A hectic timetable preceded Standard Life’s planned flotation, involving teams of advisers working flat out on the mind-numbing process which was by no means a foregone conclusion.
MALCOLM Wood’s last night before Standard Life hit the London stock market as a FTSE 100 company was a restless one — but it was not because of stress. Wood, general counsel and company secretary at the large life insurance group, was due to attend a 5am meeting next morning at the City offices of the law firm Slaughter & May.
“There was still a vast quantity of documents to be signed. The full team was due to assemble there by 6am that morning with the flotation itself planned for 7am.”
Hoping to get a decent night’s sleep before the big day, Wood hit the sack at 9.30pm at his hotel near Trafalgar Square. He had not banked on Italy’s success in the World Cup final, which it won in a penalty shoot-out against France.
In the end Wood barely slept because of the cacophony of car horns as Italians residing in London gathered to celebrate their nation’s victory.
Wood concedes attempting to describe the process leading up to the Standard Life float is “a bit like trying to condense War & Peace”.
Alongside Standard Life’s John Hyndland, executive director in charge of the insurer’s demutualisation and flotation project, Wood was at the centre of a mind-numbing process that included dealing with regulators in almost every European country.
Wood says: “It was pretty well one enormous piece of work over that two and half year period. We had 350 people working flat out on it within the company. There was no time to eat or see the family during that time. We ate nothing but ‘white food’ (sandwiches) for the duration.”
Peter Lawson, a partner in law firm Burness, which acted for Merrill Lynch and UBS says: “It was a backbreaking effort and Standard Life’s in-house team deserves a huge amount of credit.”
The starting gun was fired in March 2004 when, after several years of being buffeted by collapsing stock markets, the board of Standard Life decided demutualisation and flotation were the best way forward.
The company, led by CEO Sandy Crombie, embarked on a process of strategic and cultural change, coupled with emergency surgery, to ensure it would have a sustainable future, while Wood, Hyndland and their teams focused on the legal and actuarial aspects of the planned conversion and float.
Even after appointing its principal advisers — Merrill Lynch, UBS, Slaughter & May, Dundas & Wilson, Watson Wyatt and PwC — the company was still not fully committed to the this plan. Indeed it had to be seen to keep its options open and retained a separate team of advisers to check whether the plan would be members’ best interests. These were Lazards and Clifford Chance, who formally stood down on 18 October 2005, once the insurer’s board pushed the green button for demutualisation and flotation.
Wood says from that day until 10 July 2006, it was full on for the internal and external project team. D&W had 50 lawyers involved in the project at its peak.
Wood says one reason for the pressure was the listing rule that insisted any prospectus issued by a company planning to float must contain numbers that are no more than six months old. This created a tight schedule, as Wood recalls.
“Having a day-by-day timetable made it tremendously stressful,” he says.
“There was no latitude to get anything wrong, no leeway to rethink. People were basically working around the clock. It was such an unforgiving timetable that if we missed a single day we were pretty much dead. There was huge effort in getting the members circular out on the day. But we were also acutely aware that we had another three major hurdles to overcome once that was mailed out.”
The other major milestones included restating Standard Life’s 2005 figures, normally produced according to GAAP, under IFRS accounting standards, the 31 May special general meeting — at which an unexpected 98% of members voted in favour of demutualisation — and the publication of a prospectus in June. Once this went out, Wood says the only possible date for the company to float was 10 July.
So when the stock-market endured a “wobble” in the first half of 2006 there were raw nerves at Standard Life’s Lothian Road headquarters. The company had to knock down its offer price, with the shares eventually floating at 230p, 10p below the lowest level of the original range.
Wood insists pulling the float was “never an option”.
Wood says individuals on the advisory teams included Matthew Greenburgh and Henrietta Baldock at Merrills, Ian Gladman and Tim Waddell at UBS, Wendy Colquhoun and Philip Mackay at D&W, Glen James and Jonathan Marks at Slaughters, Steve Sarjant and Nick Dumbreck at Watson Wyatt and Ian Rankin at PwC.
He does not resent their fees, even though when combined with other costs associated with the conversion, these brought the exercise’s cost to some £250m.
“You could pay J McNumpty to do it, but if they were no good it would be a complete waste of money.
“The advice we got was absolutely superb.”
This article published in Scottish Business Insider’s Deals & Dealmakers Yearbook 2007, published August 2007.