Turnaround for Archie Norman

Archie Norman, the former Conservative MP for Tunbridge Wells, and the man credited with turning around UK supermarket chain Asda in the 1990s, recently launched a new investment firm with backing from institutional investors.

Our backers have very deep pockets, with an equity commitment of £500 million a year, equivalent to a fund of about £3 billion. Archie Norman, Aurigo Management

Last month, Norman announced the formation of Aurigo Management, an investment firm focusing on “people-leveraged businesses” with a specific interest in distressed situations.

Norman says that the “small partnership” has substantial capital backing: “Our backers have very deep pockets, with an equity commitment of £500 million a year, equivalent to a fund of about £3 billion.” Norman declined to disclose the firm’s four backers, but media reports have indicated that Lord Rothschild is involved.

Aurigo Management, which currently numbers four including Norman – “we’ll probably add to the team later this year” – will work with, and occasionally compete with, private equity firms to buy UK and European companies. “We have an association with private equity firms, including CVC Capital Partners, and we’ll be working with them, such as with co-investments, and we’ll also participate in debt financing, not just pure equity.”

While Aurigo Management does  not have a sector focus, Norman says that market segments of interest include financial services, high-end business services, fast moving consumer goods, retail and possibly even certain technology businesses: “We like strong leadership and strong teams, but we also like management problems and problematic situations where operations have been adversely affected by management such as distressed companies and credit recovery situations. That’s the sort of thing I’ve addressed in the past.”

Norman: specialist in turnarounds

Famous for being a grocer at the beginning of his career, Norman spent 1979 to 1986 as a partner at McKinsey, a management consultant, before becoming finance director at Kingfisher Group, a retail conglomerate. In 1991, he joined Asda as a chief executive, where he is renowned for having carrying out one of the most high profile turnarounds in corporate history. Norman has also been a non-executive director of Geest, a food group, British Rail and Railtrack.

In the late 1990s, Norman turned to politics. After the 1997 defeat to Tony Blair’s Labour, former McKinsey colleague and newly-elected Conservative leader William Hague recruited Norman in his shadow cabinet. His tenure lasted eight years, until a new leadership campaign resulted in failure for Michael Portillo, whom Norman was backing.

Norman isn’t the first to make the move from politics to private equity on either side of the Atlantic. In the US, former vice-presidential candidate John Edwards joined Fortress Investment Group as an advisor last October, four months after former Secretary of State Colin Powell took a position at Kleiner Perkins Caufield & Byers as a strategic limited partner.

However, private equity firms such as The Carlyle Group have shifted away from politics recently. Until last year, Carlyle had an enviable crop of former politicians on its advisory board, including George H. W. Bush, former US president, Arthur Levitt, former chairman of the Securities and Exchange Commission, and Norman’s former colleague in the Conservative party, John Major, Prime Minister of the UK from 1990 to 1997. Major, Bush and a number of other politicians are no longer affiliated with Carlyle.

Norman may not have reached the political heights of the likes of George H. W. Bush and John Major, but perhaps his spell in private equity will last longer.