By Edward Poultney
Peter Barker-Homek tells Edward Poultney how he plans to triple TAQA's value over the next five years.
Peter Barker-Homek tells Edward Poultney how he plans to triple TAQA's value over the next five years.
Only two and half years old and already a global presence, the Abu Dhabi National Energy Company (TAQA) now has an operational presence that almost spans the globe. As CEO Peter Barker-Homek puts it: "We are a truly trans-national corporation: Our eastern frontier is Chennai in India and our westernmost base is Calgary in Canada."
Founded in June 2005 as a public joint stock company and partially listed on the Abu Dhabi Stock Exchange TAQA is 75% wholly or partially owned by the Emirate's government, with the remaining 25% in the public domain.
I’d like it [TAQA] to be a US$60bn entity by assets, with 7,000 employees... That’s the beauty of TAQA, we have 38 nations represented in our workforce.
The group hit the ground running with massive financial backing and currently has in excess of US$15.5bn in assets, an annual turnover of US$898m in its first full year of operations and Aa2 and AA- credit ratings from Moody's and S&P respectively.
According to Barker-Homek the company's launch and success is part of a larger region-wide development: "A trend took off around 2004/2005 to create securities exchanges that are similar to the exchanges that we have in Europe and the US, and with that a number of companies were publicly-listed.
This has allowed the average citizen to take ownership of the industry and commerce in the UAE. It's been a huge success.
If we think about raising trading you need transparency, you have to see what accounting standards you are going to use, how the exchange will be governed - all those things have come together in the course of a year or two as regulations have come about that took Europe and the US 100 years to develop."
Although the Gulf exchanges have moved forward in leaps and bounds, the type of trading that is undertaken is on a different level to their Western counterparts.
TAQA's economic muscle is propelled by returns on investment and its principal shareholder rather than by individual investors, with trading being slower than in other, mature markets.
I have seen that with TAQA stock - people buy and then hold.
It's the behaviour that we saw in the EU and the US 50 years ago, which was that you actually bought a company because it was part of your portfolio, your family's financial wealth - you didn't buy it with the idea that you were going to turn it. To take one example, my mother still owns stock that she bought in the 1950s!" laughs Barker-Homek. "She'll never sell it, she'll pass it on to her grandkids.
So it's a different mindset; we haven't had the invasion of the hedge fund, the invasion of the private equity firm that looks quarter-to-quarter, and that's probably very good. When you think about the youth of the institutions on the exchanges they actually need long investors at this stage of their development.
Now, in three to five years I think that the insertion of ‘hot money' will probably add further advocacy to the way that we govern ourselves. So I think we're at the right stage for now.
This timeline is one during which Barker-Homek also has big plans for TAQA. Through organic growth and an eye for acquisition targets, the ambitious CEO wants to see the group's net value triple in the next five years.
I'd like it to be a US$60bn entity by assets, with 7,000 employees. We're currently in three regions: America, Europe and MENA India and Pakistan. That's the beauty of TAQA, we have 38 nations represented in our workforce of 2,500 people," he says.
This reflects the company's current geographical spread. With operations throughout the energy industry ranging from power generation, desalination, renewables, upstream oil and gas, pipelines, gas storage and LNG regas, TAQA necessarily actively pursues opportunities across regional boundaries.
The two latest landmark deals include the acquisition of Talisman Energy Limited's non-operated interests in Brae on the UK Continental Shelf, finalised on the last day of 2007 and the acquisition of Canadian group PrimeWest by wholly-owned subsidiary TAQA North, which was finalised in mid-January.
TAQA North began in August last year. The company as a whole has US$21bn in assets today and US$7bn of those are in Canada, so you could say that we are a leading Canadian company!" he says with a glint in his eye.
Unlike the furore surrounding DP World's entry into the US market in 2006, Barker-Homek set the group's strategy to pre-empt any negative publicity over the deal: "We took the approach of being very vocal and media friendly, so people know our organisation and they know our strategies.
I think that the role of leadership is to go in and push the process along.
There was a little noise in the media but it was more of a debate over whether our investment would get extra oversight - and [the Canadian Minister of Industry] Prentice came out immediately and said that no new legislation would need to be enacted.
Four days ago I also received a letter from him thanking TAQA for our investment and looking forward to future investment."
TAQA North is the one of the group's key focal points at the moment. The addition of the PrimeWest operations has meant that the company is now one of the top ten in terms of proven and probable reserves and one of the top 14 producers of oil and gas.
The really exciting thing from a business standpoint is that we will be replacing our reserves at 141% over 2008," explains Barker-Homek.
That puts us in the top tier as far as EMP companies go. It's a monumental moment for us as it's the first time that we have built a business footprint of scale in organic growth, where we can look at growing the opportunities within our signature. In Europe we'd like to get to the same place in the power and midstream business."
With a general trend towards pursuing alternative energy sources, boosted by January's Future Fuels Summit in Abu Dhabi, many countries are looking to move away from total dependence on traditional fuel sources.
Most European countries and almost a third of US states have made renewable energy a primary component of their energy mix, usually from 10% to 20%, so even petrochemical giants have to be able to pursue and present a range of options.
While renewable energy has a place on TAQA's portfolio the company is concentrating on proven technologies rather than funding research and development projects. "We are very bullish on wind power, hydro and ethanol," explains Barker-Homek.
I like solar power but unfortunately it works only in certain markets where it's highly subsidised - that being said we are looking at partnering in a solar-powered scale utility plant. But beyond renewable energy is sustainability - we look to minimise our impact on the environment where we operate.
We have green offices as far as rolling out recycling plans, for energy methods we have a hybrid carbine programme that we've rolled out to all employees that is considered top quartile. We also look at creating awareness globally - we're the first Middle Eastern member of the Combat Climate Change movement.
This regional ‘first' is part of the company's identity that Barker-Homek feels sets TAQA apart from its competitors. Having only been in the market for a relatively short time the group has been able to create its corporate identity unburdened by historical pressures or a single dominant culture.
Though headquartered out of Abu Dhabi, Barker-Homek describes the company's workforce as "the UN": "Because of this we had to make a very conscious decision to make sure that every culture, colour and gender feels enfranchised within the organisation.
I think that will prove to be a huge competitive advantage to us." This has already brought dividends as one organisation, which Barker-Homek cannot yet disclose, has entered into exclusivity with TAQA based on their staffing policies.
They actually said to me: ‘Peter, the reason we've entered into this with you is because of the way you treat people.' And for a company that's only been on the global stage for a year that's a terrific endorsement.
In fact, we've changed the name of our HR department to HP - Human Potential! In upstream business you exploit resources, that's the common term, and sometimes I feel that in the industry that gets transferred into how you treat people.
I want our employees to know that we are here to support them - we're founded on the basis of being a meritocracy; everyone can be the CEO.
In addition to the HR policies TAQA is set apart by the speed at which its transactions take place. Over the past 12 months the group has deployed US$11bn over six separate transactions. In each due diligence and completion has already been concluded, an impressive tally for a company of TAQA's size.
This strategy is set to continue through this year, although at a slightly lower rate.
"We will always be an acquisitive company," he says, continuing, "you get a lot of things from an acquisition if it's done right; people, practices, intellectual property - which you just can't measure on a balance sheet. And if you enfranchise people you renew your corporate culture.
It is not just competition that the group pursues, Barker-Homek is a keen advocate of using corporate relationships to power his team forward: "I personally think that this is an opportunity-rich world - and those opportunities are best developed in collaboration.
Today we partner some of the best companies on the planet; BP, Shell, Total, Suez and Petro-Canada to name just a few. Those relationships enrich us and enrich the opportunities for collaboration."
Collaboration is also something that Barker-Homek brings to his management strategy, which he bases on someone that he sites as his principal mentor.
"John Brown's vision for BP, his green agenda, the importance he placed on meritocracy, validated a lot of my assumptions about the way a business should be run. It's those values that I've taken to TAQA."
Indeed, every employee has access to Barker-Homek's mobile telephone number and email address and he encourages them to contact him if they are not getting the help they need through normal channels.
He also travels out to see each segment of the business once a quarter and see how things are running on the ground. In order to ensure that employees across the company feel tied in to the corporate culture they are also encouraged to travel between divisions and geographical locations to get a taste of the different sites.
"I'm not a micro manager unless I need to be," explains Barker-Homek. "What I like to do is set the strategy, ethical standards and vision and allow people to fill in the details so long as they meet the deadlines.
And I am very driven by time - I think that time is the one thing in our business that you can't treat lightly. People by nature can get into analysis paralysis and indecision and I think that the role of leadership is to go in and push the process along.
As we wind down the interview and Barker-Homek prepares for his next meeting his thoughts turn to philosophy. "The one thing I've learned is that you can't understand your own societal context unless you see it from the outside, that's made me a fairly global leader.
We have to spend a lot of time helping people break down barriers they're not even aware exist. Having had a global career all my life and having lived in Asia, Latin America, Eastern Europe and the Middle East, when I got offered the job to come here and build a global energy company it seemed like the chance of a lifetime. And it has been."