Measuring up Cameron O'Reilly, Landis+Gyr
THE FRIDAY INTERVIEW:CAMERON O'REILLY bustles into the Shilling Room of Dublin's Westin Hotel on Monday afternoon, a little late for the interview and a bit hot and bothered. "I almost scaled the railings at Trinity to get out," he says, slightly out of breath. "I tried to cut across, only to discover that you can't exit on this side [Pearse Street]. That would have been a story for you."
In business, the eldest son of media baron Sir Anthony O'Reilly seems to have found the right path. For the past six years, Cameron O'Reilly has been quietly building one of the world's leading smart metering companies, recently rebranded as Landis+Gyr. With oil prices through the roof and energy conservation near the top of almost every political agenda, O'Reilly's time might be about to arrive.
"Smart metering is coming to the industrialised world," he says confidently. "Every single one of the utilities in California has chosen it; Texas is now doing it; it's rolling out across the United States. It's happened in Italy, it's happened in Finland. It's been mandated in Australia; it's been mandated in Ontario, Canada. So that wave is going to continue and one of the big drivers has been the increase in functionality but also the reduction in cost [of meters]."
Landis+Gyr manufactures electricity meters that provide two-way communication between utility companies and homes and commercial premises. They have a lifespan of about 20 years and will replace the sturdy but basic electro-mechanical meters used for more than 100 years.
In theory, utility firms should be able to manage energy loads better and homeowners will be able to monitor their consumption closely. The meters should also allow utilities to introduce a range of tariffs to suit the consumption habits of customers, in a similar way to mobile phone companies.
The Government is examining the merits of smart metering and Landis+Gyr has submitted its own cost-benefit analysis. O'Reilly says it should push for the use of in- home displays that allow people to monitor their usage indoors rather than having to go to the boiler outside. "The reduction in consumption comes from people becoming more conscious of their usage, and that's where the in-home display comes in."
With the meters costing about €120 a pop though - before factoring in the cost of installing them - O'Reilly estimates it would cost about €1 billion to roll them out in every home across the State. Who would pick up the bill?
"It's going to be a combination of the utility company and the customer," he says. The benefits, he argues, are enormous. "A 1 per cent reduction in peak load in Ireland would be 135 megawatts of avoided investment. Every megawatt costs about €1 million."
Digital communication between meters and the network would also bring an end to the age-old practice of a man calling round to read your meter.
"We're still living a bit in the dark ages in this part of our social infrastructure. For example, the only way that most utilities know whether their customers are consuming their product is when they don't call up to complain that the lights have gone out.
"It's remarkable in a post- internet revolution world that that's the case. It seemed to me that here was a wonderful, safe, solid business and an essential industry where we could get a leading global role and one that had really explosive growth potential."
O'Reilly persuaded some of Australia's wealthiest businessmen - Kerry Stokes, John B Fairfax, Jack and Robert Smorgon and Douglas Myers - to back the business. His father owns about 7 per cent and other shareholders include Dubai International Capital and the New South Wales government.
With headquarters in the Swiss town of Zug, Landis+Gyr now has operations in 30 countries and will this year earn revenues of about $1.5 billion (€945 million).
It has earnings before interest, tax, depreciation and amortisation of about $200 million. In May, the firm landed a lucrative four-year contract - estimated to be worth $360 million - to supply three million smart electricity meters in Texas. Just last week it concluded a €710 million refinancing on better terms.
Landis+Gyr will open an office in New York today. The move is long overdue, as the US accounts for about 40 per cent of turnover. New York is also the logical place for O'Reilly to meet his ambition to float the group, probably in the next 12 to 18 months.
Having lived mainly in Australia since 1988, O'Reilly is planning to uproot his family and move to the Big Apple. "It got to the stage recently where I was doing two weeks in Australia and two weeks between Europe and the States. It was a mad way to live. I'll switch my time between Switzerland and the US."
O'Reilly admits he will miss Sydney. His mother Susan - Sir Anthony's first wife - hailed from Down Under, and Cameron O'Reilly has dual Australian and Irish citizenship. His four children have been raised there, save for a couple of years spent in France. His accent has a soft Aussie lilt mixed with an American twang.
O'Reilly is the lesser-known son of Sir Anthony. Media-shy and based in Australia for two decades, he disappeared off the radar between 2000 and 2002 as he plotted his next career move following his surprise decision to quit as chief executive of APN News Media, Independent News Media's (INM) Australian associate.
While much is known of his brothers Gavin, INM's chief operating officer, and Tony, head of Providence Resources, interviews with Cameron are rare.
Once considered the heir to the INM throne, rumours circulated of a falling out with his father, and that his wife, Isle, wanted to leave Australia. O'Reilly has a different take on events. "I had worked with Independent newspapers for 12 years. It was a fabulous experience, but, effectively, it was a business that had been built up by my father and I always had a fascination about building something myself.
"Essentially, I wanted to start a public company from scratch. During the time 2000 to 2002, we wanted to bring the kids to Europe, so we moved to France and I developed the concept for Bayard [now Landis+Gyr]."
He describes Bayard as a premium capital investment group rather than a private equity firm, ie it is focused on just one business and willing to invest long term rather than looking for a quick return.
Later in the interview, O'Reilly gave further insight into his reasons for stepping away from a full-time role with APN and INM - he remains a non-executive director of both companies.
"Working with my brothers and my father was great, but the idea of building something from scratch really intrigued me.
"When he [Sir Anthony] was at Heinz, he fought against nepotism and loved the meritocratic corporate environment. I admired greatly what he had done. I really enjoyed working with him closely, but being able to do what we've done has been very gratifying."
Did he ever covet the role of group chief executive at INM? "It's like asking anybody in politics did they ever want to be taoiseach - pretty much everybody wants to be one rung higher on the ladder.
"So yeah, I obviously flirted with the idea. Running a public company like Independent, my dad had a very big role there as well. A lot of people take over as chief executive [at a company] and they're the bigwig, so that wouldn't necessarily have been [the case at INM] because, you might recall, he [Sir Anthony] was the chairman at that time."
Does he see himself working for INM again in a full-time executive role? "No," he says. "I had 12 great years there. I have a passion for newspapers but that was a previous stage in my life."
O'Reilly is less forthcoming on the subject of Denis O'Brien and his stakebuilding in INM. O'Brien has accused the O'Reillys of cronyism and of observing poor corporate governance standards.
Cameron O'Reilly was one of those to come under attack, accused of being on the board for too long and of earning too much as a non-executive director.
"The outcome of the most recent [INM] agm [in London] is pretty clear as to how shareholders feel on a lot of the issues, and the last thing I want to do is to pour oxygen into something."
What does he think O'Brien's long-term plans are for his stake in INM? "It's not for me to speculate. You'd have to ask him. A lot has been written and it has potential for a great media story, but, at the end of the day, the company needs to be, and is, focused on building the business for all shareholders.
"If you look at the board of Independent, there are people with an awful lot of experience around the table and that was well highlighted at the agm. The thing that really matters is what do the shareholders actually want? It [the agm] was resounding on all counts."
A lot of mud has been thrown by O'Brien in Sir Anthony's direction - what effect has that had on him? "He's been through so many corporate fights. He's had battles with competitors all through his career. I think it's not surprising from time to time that you are going to have corporate issues that come up. I think he's big enough and able enough to handle that."
Cameron and the other members of the O'Reilly family got together recently for his brother Tony's wedding. He says the extended family also meet up each year at Sir Anthony's Castlemartin estate in Co Kildare.
What was it like growing up in Castlemartin? "I didn't really grow up there in the sense that I lived in Ireland until I was five, then moved to the UK for a couple of years and then, from seven to 14, I was really in the United States and we'd come back for summers."
O'Reilly returned to Ireland at 15 to attend Clongowes Wood College. He established his academic credentials there, later attending Oxford University, where he graduated with an honours degree in politics, philosophy and economics.
He also gained a reputation as a rebel and enjoyed what might best be described as an "active" youth.
He met his wife through a blind date in 1992 and they agreed to marry after just three weeks. On the day the engagement was announced, one media analyst wrote: "Now that Cameron is getting engaged, he will focus more on his business [APN at the time] and stop going to nightclubs."
Nowadays, he's more likely to be staying in, watching the meter.
ON THE RECORD
Job:Chief executive of Landis+Gyr.
Home:Sydney but moving soon to New York.
Family:Married to Isle, with four children aged seven to 14.
Hobbies:Ski touring and mountain climbing. He has a house in the French Alps to indulge both.
Something you might expect:He is a board member of the Salvation Army in Australia, the Sydney Theatre Company and the Australian Ireland Fund.
Something that might surprise:"I've done a couple of bungee jumps but I don't do it every weekend," he says. "When I was at university I rode around the Amazon jungle on a motorbike. I also led a motorcycle expedition to China from Oxford."