With BCD Holdings shareholder John Fentener van Vlissingen becoming Hogg Robinson Group's largest single shareholder by increasing his ownership stake to 13.14 percent late last month, the BCD founder also is planning to make further investments in Asia/Pacific and other emerging markets and diversify BCD Travel's client base by putting an increased emphasis on the midmarket.
On April 29, Beverweerd Investments, the Zeist, Netherlands-based wholly owned subsidiary of van Vlissingen's Boron Management investment firm, increased its share from more than 10 percent, which it acquired in March following the initial mid-December buy into Hogg Robinson, parent company of travel management company HRG
(BTNonline, March 6). The latest purchase surpassed institutional investment firm and previous largest shareholder F&C Asset Management's 11.25 percent share in Hogg Robinson.
Van Vlissingen would not discuss further Hogg Robinson investment plans, saying that talking about his intentions "would limit my flexibility." In March, Boron and BCD Holdings spokesperson Mario Bruna said the share acquisitions were "purely a long-term investment." According to van Vlissingen, all non-travel operations formerly within BCD Holdings have been moved to Boron, and that the only thing the two have in common is their shareholder.
According to Kean Marden, capital markets head of research at London-based investment bank Kaupthing Singer & Friedlander Group, London Stock Exchange regulations state that if van Vlissingen "comes out and says that he is building a stake and wants to bid, he will be required to bid. You can't sit there and destabilize a business by claiming you might bid for it."
Marden said Hogg Robinson remains profitable despite the cyclical nature of its business and the slumping economy. However, a previous seven-year relationship between BCD and Hogg Robinson in the BTI joint venture, ongoing joint clients, differences in market presence—with BCD larger in the United States and HRG larger in the Far East and some parts of Europe—and van Vlissingen's latest investments could suggest a new tie-up in the future. "We know that the two businesses have operated together harmoniously in the past and there is merit in the combination," according to Marden.
Despite the links between the two TMCs, van Vlissingen's stock buys do not affect HRG's future, HRG CEO David Radcliffe told Business Travel News this month. "Good for John. He knows a good investment when he sees it," Radcliffe said. "At the end of the day, we are not working any less or more with BCD than before the investment and that's the bottom line. We are still an independent company. He may hold a fair slug of shares, but it's not sufficient enough for him to be able to control the company. Whatever his long term plans are, best of luck."
Along with investment firms, Radcliffe and other management team members own a significant number of HRG shares. The share price has been cut by more than half since the company issued its initial public offering in 2006, but the company outlook is better than its share price indicates, according to Radcliffe.
"It's pretty well known out in the market that since the split HRG's done pretty well," Radcliffe said. "Not talking about share price, but in terms of growth, global footprint, etc. I don't know how BCD has been operating, but possibly John feels the need to protect it."
Separate from the HRG investment, one of van Vlissingen's top priorities for BCD Travel is to increase ownership in Asia/Pacific, where former BCD Travel CEO and soon-to-retire Mike Buckman is mustering a regional strategic plan for mid-year delivery to the company's board. The plan could include a larger stake in Hong Kong-based Jepsen Travel, in which BCD bought a 20 percent stake in 2005. Van Vlissingen also wants to become a top-five player in India and Australia, where there are better margins than in most countries, he said. In October, BCD took a majority ownership stake in its Sydney-based partner.
"Without any doubt, we must get stronger in the Far East," said van Vlissingen. "We have to be one of the top three. Our investment there in Jepsen was clearly a very good move."
Jepsen ownership is a key asset for BCD as it operates a mainland subsidiary in China, where 50 percent of Far East business resides, van Vlissingen said.
"India is growing, but it's not the same," he said. "Even Thailand or Vietnam might look exciting, but it's all less than 1 percent. So is it wise to go in all of these countries? That's part of what we'll look at. Without any doubt, we have to be strong in China, India and Australia."
The souring economy and decline in acquisition prices has the company also looking at investments in Latin America, where the company is soon to increase its ownership in Brazilian partner Avipam. In June 2007, BCD took an undisclosed ownership stake in the Rio de Janeiro-based company, giving it equity in all of its top Latin American markets, which in addition to Brazil are Mexico, Peru, Argentina and Chile.
Buoyed by the billionaire pockets of van Vlissingen, acquisition is not BCD's only area for increased revenue growth.
"The first quarter was very strong. What I liked was that it saw us getting the middle clients. In the beginning, our focus was on the big clients and the global accounts and we became very strong on that. That's good and bad news at the same time. The good news is that they are growing. The bad news is the margins for the major clients. We have moved a little to get a better base in the middle clients.