also within a few weeks of the end of the current financial year for Invensys, whose results are scheduled for publication on May 19. The company has issued a trading update saying, "On 20 January, 2011, we reported that our performance in the current year ending on 31 March, 2011, was on track and that we continued to expect the Group to deliver improved performance. This remains the position today and we currently expect that the results for the year will be broadly in line with market expectations."

Accountants in Control

The next chief executive at Invensys is to be Wayne Edmunds, who has been chief financial officer since June 2009. Nigel Rudd commented, "I am delighted that Wayne has agreed to take on the role of Chief Executive to lead Invensys through the next stage of its development. We have three world-class businesses and a management team to match, and I am confident that Invensys is well-positioned to continue to deliver value to shareholders. I would like to thank Ulf for his hard work and achievements which have delivered a transformation of Invensys. We wish him well for the future."

Edmunds was previously chief financial officer of Invensys Process Systems, the largest of the three businesses that came together to form Invensys Operations Management. He joined the group from Reuters America and previously held senior financial roles in the technology sector, including 17 years with Lucent Technologies. While some reports suggested that the Edmunds appointment was an "interim" move, the INSIDER can see no basis for this in any of the company statements, so it would appear to dash any of the hopes by Sudipta Bhattacharya, CEO and president at Invensys Operations Management (IOM) since 2009, of progressing to this role, or by James Drummond, CEO and president of Invensys Rail, who joined Invensys in 2005 from Kidde, and was previously with Honeywell. The third world-class business in Invensys is Invensys Controls, where the CEO and president, appointed 2007, is Mark Balcunas, who joined the company in 1979. As recently as February, it was Bhattacharya who took the prime spot in the limelight, showing the IOM capabilities at the Invensys Group capital markets day presentations to analysts in London.

Sr Nigel Rudd: the Deal-Maker

Nigel Rudd, aged 64, is often said to be "Britain's busiest Chairman," and has a reputation as a deal-maker. He took over as chairman at Invensys in July 2009 and is non-executive chairman of BAA (the Spanish-owned U.K. airport operator) and Pendragon plc, director of BAE Systems and Sappi (the paper manufacturer) and was formerly deputy chairman of Barclays, Alliance Boots and Pilkington.

In February he was appointed chairman of the GBP2.5-billion Business Growth Fund, backed by high-street banks Barclays, HSBC, Lloyds, RBS, Santander and Standard Chartered, hopefully to play an important role in funding Britain's growing businesses. He became Britain's youngest accountant at age 20 and founded industrial holding company Williams plc in 1982, a business which he grew into one of Britain's top industrial conglomerates—which was later demerged into Chubb and Kidde in 2000. Rudd has a reputation for instigating corporate activity at the companies where he serves: He has sold two companies that he chaired — Boots and Pilkington — and overseen the merger of Pendragon with rival Reg Vardy.

Attention Turns to Invensys

Hopefully Sir Nigel has some time available now, following a difficult winter with snow problems at Heathrow airport, and the launch of the Business Growth Fund in February. The scene is set for Rudd to move and make his mark on Invensys by using the financial background skills of Edmunds to help structure a good result for the next corporate deal, which is presumably why he was appointed as chairman anyway.

Already it appears that various Henriksson appointees and policies have also been "restructured" or eliminated. Harry Philips, an analyst at Evolution Securities suggests that "Edmunds will be a better communicator with investors, which will help in highlighting the unique positioning its businesses have in their respective markets—this is significant. In addition, Wayne is the driving force behind resolving the [pension] issue, which remains the key catalyst for the stock."

The black hole in the Invensys pension fund appears to have been one of the major factors that has discouraged potential acquisition or merger deals in the past. For the analysts, the year end results on May 19 are crucial: Philips notes that if the GBP261-million operating profit consensus is delivered in the year ending 31 March, then a fresh start beckons in terms of sentiment. "But even a minor miss will unsettle investors and confidence." Rumors of the loss of the London Underground signalling contract for Invensys Rail, and outsourcing IOM Marketing to India, might be the start of such a trend.