Ovo exits parent firm in founder Stephen Fitzpatrick’s latest reshuffle
Big Six energy supplier Ovo has cut ties with its long-standing parent company Imagination Industries, with founder Stephen Fitzpatrick shifting the household retailer into a new corporate entity.
Ovo Group revealed in its results last week the company has been transferred to Energy Transition Holdings, with Fitzpatrick the majority shareholder alongside long-term backers Mayfair Equity Partners, Mistubishi Corporation and Morgan Stanley Investment Management.
The decision was overshadowed by a £200m investment boost from Mayfair and Morgan Stanley, and a slump in profits from £159m in 2021 to £20m in 2022.
Fitzpatrick’s latest move could ease some of the scrutiny on his business decisions, with the Ovo boss grilled by the Business, Energy and Industrial Strategy Committee last year concerning brand licence fees and loans to directors.
This includes £21m in brand licence fees Ovo paid to Imagination according its 2020 accounts, and its decision to hand out £27m in loans to its directors amid the global energy crisis – as first reported by The Mail on Sunday.
There is no suggestion these decisions broke financial rules.
Imagination was originally set up as Fitzpatrick’s investment vehicle to incubate companies in the early stages.
Once investments rise in scale they are spun out of the group, with Ovo’s exit following the listing of Vertical Aerospace in December 2021, which was also part of Imagination.
Fitzpatrick founded Ovo in 2009, which has since risen to become the UK’s fourth largest supplier with over 4m customers.
It expects the slump in profits to have “no cash impact” on its business, blaming the decline on the need to hedge supplies for customers in a volatile trading period.
The supplier also expects to “be compliant with financial covenants,” with chief executive Raman Bhatia committed to the domestic energy sector.
He told City PM earlier this year Ovo plans to “have a long run” and is focused on its mission to “help customers on to the path to net zero.”
Ovo has been linked to a potential takeover of Shell’s household supplier arm, home to 1.5m customers, which was put up for sale by the energy giant earlier this year – which it has declined to comment on.
British Gas owner Centrica and Octopus Energy have been named as other potential suitors in media reports.