When the Rontec consortium emerged last year as the lead bidder for Total, the question on many people’s lips was: "Why is Gerald Ronson still messing around with petrol stations?"
"It’s a question many people have asked me over the years," confirms Gerald CBE, property magnate extraordinaire, as well as legendary figure in the petrol-retailing world. "It’s a business I have an affinity and a passion for. I’ve been in the business for 46 years and built 968 petrol stations. I invented self-service back in 1966; was the forerunner to Green Shield stamps; and the first person to put a convenience store on a forecourt. I must be the most knowledgeable person in the business by far. It’s not that I’m clever, it’s just that I’ve been doing it for a long time. It’s in my blood. I have developed and sold out most probably five or six times over that period. But we’ve always kept a hardcore of petrol stations, which I refer to in my book (’Leading from the front’) as my ’f**k you’ business. I don’t mean that to be rude, but when everything else is going down the tubes as in the early ’90s when I had to reconstruct my business it generates good cashflow."
He also refers to the petrol station business as his ’Saturday’ job which is as much a nod to the fact he continues to go out visiting sites on most Saturdays during the year, as it is to his other huge responsibilities as chief executive of Heron International plc; chairman of Ronson Capital Partners; as well as spending 15% of his time on his charitable work through The Ronson Foundation. "I’ll do 500 miles on a Saturday and people say ’you’re mad, you’re not a young man any more’ I’m 73. I’ve probably travelled a million miles looking at forecourts over the years. But the fact is I enjoy it it’s a hobby. And it’s always made money some years more, some years less!"
With the creation of Rontec, the petrol station business now has two separate operations, albeit with the same management. The Snax 24 business was created in the early ’90s and comprises around 80 sites, including 44 owned sites, and a number operated on behalf of BP and Esso: "I have a very capable, committed, dedicated management team who have been with me for many, many years, and who are committed to being the best in the marketplace," stresses Gerald. "We have constantly invested in the business, and our sites feature all the essential ingredients of a modern petrol station good shop, forecourt and car wash all clean and well run, and providing a friendly service.
"But I’ve always believed that one day one of the majors or mini majors would sell their business, because with all due respect to oil companies they’re not very good at running petrol stations."
When Total put its entire UK marketing assets on the market in 2010, Gerald and his team seized this "once-in-a-lifetime" opportunity. The announcement that a consortium called Rontec Investments LLP, comprising Snax 24, Investec and Grovepoint Capital had acquired Total’s UK retail and fuel distribution business was made last summer. Rontec immediately sold 254 sites to Shell; the wholesale business including 300 dealer contracts to DCC; and the pipelines to Valero. However, these deals weren’t part of the initial plan, according to Gerald. "They all approached me after we agreed to buy it," he says. "It was always my plan to sell off a number of sites. But I would most probably have kept half the sites because my ambition is to run a group of 3-400 high-quality, well-operated prime sites within Rontec and we’ve sold off a lot of very good sites to Shell."
About 40 sites are currently being developed for supermarkets 18 will be leased to Sainsbury’s; some will be sold to Asda, some to Morrisons. A further 50 sites are being disinvested, and most have exchanged/under offer as they don’t fit into the Rontec network long term.
"That leaves us with a hardcore of 150 sites," confirms Gerald. "Those we will refurbish and re-brand over the course of the next 18 months. The new format will consist of modern convenience store, forecourt, rollover and jet wash. We are creating our own brand for the shops and the first new site will be launched later this year. They will all have the same fuel branding but that’s not decided yet."
With much of the due diligence done before the sale was completed Gerald saw every one of the 500 sites progress in transforming the business has been fast, although still very much in transition, with sites still to hand over, and the merger of Total’s Watford HQ operations coming at the end of the year: "I’d say we’re running 12 months ahead of the programme and we’ve only had the business for six months. Everyone involved on all sides has been very professional. I’ve had a big team on it. The lawyers had an enormous job. It’s been a very exciting challenge and I think most people are enjoying it.
"What the deal comes down to is real estate and operation. I don’t think there’s anyone else in the industry who can write a very big cheque, maximise the real estate, and who has the expertise of running a network of state-of-the art petrol filling stations. Half the sites are those I built 20-30 years ago. I then sold 150 sites to Elf, which then merged with Total they’ve come full circle!
"Interestingly, in a market which is flat on its back I’m pleased to say we’re already up 6%. There are good people in the Total organisation who have responded to motivation and leadership. The sites are open when they should be, they’re cleaner, more focused and we’ve adjusted the fuel pricing. We’re moving over to commission operation so there will be opportunities for existing managers. It’ll take a further 18 months to get everything right. Petrol retailing is hard work, but for those with prime sites, it’s a good, solid, cashflow, real-estate business. Our two petrol retail businesses have a £1.5-£1.75bn turnover.
"That’s a big business. Has buying Total been a successful transaction? The answer to that is yes!"
Gerald Ronson CBE - CV
l Since the 1960s Gerald Ronson has been a major property developer and pioneer in the sector, including leading UK property developers into the European property markets.
l Heron International became the second largest private company in Britain and has developed 160 buildings in nine countries; 10 million sq ft of commercial and retail property; and more than 15,000 residential units in the UK, US and continental Europe. He also developed the Heron City concept, a chain of branded entertainment-led leisure and retail destinations across Europe.
l In London, developments include Heron Tower the 46-storey office building, the tallest in the City of London; and The Heron, a development of 285 luxury apartments.l 1954 Gerald started work at the age of 15 with his father in the furniture business before moving on with Heron Homes.l 1956 He founded the Heron Group, which became Heron Holdings in 1965, then Heron Corporation and subsequently Heron International plc where he is currently chief executive.l 1966 He is chairman of Snax Corporation Ltd, was instrumental in the introduction of self-service petrol in the UK and has built 968 stations across the UK since March 1966.
l 2011 Chairman of Ronson Capital Partners.
l 2011 A consortium comprising Snax 24, Investec and Grovepoint Capital, created to acquire assets of Total Oil UK.
l 2012 Gerald was appointed Commander of the Order of the British Empire (CBE) in the 2012 New Year Honours for his charitable services.