British Gas was a pivotal privatisation in the Power Brokers overall plan to do business in the United Kingdom. It was the first really major penetration of a British company and, thanks to Margaret Thatcher, allowed an American team to work at the heart of British government. Eugene Fife of Goldman Sachs ran the core team who orchestrated the offering. For Eugene, the intimacy and open road offered by the Thatcher government allowed two important things to happen: one it gave Goldman Sachs hugely significant fiscal credentials every time they were able to distribute the offering successfully; and secondly, this was the first major under-writing exposure Goldman's had secured under a new form of contract - one with a western democratic government.
Thatcher is praised for spreading her trademark of privatisation around the world. This is a naà ¯ve and superficial analysis of what was really happening at the time. The greatest gift that anyone, not least a government, could bestow upon the broker team was the anchored platform to now take their equity capital markets model to the rest of Europe - using their success in the UK privatisation programme to launch a whole raft of new European privatisations. The American power brokers were now winning mandates for privatisations that even by American standards were huge; for every one of the early UK privatisations amounted to billions of dollars. America itself had not seen a billion-dollar equity deal beyond America in over a hundred and forty years of global trading.
The laurels here lay entirely on the heads of men like Eric Dobkin of Goldman
Sachs. At this time, Europe was really a continent of pieces. Going to Paris and then going to Milan and
then coming back to London and even going to Germany, as Americans, they must
have been struck by the huge differences and disparities of the continent's
financial operations. In Germany, for example, there were only three banks. They
basically controlled pretty much everything that went on. They elected the CFO and
there was no real domestic capital market operating at all during this time.
The UK had the semblance of a capital market but Paris was somewhere in between the UK and Germany. Milan was, basically, two or three guys sitting in a room controlling all the major companies in the country. Creating a culture of capital markets and a culture of investing and being able to bring very good companies to the market was really something that the Americans understood and managed and continued to manage, country by country by country.
Thatcherite Privatisation was not the ascendant idea at this moment of time. What is really happening here is the idea of a powerful American perspective. The American power brokers viewed Europe exclusively from the outside and saw it as a single economic unit . Europeans looked at Europe from the inside and saw themselves as a fraction, as one-25th of a continent.
Having a strong perspective on Europe was one thing - but actual full-on, physical interference with Europe, at least from an economic point of view, was another. The dynamic effect of the American perspective ran counter to the European politics of the period, added to the fact that their door-step presence started to cause an uproar among many Finance Ministers, government officials and central bankers. No one was pointing fingers at Margaret Thatcher for cause and effect.
It started in London, where the issue of American, "non-elected' influence was raised for the first time on record in Parliament. Nigel Lawson, who was then Chancellor of the Exchequer stood up during Prime Minister Questions and immediately came out to defend both Thatcher and the Americans. The name "Goldman Sachs" was uttered in Parliament for the first time.
However, the future always trumps the past. The success of past deals and the sheer scope, size and weight of the deals on the table had already created an economic imperative. The whole of Europe now lay at the feet of the American power brokers.
But finance and business are brutal. The personal motivation behind each broker was to make money and secondarily to create cash flow. The fact that each privatisation also had a huge social impact was incidental and really not a factor. What soon became clear was that with each billion-dollar deal, European bankers were now being challenged by a dynamic new form of financial thinking. Full-blown American capitalism. An approach to capital that for many decades had simply not existed before in Europe.
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