By Carole Dennett
Yesterday it was announced that Red Funnel had been bought by Njord Partners – a ‘special situations’ investment company.
These companies specialise in investing in businesses that are undergoing circumstances such as financial distress, mergers, bankruptcies, or other challenging events. Njord’s website says the business “Will typically take an active role in restructurings, in which we have extensive experience, to facilitate a favorable outcome.”
Time will tell what any ‘restructuring’ of Red Funnel will look like or mean for Islanders and the Island’s fragile economy, however special situations investors typically demand a higher than usual return on their investment due to the risks involved in the market.
Neither Red Funnel or Njord Partners contacted the Island’s elected representatives prior to the deal going through. Although Red Funnel’s CEO Fran Collins remains in post at present, it is unclear what the future holds for her – as special situation investors often put in place their own management to bring about changes they believe are required.
The payday for the various banks behind Red Funnel, Royal Bank of Canada, Allied Irish, Barings, and the syndicate of Sun Life, SEB, and Santander, along with their advisors FTI, could herald bad news for the Island.
This is the reaction to the news from the Island’s MPs and the IW Council Leader. The three collaborated last year to publish the Islanders’ Charter – a roadmap for improvement in cross-Solent services which they produced following reports that the ferry company was for sale.
IW East MP Joe Robertson: This is a bad day for the Island. Yet another sale to a private equity group who exist for the “uncompromising pursuit of capital preservation” for foreign investors – their words not mine.“They have not even had the courtesy of contacting local elected representatives to hear our concerns on behalf of Islanders before structuring this deal. While cross-Solent connections are treated purely as a revenue generator for investors in an unregulated framework, Island residents and visitors will continue to pay over-inflated prices.
“The Government must step in. Enough is enough.”
IW West MP Richard Quigley: “If the new owners are interested in solving the worsening problems around reliability, frequency, and especially pricing, then I’ll happily work with them.The new owners would have to have gone out of their way not to have heard Islanders’ concerns. And they’d have to go some way to do a worse job than is currently the case- but time will tell.
IW Council Leader Phil Jordan: “Red Funnel is a lifeline service for Islanders. The acquisition by Njord Partners, a private equity firm specialising in distressed and high-risk investments, raises serious questions about the long-term security and affordability of this essential route. Njord’s track record shows a focus on turnaround and profit extraction – not the delivery of stable public services.
“Islanders deserve reliable, regular ferries at affordable prices. Not further uncertainty about whether financial engineering and equity ownership comes at the cost of jobs, service levels, affordable fares and investment in their assets. It is disappointing that a more local, dedicated ferry operator was unsuccessful in their bid. We will be watching closely to see how the service is run with these new owners. If the Island is not placed first we shall be pressing Government even harder for regulation and oversight of this vital transport service.”
