Oppenheimer family of Stemcor steel, one of Britain’s largest private companies, pushed into spotlight in fight with India’s Jindal billionaire brothers

July 26, 2013 7:58 pm

Jindal fight puts focus on British steel trader

By Duncan Robinson

A fraternal scrap between two Indian billionaire brothers has pushed one of Britain’s largest private companies, and the family who control it, into the spotlight. The fight between the Jindal brothers aboutwho will buy steel trader Stemcor’s $800m Indian assets has dragged the London-based company into the public arena, which it has happily ignored since it was formed by a German immigrant in 1951. Its founder, Hans Oppenheimer, was raised in a middle-class Jewish family in Stuttgart before the second world war. A job with his uncle took him to Alexandria, the Egyptian port, before he and his young family settled in Orpington, a small town nestled in London’s commuter belt in 1949. It was from here that Mr Oppenheimer set up Coutinho, Caro & Co (London) – a joint venture with a German steel trading company of the same name.Described by one of his grandchildren as a “lovable but fearsome chain-smoking patriarch with a heavy accent”, in a 2010 article in Prospect magazine, Mr Oppenheimer was wont to tell his grandchildren: “Anything an Oppenheimer wants to do, an Oppenheimer can do.”

Particularly if it involved running the family firm.

Mr Oppenheimer’s only son, Ralph, took over as chief executive in 1982. But Ralph’s sister, Margaret Hodge, opted for politics – where, in her role as head of the Public Accounts Committee, she has recently gained a high profile for her acerbic analysis of the tax affairs of global companies, including Amazon, Google and Starbucks.

Under the younger Oppenheimer’s control, the family business expanded rapidly. It morphed from Coutinho Caro and Co into Stemcor – a contraction of Steel Marketing Corporation – in 1987, after the Oppenheimer family bought out a stake owned by its joint venture partner, US construction group McDermott International.

That gave the family complete control of its steel business – which spans trading, finance, provision of raw materials, and stockholding – for the first time.

Turnover reached £1bn in 2000 and then £4bn seven years later, as the global steel industry rode China’s seemingly insatiable demand for the metal.

In its last financial year, revenues were £5.1bn – making it the UK’s sixth-largest private company by sales, even as it fell to a pre-tax loss of £23m.

Stemcor had relied on debt to fuel its expansion and, by 2013, its short-term credit facility stood at $1.2bn. However, as the price of steel dropped, so did the desire of Stemcor’s banks to provide funding to the business.

As the need to restructure the business increased – and demands by Stemcor’s banks to pay down its net debt became louder – the company appointed Goldman Sachs to sell some of its Indian assets.

A new chief executive, Julian Verden, was brought in this year to oversee this process – the first time someone not called Oppenheimer had led the company.

The Oppenheimer family still own about two-thirds of the group’s shares – with the balance controlled by other directors and the group’s employees – and they have two seats on Stemcor’s board.

The family’s shareholdings are spread across Mr Oppenheimer’s five children and their children, in a mish-mash of trusts and direct ownership. “It’s a family firm – but it’s a very big family,” noted a family member.

The relationship between Ms Hodge and Stemcor – and the amount of tax the group paid compared to its large revenues – was pursued by some newspapers late last year as her profile as an anti-tax avoidance campaigner rose. Stemcor denied any suggestion it had paid less than it should, pointing out that it had paid £14m of corporation tax in the UK during three years, giving it an effective tax rate of 30 per cent.

Its preference, however, has been to keep public utterances to a minimum – as it has done for more than 60 years.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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