The Sunday Times - UK (2022-04-24)

2 V2 The Sunday Times April 24, 2022

BUSINESS

attracted to Bulb by a referral scheme

that gave them £50 off their own bill for

signing up friends and family, who also

received a £50 credit.

Its purported green credentials were

also a selling point. For every new cus-

tomer, the firm donated £1 to the Trees

for Cities charity, which leads a planting

scheme in cities across the UK. It also

sponsored non-league Dulwich Hamlet

FC, known for its hipster fans who sup-

port ethical and environmental causes.

Gudka and Wood raised £1.3 million

from friends and family and moved into a

They

made a

strategic

error

in not

hedging

their

position

shared-office space in east London called

Second Home. Typically used by tech

start-ups, Second Home was set up by

Rohan Silva, an ex-adviser to David Cam-

eron when he was prime minister.

Initially named Hanbury Energy, after

the street where Second Home was

located, the business was established in

two parts: Bulb Energy acted as the trad-

ing company but the directors owned

their shares through the parent company,

Simple Energy.

In 2019, Bulb moved into the big league.

It swapped its shared office for two floors

29

Energy collapses

£1.5bn

Bulb revenues

American group joins bidders

circling beleaguered Ted Baker

American consumer giant

Authentic Brands Group

(ABG) is exploring a bid for

Ted Baker, which has kicked

off a formal sale process after

numerous approaches.

ABG has been in discussion

with Ted Baker’s financial

advisers in recent weeks,

according to Sky News, which

first reported the story. A

deadline for indicative bids

lapsed on Thursday.

ABG, founded by

billionaire Jamie Salter in

2010, has amassed dozens of

brands including Reebok and

Juicy Couture. ABG partnered

with JD Sports to launch an

ultimately unsuccessful bid

for Topshop last year.

In March, US private equity

firm Sycamore approached

Ted Baker’s board about a

takeover after an atrocious

three years in which the

fashion brand’s shares lost

90 per cent of their value.

Salter, formerly of

turnaround investor Hilco,

has acquired struggling

retailers, such as store chain

JCPenney and clothing chain

Brooks Brothers, in the

pandemic.

Ted Baker, led by chief

executive Rachel Osborne,

rebuffed a 137.5p-a-share

Sam Chambers offer from Sycamore, which

has since tabled an improved

bid. One top-20 investor said

they would accept a bid only

above 170p, valuing Ted

Baker at about £310 million.

Activist investor Toscafund,

the largest shareholder, lifted

its stake to 28.1 per cent.

Founder Ray Kelvin is

understood to have

welcomed Sycamore’s

interest after becoming

frustrated with performance

since he was forced out three

years ago amid allegations of

misconduct, which he

denies. He still owns an

11.5 per cent stake.

Last November, ABG,

reportedly valued at about

$10 billion (£7.8 billion)

shelved plans for a float in

favour of selling stakes in its

business to investors. Last

year the pandemic pushed

Ted Baker to a pre-tax loss of

£107.7 million on sales of

Baker boss Rachel Osborne £352 million.

1.7m

Bulb customers

£1.7bn

Cost to taxpayer

Broken glass:

Hayden Wood

and Amit Gudka’s

firm earned a seal

of approval last

year from the

prime minister

SABAH

MEDDINGS

AND JAMIE

NIMMO

W

ednesday afternoons

were rowdy at the Bulb

offices on Bishopsgate

in the City. Staff in the

glass-fronted building

lined up in two groups

for a frenzied reminder

of the company mis-

sion. “Lower bills,

lower CO 2 ,” they

shouted, getting louder each time.

It was a scene more typical of a trendy

tech company than a power supplier, but

Bulb’s young founders were keen to dis-

tinguish it from the old-fashioned energy

giants, which had a reputation for rip-

ping-off customers.

Its offices were filled with expensive

plants, staffed by excited young gradu-

ates hired on the promise of disrupting a

cumbersome industry, and led by a pair

of entrepreneurs who had raised hun-

dreds of millions from investors won over

by their mission to provide greener

energy at cheaper prices.

Bulb’s cult status filtered through to its

young customers, who revered it as a new

breed of energy company that punished

the “big six” for their terrible customer

service and reliance on fossil fuels to heat

and power homes. However, its dream of

creating a trailblazing tech company that

could revolutionise the energy market

came crashing down last November

when the firm collapsed.

Ministers put it through a process

called a special administration — in effect,

nationalising it and paying the running

costs to ensure its 1.7 million customers

were not left without gas and electricity.

The government has set aside £1.7 billion

of taxpayer money, but it is already esti-

mated that the costs could reach more

than £2.2 billion.

Last week, Hayden Wood, Bulb’s

38-year-old chief executive, apologised to

MPs in a bruising select committee hear-

ing during which he admitted he should

“take responsibility” for how the busi-

ness failed.

“I am very sorry for the way things

turned out at Bulb,” said Wood, appear-

ing via video link. Wood, a privately edu-

cated former management consultant,

also revealed that he continued to be paid

a £250,000 a year salary — with the bill

picked up by the taxpayer.

What Wood did not say was that both

he and co-founder Amit Gudka had

extracted more than £4 million each from

Bulb by selling shares in a 2018 fundraise.

The collapse of Bulb came just four

months after the prime minister visited

its London offices for an official opening

How Bulb’s

blowout

left a £2bn

energy bill

Two risk-taking City boys, whose staff of

‘Bulberinos’ shook up the power market,

made fortunes. But now we’re paying the tab

and declared the company was “leading

the way in the renewables revolution”.

So what went wrong?

Bulb was one of nearly 30 challenger

energy firms that failed as a result of rock-

eting wholesale prices for natural gas that

left thinly capitalised start-ups unable to

provide energy to customers without

government help. The regulator Ofgem

has been heavily criticised for welcoming

this wave of new companies to the mar-

ket without imposing proper checks or

stress tests.

While the customers of smaller failed

firms were handed to the bigger opera-

tors through a process called Supplier of

Last Resort, Bulb’s scale meant it fell to

the taxpayer to pick up the bill.

The demise of Bulb is also the story of

an inexperienced start-up that sought to

compete with some of the world’s biggest

companies through cunning marketing —

but without installing the financial buff-

ers needed to endure a downturn. It

exposed the naivety of a young manage-

ment team who failed to hedge properly

— or buy in advance — against the risk that

wholesale gas prices could rise suddenly.

Dermot Nolan, the former chief execu-

tive of the energy watchdog Ofgem, has

declared that the company had only itself

to blame. “For Bulb to blame anybody

but themselves is not reasonable,” he said

in November. It had made “conscious

choices about its own hedging policy”.

B

ulb was founded in 2015 by Wood, a

former management consultant at

Bain, and Amit Gudka, an ex-Bar-

clays energy trader. The two

friends decided to give up their cor-

porate jobs after agreeing that the big six

were ripping off customers. The answer,

they believed, was to set up their own

business — a supplier promising renewa-

ble energy with one tariff and no exit

fees. By running it largely online, they

could have fewer staff and reduce bills

further. Employees were tempted by free

snacks, monthly allowances for social

events and competitive salaries.

Wood raved publicly about Bulb’s mis-

sion to provide customers with “cheaper,

greener, simpler energy”. He aimed to

reach 100 million customers globally by

2030. “The best bit about working for
      Bulb is shaking up a stale, uncompetitive
      industry,” said Wood in a 2016 article.
      Wood, who lives in east London with
      his wife Flora and daughter Iris, was chief
      executive and the public face of the busi-
      ness, appearing in videos and interviews.
      He was also an adviser to the government
      on green business.
      However, there was a darker side. An
      adviser to Bulb said Wood was “control-
      ling and insecure” but had a “private
      school air of being supremely confident”.
      Wood attended the prestigious £28,000-
      a-year King’s School in Canterbury.
      Cambridge-educated Gudka, 38, a
      grime and dubstep DJ in his spare time,
      was chief energy officer. Customers were

We are searching for the UK’s

fastest-growing private

companies to appear in our

inaugural The Sunday Times

100 ranking.

While the past two years

have been difficult, many

business leaders have been

quick to respond to new

growth opportunities.

Job creators such as Huel,

the food replacement brand,

myenergi, which makes

electric vehicle chargers, and

Lusso, which sells luxury

stone baths, will all compete

for consideration.

The research is being

conducted by our partner,

Beauhurst, with support from

our team at Times Enterprise

Network, and has headline

sponsorship from Barclays

Private Bank. Companies

have until May 4 to submit

their details. The league table

will be published on July 3,

Search begins for

fast-growing firms

followed by a networking

awards dinner in October to

which all 100 companies will

be invited, free of charge.

Companies must have four

years of accounts

(management accounts

accepted for the latest year),

with sales growth measured

by the compound annual

growth rate over the latest

three financial years.

Our entry criteria includes:

be UK registered, unquoted

and not a subsidiary; have

sales of at least £5 million in

the latest year, and

annualised sales of more than

£250,000 in the base year; be

in profit, have ten or more

employees and forecast sales

growth. Companies that do

not meet all criteria will be

considered as Ones to Watch.

To take part, enter your

details at: thetimes.co.uk/

static/sunday-times-100-

searching-britains-fastest-

growing-private-companies/.

Airbus has denied a safety

issue and pointed out that

A350s continue to fly for

other airlines in Europe.

Airbus, which makes the

wings for its planes in North

Wales and Bristol, said its

relationship with the airline

had “broken down” and

suggested its customer

should look elsewhere.

In its latest response, Qatar

denied there had been a

breakdown in relations and

said: “Indeed, the parties

continue to work together

productively and co-

operatively on a daily basis.”

It rejected a suggestion from

Airbus that the pair would

Jon Yeomans

need “constant supervision”

to keep working together.

Qatar said it could not buy

another plane, insisting that

only the A321 Neo offered the

right specification. Acquiring

planes from another

manufacturer would most

likely incur “significant

delay”, Qatar added.

Qatar had agreed terms of

the first delivery seven days

before Airbus pulled the plug.

Airbus said it “remains

committed to finding an

amicable resolution but will,

absent an agreement,

continue to defend its case in

court”. Qatar did not reply to

a request for comment.

Richard Tyler

Airbus cancelled an

order of 50 A321s

Rarely has a peeling paint job

caused such a ruckus in the

airline industry.

Qatar Airways is in a battle

royal with Airbus over what it

claimed was “flaky paint” on

a number of A350 jets it

received from the

planemaker. The airline sued

for $600 million but Airbus

countered, cancelling a

separate order to supply

Qatar with 50 of its highly

sought after A321 Neo jets.

Qatar is demanding Airbus

fulfils the Neo order, with a

judge due to rule in London’s

High Court on Tuesday.

Qatar authorities grounded

17 planes over the issue and

the carrier refused to take

delivery of three further

A350s. The airline alleged

“serious and legitimate safety

concerns” because the defect

could degrade protection

from lightning strikes.

Airbus ‘flaky paint’ row with

Qatar lands in the High Court