He May Have a $2.1B IPO, but Tony Hayward's Comeback Won't Last
The comeback of Tony Hayward -- once dubbed the most hated man in America -- is officially complete. Hayward's crowning moment arrived Friday when Vallares, the oil-and-gas investment vehicle he co-founded, raised $2.18 billion through an IPO -- a third more than expected. The successful IPO was a referendum on the disgraced former CEO of BP -- and he passed. Now Hayward's risking it all on one act of (aspirational) management hubris.
Vallares, founded by Hayward, financier Nathaniel Rothschild, investor Tom Daniel and former Goldman Sachs banker Julian Metherell, will use the proceeds to buy up to $10 billion in oil and gas assets in emerging markets like Russia and the Middle East. The plan is to repeat the success of Vallar, a similar investment vehicle created by Rothschild to buy mining assets.
Vallares is structured to do well. It has the market cap to go after oil and gas assets typically reserved for super majors like Exxon, BP and Shell, and the nimbleness to move faster than other publicly-listed companies because it doesn't have to seek shareholder approval for takeovers, Rothschild told the NYT. And Vallares will target emerging markets like former Soviet states where governments aren't always keen on working with oil majors.
Where the problems begin... with Hayward!
The problem begins once Vallares makes an acquisition. It's widely believed that Hayward will take the helm of whatever company Vallares ultimately buys. Yes, Hayward has loads of management experience running one of the largest oil and gas companies in the world. And at BP, he successfully reduced overhead by more than one-third and increased profits.
Of course, Hayward also failed to improve safety at BP and the company suffered a string of massive fines as a result. The most egregious example was the Deepwater Horizon disaster in April 2010, which killed 11 workers and sent 4.9 million barrels of oil into the Gulf of Mexico.
But BP had problems long before last year's disaster, and Hayward's cost cutting helped cement -- even if it was unintentional -- a profits-over-safety culture. If that weren't reason enough for his Vallares partners to keep him out of the CEO seat, his handling of the oil spill should be.
Hayward has a valuable role to play over at Vallares. His experience in the oil and gas sector will help the company identify deals with the most potential. But he should stick to broader strategy and negotiations, not get caught up in some desire to show the world he can really handle the chief executive job -- no, really!.
Photo from BP
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