THE architect Lord Foster stands to make up to Â£450m by putting the practice he has built up over the past 40 years on the market, write Robert Booth and Sarah Duguid.
Foster told senior staff last week he had called in Catalyst, a corporate finance house, to find bidders for Foster + Partners, one of the most famous names in world architecture.
Foster, 71, designer of landmark buildings such as the Swiss Re tower in London, nicknamed the Gherkin, has no plans to retire and hopes to continue running the practice even after selling.
â€œIt is the 40th anniversary of the firm and Norman has to find a way of ensuring the business remains the market leader,â€ a source close to the practice said. â€œHe might sell but he still wouldnâ€™t leave.â€
It is not certain whether Foster will sell the whole company. However, the source said it was hoped the sale would fetch between Â£300m and Â£500m, of which the bulk would go to Foster, who is believed to own 80-90%, netting him Â£240m- Â£450m. He controls the firm partly through nominees based in the Channel Islands.
Fosterâ€™s current commissions include Beijing airport, widely said to be the worldâ€™s largest construction project. He has become a favourite among developers in Russia, New York, Kazakhstan and London. In addition to landmark buildings such as the Gherkin, Londonâ€™s City Hall and the British Museum Great Court, he designed Stansted airport.
The architect, who was born in Manchester and now lives above his practice in Battersea, south London, also has homes in Switzerland and the south of France. He flies his own jet and helicopter and competes in cross-country skiing marathons.
The source said that, despite his many outside interests, Foster would not be retiring â€œfor many years to comeâ€, even if the company is sold.
In 2004-05, the last year for which accounts were filed, the parent company of Foster + Partners made a profit of Â£2.5m and paid Foster a Â£2.1m salary.
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Lord Foster prepares to sell his practice
By Dan Roberts and Sylvia Pfeifer, Sunday Telegraph
Last Updated: 1:04am GMT 22/01/2007
Lord Norman Foster has appointed bankers to examine the possible sale of his world-leading architectural practice.
Suspension of disbelief: The stunning Millau Viaduct, the world’s tallest traffic bridge, was the brainchild of Foster + Partners
Foster + Partners employs some 600 architects and designers and has been involved in high-profile projects ranging from the HSBC headquarters in Hong Kong to Swiss Re's "Gherkin" in London.
But like many professional services firms it is grappling with how to ensure an orderly handover of ownership and fresh capital for expansion.
Last week Foster told a small group of senior staff he was considering bringing in outside investors, but he is understood to be anxious to avoid giving the impression that he is leaving soon and has not made up his mind about whether to retain a stake in the business.
"He's looking at his options, some of which include a sale and some of which don't," said one person close to the company. "Some would leave him with control." Whatever happens, he is said to be planning to remain involved for some time.
Foster, who is 71, is believed to be advised by a specialist corporate finance boutique in London called Catalyst Investment.
One source said bankers were hoping the business would fetch between £300m and £500m, but City observers questioned whether there was appetite for a deal of this size.
Norman Foster looks out from Swiss Re's 'Gherkin' in London
A private equity investor who studied the business said the cyclical nature of the construction industry made it a risky proposition.
"Commercial property is right at the top of the cycle and anything with this much exposure to speculative office development is vulnerable to a global slowdown," he said.
Yet one of the drivers that prompted the review is believed to be the need for outside capital to help fund a massive expansion drive. The company is understood to be keen to have between 20 and 30 offices around the world but lacks the infrastructure and manpower to support so many.
The continued involvement of Foster is likely to be key to its valuation. His personal brand and reputation are said to command additional fees on some projects designed by Foster + Partners.
In the last accounts filed at Companies House, for the year ended April 2005, the company revealed pre-tax profits of £2.5m on turnover of £44.5m. Reflecting the increasingly international mix of its business, during that year the company generated 12 per cent of its turnover from the US and 9 per cent from China. The bulk of the business, however, was still in the UK, which generated 43 per cent.
The company has also diversified into new sectors, notably hotels, which are emerging as an area of growth. The transport sector saw its share of turnover rise from 9 per cent to 17 per cent
Foster's work dominates the skylines of cities around the world – from the "Gherkin" in the City of London to the Reichstag in Berlin to the Hongkong and Shanghai Bank in Hong Kong. In London, his projects include City Hall and the Great Court of the British Museum. He is also in the process of designing the Prime Minister's new city academies.
The thrice-married -helicopter-flying multi-millionaire was knighted in 1990 and made a life peer in 1999. He has a new young family with his glamorous third wife, Dr Elena Ochoa. The Fosters live above the office in two vast penthouses on the Thames at Battersea.
Foster left school at 16 to work in the Manchester City Treasurer's office. After doing his National Service in the Royal Air Force, he studied architecture at Manchester University and in 1961 won a fellowship to Yale School of Architecture. He founded Foster + Partners in 1967. His first big project was the Willis Faber & Dumas building in Ipswich.
Both Foster + Partners and Catalyst declined to comment.
On that profit level £500m seems about a digit too high
- PVC King