Betting on the future

Betting on the future

In sustainables, we’re woefully behind many others in some respects. But John Wall, doyen of dealmakers, has been quick to spot and push the prospects. He tells Brian Nicholls how.

John Wall’s bets are on the future of hydrogen cell fuel and photovoltaics. That should tell us all something. Doyen of North East financial dealers for over almost a quarter century, Wall now executively chairs Proton Power Systems which runs the world’s first ferry driven by triple hybrid fuel cell, and the world’s first bus similarly fuelled. He’s also a partner now in a leading photovoltaics business, driving sales through state incentives to develop sustainable energy.

Sundog Power employs 25 and runs in tandem with Sundog Energy of Penrith which, in 15 years, has become the technical leader in commercial and domestic photovoltaics. Sundog Power offers companies cheap, clean energy – to use free and also sell without the upkeep. The revolutionary ferry operates on the Alster river in Hamburg, and you can catch the hybrid fuel cell bus, a joint advance with Skoda, in Prague – major departures, these, from the pasties, water and frozen food once occupying Wall’s attention.

“Hydrogen fuel power’s going to be so important,” he enthuses. Involvement in Proton stems from friendship with North East entrepreneur Karl Watkin. Wall explains: “When I left PricewaterhouseCoopers, Karl rang. He’s amazing in things he generates. He told me of a great business in Munich called Proton. It was developing the technology of hydrogen power from fuel cells to drive vehicles that park up at night.”

The company needed access to capital from private markets. Wall, as a director, put together a deal getting Proton onto London’s Alternative Investment Market, and among capital transforming it from a simple R&D business. With the listing there was a reverse takeover with the German firm becoming a plc subsidiary.

Then four years ago Wall became chairman, succeeding North East automotive stalwarts Sir Ian Gibson and Bernard Robinson; the former ex-president of Nissan Europe, senior vice-president of Nissan Group and architect of Nissan’s early Sunderland success, the latter a former North East Business Executive of the Year, whose expertise in suspension systems had made Tallent a great manufacturer at Newton Aycliffe.

He had also gone on to head a global suspension business when German giant ThyssenKrupp bought Tallent. Proton Power Systems plc, with Quayside offices in Newcastle, now employs 50, including physicists and engineers. It has a joint venture with Smiths electric vehicles – and Faiz Nahab, a rich Iraqi investor, is backing Proton heavily, confident it will become a £500m business.

“Chairing a business very German-centric got me into a whole new world – renewables are massive business there,” Wall says. “They’re huge in a way they’ve never taken off in the UK yet. There’s massive funding and enthusiasm there. Proton was Karl’s idea. He’s still a shareholder. But he did what he’s good at, generated an idea, formed a team around it then let them get on with it. That’s his skill. He’s a strategist, an innovator, but isn’t into running things.” His appetite whetted, Wall examined the now faster growing photovoltaics. The UK, under EU legislation, must achieve 15% of total energy from renewables by 2020 (from less than 2% in 2009) with heat from renewables reaching 12% from 1% in that time. That 20% goal by 2020 compares with Sweden’s existing 38%.

As Wall points out, technology needs a stimulus to move from very low volume, very high cost into commercial high volume and very low cost. There’s now grant subvention. Previously minor capital grants had been offered and users installing rooftop photovoltaic (PV) panels were likely to get a grant less than half of the actual cost. In Germany, Spain, France and Italy, PV panels had bloomed because feed-in tariffs had been introduced with greater incentive for users. As production had grown, capital costs had dropped, commercialising the technology.

With feed-in tariffs, rooftop panels bring payment for generating, you get free energy by day and can sell surplus into the grid. Acceptance into the tariff locks you into that income for 25 years – index-linked at the initial tariff rate entered into. Wall advises householders: “If you’re 55 or 60, have a few quid tucked away and get 2.5% from a bank on your deposit account and pay tax at 40% – and if you like to stay cash liquid and want cash investments for the next 10 or 15 years – do it. And do it yourself – even if you don’t need all the electricity yourself.

“If you can get income from the annuity coming in you’ve something interesting. Locking into an income stream that’s there 25 years, index linked, is phenomenal – tax free to householders. Where else for £10,000 can you get an 8% yield index-linked for 25 years and tax free?” Householders reluctant to install and maintain will find many companies that will oblige for a slice of the income. Wall focuses on leasing company roofs of 17,000sq ft plus, offering installation and maintenance in return for the income that can be securitised and turned into a capital sum.

“As it’s retail price indexed it can carry real capital value,” he says. “It’s building an index linked annuity stream in return for an initial outlay. Make money while you sleep – that’s one of my favourite concepts.” Maintenance and monitoring are vital though; even an overall accidentally dropped on a panel will affect earnings. But Wall, wherever he is, knows from his BlackBerry if a particular roof is functioning properly. At Sundog Energy, Wall found managing director Martin Cotterell a technical expert.

“He’s written the technical standards for the industry basically, and does some most interesting and demanding contracts,” he says, “like putting photovoltaics onto the roof of Kings Cross station.

He told Cotterell: “With your ability and my commercial strategic funding capability I think we can put together something very interesting.” And a third partner now in Sundog Power, John Andrews, excels at sourcing and distribution amid global shortages of panels and inverters.

“I got five buildings just by talking to people over the Bank Holiday weekend,” Wall, a great raconteur, mentions gleefully. “You see, it’s very cash negative for businesses doing it for themselves. Our way, you’re cash positive from day one.” Astrologically, John Wall has been a typical Arian, outgoing and confident – both as dealmaker and as founder of corporate financial service in our region. Well done, the former head boy of Newcastle’s Manor Park Technical Grammar School who, between later studies at Sheffield and Newcastle Universities, laboured happily on a Leech building site at Cramlington.

Visitors to Newcastle’s Metro Radio Arena and Sunderland and Middlesbrough’s football stadiums may not realise Wall’s contribution to their enjoyment. Nor residents of apartments overlooking the Tyne bridges or the attractions of Morpeth, or caravanners at Rothbury. From 1987 he led PwC’s rapid regional growth, launching the first regional corporate finance business in Newcastle, then beyond. At PwC he advised on more than 100 major deals totalling £1.5bn plus. He recruited, developed and managed more than 200 partners and 200 senior professional staff until retiring from there on his 50th birthday in 2004.

After dealing for others he wanted to deal for himself. He joined Albany RTA Group, an insurance outsourcer, as chairman. First task: Effect a secondary buyout of the Albany half held by a South African company Capricorn – this for Brooks Mileson, who held the other half. Mileson was a pigtailed, larger-than-life son of Sunderland Salvationists, obsessed by fast cars and reputedly worth £75m then. Business thrived on cases of customers who, via a Peterlee call centre, could claim innocence in road accidents in their need of legal, medical and vehicle repair help.

Mileson was fiery and demanding – the sort Wall gets on with. Mileson drew Wall to Albany saying: “You can be chairman. I’m sick of being chairman. Finish the buyout with the South Africans and in due course we’ll sell and get lots of money.” Wall worked a month of nights and days to fund and finalise the far-from-straightforward buyout, and succeeded. Mileson asked: “What are you doing on Monday?” Wall thoughthe’d have his first day off. Mileson said: “No. I want you to go to London. I’ve sold the business.” The sale had been secretly agreed over coffee at Newcastle Airport on the Helphire plc buyer’s arrival; three divisions for £46m. Wall recalls: “I spent the next five months, basically 18 hours a day, seven days a week, on completing a hugely complicated deal, then sold not three divisions for £46m but two for £47m.

We kept one.” Mileson stayed away. He took his money to Gretna and created a real-life Roy of the Rovers story, buying the local non-league football club, and lifting it from Scotland’s Third Division to its Premiership and into the Scottish Cup Final. His addiction to tobacco killed him, sadly – 10 days short of his 61st birthday. The club went into administration.

“It ended in tears,” as Wall says. “But they had a fantastic time. Mileson, chairman and owner, would queue at the turnstiles then stand among the supporters. In the changing room beforehand he’d say, ‘If one of you knocks in the header in this incredibly important game, I’ll give you my Aston Martin.’ And he did.

That’s how he was.” Wall’s deals while with PwC had included: • The hostile bid by Lyonnaise for Northumbrian Water Group (£800m) • Sale of a strategic interest in Newcastle Airport to Copenhagen Airport (£400m) • Greggs plc’s acquisition of The Bakers Oven chain (£20m) • Reverse takeover of Dalepak and Stock Exchange listing of Cavaghan & Gray plc (£80m) • Disposal of Northumbria Bus to British Bus (£25m).

He masterminded PwC’s viability studies for the building of Middlesbrough and Sunderland’s football stadiums. After PwC, Wall also became director and founding shareholder of Adamson Joint Ventures, gaining permission to build 134 apartments and 12,000sq ft of offices at the Bonded Warehouse on Newcastle Quayside, and put up 125 apartments alongside the Hilton in Gateshead.

Between 2006 and 2008 he chaired young entrepreneur Ian Baggett’s fast rising property group Adderstone. He was an Arrowcroft plc adviser for a £500m development in Croydon. Other assignments took in Morpeth apartments, Stobo Castle at Peebles, and a static caravan park at Rothbury, and work for the like of East Coast Properties, the Dodds Wall Partnership, August Private Equity, Primary Capital and Alchemy.

He’s a consultant on business and strategy development for Dickinson Dees law firm. And he relished his role in turning Chas Chandler’s long-held vision for a major North East music venue to reality. Many thought a Newcastle Arena commercial folly, even though the city’s biggest concert venue then, the City Hall, held only 1,800. Yet many arenas rising elsewhere were white elephants, Wall concluded, financed largely by councils using grants or central funding and losing money because music was often an afterthought in their multi-purpose use. Chandler, however, had been one of the Animals, had brought Jimi Hendrix to England and ran Slade for many years. To achieve his vision he’d entered a partnership with Nigel Stanger, a talented architect and gifted saxophonist.

Private investors were sniffy. The duo were struggling when they approached Wall. He, comfortable with existing work at PwC, asked: “You’ve been trying to do this for years. Why come to see me?” “We’re desperate,” came the reply. Chandler, who had the necessary contacts, persuaded Wall this arena would be different, built by musicians for musicians. Wall foresaw the revenue stream, and raised the capital. Newcastle got sheer utility, breeze block not marble, but holding 11,000. “The world’s cheapest, most basic arena,” Wall suggests. Chandler had refused any “bed sharing” with American operators. Wall, regardless, worked on Ogden, a global player. He said if they transferred some of their capital earning 3pc interest in Fed Reserve, the Arena would give 12pc. Chandler was shocked but convinced himself Ogden was his idea. Newcastle’s arena cost £12m, against £60m elsewhere.