After its highly public financial problems and equally public sale, DTZ went very quiet indeed. So Estates Gazette‘s Nathan Cross sat down with the firm’s new Aussie boss Richard Leupen in Sydney to talk about what lies in store next for the firm
On Monday, 228-year-old DTZ will complete its crucial first 100 days as part of Australian global services giant UGL.
Rescued from financial collapse in a £77.5m pre-pack sale on 4 December, more than 4,700 permanent DTZ staff were transferred to UGL overnight – 1,400 of them in the UK.
But group chief executive Richard Leupen says he’s seen it all before. “When I joined we had 3,000 people and today we have 54,678. So we’ve added a few. We’ve figured out how to do that,” he says.
The 58-year-old Aussie, speaking exclusively to Estates Gazette in his first UK interview since the deal, says that integration is something UGL does well. A global steering group led by UGL Services group president Bob Shibuya has been working with DTZ to bring the businesses together – and make sure DTZ delivers on the profit-boosting business plan it showed UGL before the deal.
With former DTZ chief executive John Forrester finally confirmed this week as chief executive of DTZ’s largest region – Europe, the Middle East and Africa – the next big announcements are expected to set out the global and European management structure of the merged businesses and confirm a rebranding of the entire property services division to capitalise on the DTZ name.
Meanwhile, Leupen says: “We want the company to look, act, feel and have values and behaviors the same as the rest of UGL. We have come from different places, but today all our UGL companies look like UGL. They all behave and manage as UGL does. It’s a process we have used quite effectively before.”
The listed group – which last month reported half-year operating revenue up 5% to A$2.4bn (£1.6bn), but net profit after tax down slightly to $55.4m (£37.2m) after the costs of the DTZ deal – is big; very big.
“We are the biggest railway services company in Australia. We are one of the biggest power engineers, one of the biggest water engineers. We are big in industrial maintenance,” Leupen, an engineer by trade, proudly boasts. “We have 5,500 people in China. We have 2,000 in the Middle East.”
Looking relaxed in his penthouse corner office on Sydney’s North Shore, Leupen enjoys an impressive view that takes in the iconic Harbour Bridge and city skyline to the south and the inner harbour and sprawling suburbs to the west.
Size really does matter, he says. “There is a commonality in everything we do. It’s usually large and capital-intensive. We like technical things. We like large, complex tasks that are not easily done by small companies.”
Scale and geographic reach were Leupen’s major reasons for wanting to buy DTZ, rolling it into the 22,000-staff UGL Services division, which offers end-to-end corporate real estate and facilities management services to corporates, government bodies and institutions, but which had been limited to Australia, New Zealand, Asia, North America and the Middle East.
“The big corporate accounts, the global accounts, need global reach, and we were turning down bids for major corporates because we couldn’t really service them properly,” says Leupen.
“We needed more European capability. About six months ago, one of our biggest partners asked us why we don’t bid [to manage their property]. We said because we are not ready to bid for your property because, if we did, then you’d be disappointed and then we’re back to square one. We needed DTZ to add on that global reach. We are seeing some really big, complex international tenders, which we are lining up for. We are getting on bid lists with people who wouldn’t let us in the door before.”
UGL Services accounts for just over a third of turnover and Leupen’s big plan is to build the business into such a global entity that it can ride out all economic cycles.
“You know, the Australian saying is ‘It’s good to be good but it’s better to be lucky’ and they call this country the lucky country. It was lucky. It was well supported through the downturn and we used that strength to do other things in other countries,” Leupen says. Having demonstrated plenty of luck in picking up DTZ for a knock-down price, Leupen seems pretty pleased with what he’s seen so far.
Despite DTZ’s slow limp towards a sale, which saw it come close to being merged with BNP Paribas Real Estate, Leupen says “the essence” and “core” of the company were still there. “They hadn’t lost it. They had tremendous loyalty through the bad times, which was almost surprising,” he adds.
He is fully aware that DTZ’s competitors “have lists of their staff to try to hire”, but is ready to fight back.
“I think that [the departures] will go away pretty quickly as people realise that they’ve got an interesting future and a stable parent and a supportive one too. What you have to do is make sure that you create an environment where people like the values and direction of the business, the stability of the business and, equally important, they like the opportunity it presents,” he says.
Leupen has his eye on more takeovers across the UGL group. “We have a full-time M&A team in this building and all they do is study M&A all the time, every day. So, yes, today we are studying probably companies in the UK and Europe, engineering companies, and we have a great interest in Asia as well.”
The group’s debt-to-equity ratio prior to the DTZ deal was just 13% and afterwards around 20%, so it is ready to move quickly.
“We have still got tonnes of capacity and we had multiple offers of finance for that transaction. We wrote a cheque basically out of our existing facilities. We also have good market support if we need it,” he boasts.
And as you would expect from a business that sees itself as very much “the acquirer” and not the “acquiree”, Leupen says there will be hires in the property services division now that DTZ has the financial support and corporate stability it needed – a message that Forrester was keen to reiterate at MIPIM this week.
“We have very good people and we try to hire very good people and, therefore, there will be some targets,” Leupen says. “We want to seduce people with what we are trying to achieve and the opportunity to become part of something stable. We are here for the long, long haul.
“I think we have a very interesting journey ahead. We are just beginning still.”
Leupen’s men
UGL Services group president Bob Shibuya flew in from the US last week to spend time with the UK business. The American was brought into UGL a year ago and is the man Leupen is counting on to make sure the DTZ deal pays off. “He’s a 30-year industry guy, really knows it inside out,” Leupen says. “Someone said to me you need someone like Bob Shibuya to pull it all together.” Shibuya found himself hired just a few weeks later. It was Shibuya who suggested UGL re-approach DTZ after previously having been rebuffed.
Shibuya has been working closely with DTZ’s John Forrester, who was thrust into the role of leading the sale of the business after Paul Idzik resigned last summer. “I enjoy working with John. He’s a very flexible guy. He was pretty strong through that whole process and he led the company well,” Leupen says of the Northerner. “He’s got a good agile mind. He understands the issues and he gets to the point pretty quickly, which I like, it’s a bit Australian. If he was living here, he would fit in very easily.”
