Olivier Brousse: Using his 'Coca-Cola secret recipe' to solve infrastructure problems

For someone describing a bleak future, John Laing chief executive Olivier Brousse is pretty upbeat. Sitting in the infrastructure investment and management group’s Kingsway offices in central London, the Frenchman paints a picture of even more dangerously overcrowded trains, roads choked by traffic and air polluted by creaking power stations.

“The Tube is already running over capacity, there’s just too many people. I’m scared to get on it sometimes. There was almost a riot at London Bridge Station, the police were called,” says the man who has good reason to be wary of the train-travelling public. He was once something of a hate figure when in charge at Connex.

“The population is growing out of control, there’s going to be another 15m people in Britain over the next 15 years, that’s equivalent to two cities the size of London now… what are we going to do to house, transport and take care of those people?”

The reason Brousse is so cheerful about this seemingly gloomy future is that he claims to have the solution to it, not just in Britain but also in other countries where John Laing operates – public-private partnerships (PPPs). If governments ask, he says, his company can help solve the problems.

John Laing will raise the money to build the roads, railways, schools and hospitals required, manage their construction and earn a return when they are delivered, though the charges the industry takes have raised eyebrows among some.

But, he says, governments need to act fast. “The problem with infrastructure is that it takes years to think through, plan and deliver. Our projects take 15 years from idea to delivery, but they are fundamental - every time we invest they have an impact on people’s lives – their education, health or commute.”

Brousse regards such problems as solvable, as long as governments make “bold” decisions. The saga over a new runway in the South East is an example of the failure to do so.

“At some stage, governments will have to make decisions about adding [infrastructure] capacity and spending because things will just get worse. What’s the alternative?” he adds, darkly.

Another obstacle is educating the public about the benefits of having the private sector deliver services or infrastructure that are usually the responsibility of the state. Here Brousse has real insight into how the public can feel about such takeovers. He became a reviled figure among London commuters 15 years ago, when he ran Connex, the much-criticised company running trains from the South into the capital and the first to be sacked for its poor performance.

“It was six years of hell and back,” he says. “But absolutely I don’t regret it: I’ve only good memories looking back.”

After Connex, Brousse had similar transportation roles for its French parent company, Veolia, then went to waste and water utility group Saur in his native country, before joining John Laing last year.

“I’ve always worked in private businesses that have an impact on people’s daily life,” he says. A constant aspect of this public service is justifying why the private sector should be involved.

“We have to explain it’s not just free profit, that we have risks and responsibilities if we get it wrong,” he says, adding that often people confuse delegation of public services with them being privatised. “Privatisation is very rare,” he adds.

The Frenchman is something of an Anglophile when it comes to PPP; in fact, Brousse says the British invented it during the industrial revolution. “That was based entirely on PPP: no canal, railway or infrastructure would have been built in Britain in the 19th century without it,” he says, adding that it was refined with post-war reconstruction of bombed cities and perfected with the PFI Act of John Major’s government in 1992. “Since then, the UK has done more PPPs than anywhere in the world – maybe 500 – and how many have gone wrong? Five, 10, 20?”

He admits to some “spectacular” failures, such as Tubelines, but says a few had to fail to learn how to do them correctly. “For the few failures, how many schools and hospitals have been built?” he asks.

Brousse believes PPPs fail when the contracts are poorly designed – such as a toll road where a company has no control over the number of cars in use – or risk is not properly allocated.

With so much British experience in PPPs, Brousse sees John Laing’s role as exporting the idea.

“It’s like the Coca-Cola concentrate, we have this best practice based on British law and financial frameworks. We try to spread that British concentrate around the world through my team of ‘bottlers’,” Brousse says. “Investors like what we do and ask how we can grow, they ask how my ‘bottlers’ are doing.”

He admits that while the merits of PPP might be debated here, the rest of the world is just catching up, with the US and China particularly keen. While the UK – and John Laing specifically –can make a living out of exporting its experience, the UK needs to be audacious and embrace it to solve the coming problems, according to Brousse. He believes the cheap money created by low interest rates offers a “once in a lifetime” opportunity that presents the chance for an “infrastructure moonshot”.

“It is not a funding problem, it’s public policy problem,” he says. “It’s a unique opportunity, but what is the alternative? Do we decide something today or wait until it’s more costly and difficult? But the status quo is really not an option.”

Action would boost John Laing. Its interim results last week revealed the net asset value of its 100 or so investments rose £51m to £822m. But, while the company is ticking along, currency headwinds contributed to a 68pc drop in pre-tax profits to £32.6m, so a surge in demand for PPP would certainly mean more demand for Brousse. The shares are up 10pc on the flotation price of 195p when the group returned to life as a public listed company in February, having been taken private by Henderson in 2007.

Incidentally, there’s still confusion among some about what John Laing does: while it manages construction projects, it doesn’t do any building itself, having sold off that arm more than a decade ago, and once work is completed it is not interested in running the bridges, stadiums and railways; sister company John Laing Infrastructure Fund can handle that.

But there’s no argument for a tidying-up exercise, claims Brousse: clients appreciate who they are.

“John Laing is like having an ‘Intel inside’ sticker on a computer,” says Brousse. “You might not understand, but you know it’s going to work.”

CV

Name: Olivier Brousse
Position: Chief executive, John Laing
Age: 50
Career: Executive chairman and director general of water management group Saur; chief executive Veolia Transport; general manager Connex.
Education: Secondary state school in Cabanis, near Toulouse; degrees in engineering and civil engineering from Ecole Nationale des Ponts et Chaussees and Ecole Polytechnique in Paris.
Family: Three children: two boys, aged 21 and 7, and daughter a daughter 17.
Lives: Rented home in Kensington
Hobbies: Plays golf of a 19 handicap, rugby, running.
Reading: Ardennes 1944: Hitler's Last Gamble by Anthony Beevor.