Argent partnership opens door for new investors
The developer is changing its day-to-day operating business Argent Estates to become a limited liability partnership, called Argent (Property Development) Services.
The partners will be the six current executive directors of Argent Group plus four further Argent senior project directors. Argent's chairman, Peter Hazell and the three other current non-executive directors of Argent Group are to have similar roles in ASLLP.
Founded in 1981 by Michael and Peter Freeman, Argent floated on the London Stock Exchange in 1994 and was taken private in 1997 by BT Pension Scheme, managed by Hermes Real Estate Investment Management.
Over the last 30 years the company has made its name primarily on big city centre regeneration projects such as Birmingham's Brindleyplace, the Piccadilly area of Manchester, and more recently, London's King's Cross. Since 1997 the great majority of Argent projects, including King's Cross, have been carried out in a series of partnerships between Hermes clients, the Freeman brothers and the executive directors of Argent.
In a statement announcing the restructure, Argent said the move to an LLP for the day-to-day management of Argent's projects was driven by three main reasons.
Firstly, the restructuring reflects the ethos of the company. David Partridge, former joint chief executive of Argent Group and now managing partner, said: "Argent's reputation and track record has been built on working in partnership, whether with funders, landowners, local authorities, contractors or our advisers. We are known for establishing long standing relationships based on trust and a joint desire to create and then manage high quality places. We have operated our own business in the same way; and the move to a Limited Liability Partnership reinforces that ethos."
Secondly, the company has grown significantly in recent years and the LLP structure allows for the next generation of Argent employees to take a stake in the business. Four senior staff now join six former directors of Argent Group as partners.
Roger Madelin, former joint CEO of Argent Group, will be a partner in ASLLP, but is stepping aside from overall management, to deliver King's Cross. He said: "When I joined Argent in 1987, 25 years ago, we were a small team. Today we have a strong team of 75 people with skills as diverse as finance, place making and management, planning, retail and residential. We want to retain and incentivise those people, so this is the right move for Argent at the right time.
"I have decided to step back from the day to day management of the company and from being the point man for public affairs at King's Cross. I intend to re-focus on delivering the initial phase of our place-making retail strategy and on working, with the expanding delivery team, on the £1bn of construction planned for King's Cross over the next few years. We will need to achieve a further step change in delivery, working with partners such as the Aga Khan Development Network."
Thirdly, the creation of an LLP will allow for a more flexible model for funding new development opportunities.
Peter Hazell, chairman of Argent Group and the new ASLLP, said: "We will continue to work closely with Hermes, with whom we have had a long and successful relationship. This change does not affect the current funding structures for existing Argent-led developments, such as King's Cross and One St Peter's Square in Manchester.
"The move to an LLP creates the opportunity for us to introduce other potential investors and partners to development opportunities that our experienced team would like to take on. Despite the tough trading conditions in the UK currently, we believe this is an exciting time for an organisation with a reputation like Argent's to look at new opportunities for large, well planned, mixed use developments.
"Roger's vision and enthusiasm over the last 15 years has led Argent to where we are today and I am delighted that he will continue to be involved in the business. I look forward to working with him and the other partners."
Chris Taylor, chief executive officer, Hermes Real Estate Investment Management, said: "Hermes supports the separation of the investment decision-making on allocation of capital to individual projects from the implementation of agreed projects via the new development services entity to be created by the restructuring. Moreover, we look forward to working closely with the Argent team and deploying Hermes' fund management capabilities in both existing and future projects."
