Spring leaps ahead

(By Anthony Miller – Thursday, 25 Feb 2009 5:50 PM). Hands up everyone who remembers Karl Chapman. OK, hands down again. For those who don’t remember him, Chapman founded CRT Group (as in "Consultancy, Recruitment and Training") back in 1989 through the reverse takeover of a listed shell company capitalised at £400K with a 40p share price. Now roll forward twenty years. Spring Group – the latter-day incarnation of CRT – has a 35p share price, although it’s currently worth some £52m. Much has happened in between.

I tell you this only because I reconnected with Spring today at their prelims briefing, and caught up again with CEO Peter Searle, who I’ve known for years through his prior roles at Adecco/Computer People, and for the first time with non-executive chairman, Amir Eilon, an ex-investment banker whose obvious deep knowledge of the recruitment marketplace apparent during our conversation rather belied his modest claim to me that he knew nothing about the industry.

The fact that Spring is still around today – and is indeed one of the leading ITSAs (IT staff agencies) in the UK market – is verging on the miraculous given the mercurial Chapman’s magnificent flights of fancy. In 1997 – at the peak of IT skills demand – he spent nearly £3m launching CareerIT, a programme which aimed to recruit up to 2,000 new IT staff from non-IT backgrounds. Despite an overwhelming deluge of applicants (some 7,000 in one month alone) a year later they had placed just 169 candidates in permanent positions. A couple of years on, Chapman spent over £15m trying turn Spring into a highly centralised ‘e-ITSA’. Part of the proposition, by the way, was to offer share options to loyal IT contractors (yes, an oxymoron if ever there was). Spring’s shares soared to 300p when the scheme was announced in Jan. 2000, though crashed within months. In May 2000, it was announced that Chapman was to step down. He was succeeded as CEO and chairman by Jon Chait, who was MD and CFO of Manpower’s international businesses. Part of the deal was for Spring to buy Chait’s own e-software business, Magenta. Great times, eh?

Since then, Spring has seen various management changes, and I am greatly heartened to see that, in Searle, they finally have a CEO on board who actually knows the industry, knows what he’s doing and knows how to do it. You can read Spring’s results here and basically they look very good – indeed, Spring’s share price rose 11% today. Spring is still primarily an ITSA, but have diversified to their great benefit (like one of our other favourite ITSAs, SThree) beyond the UK and beyond IT. One of the key growth engines of Spring’s business – arguably especially in these troubled times – is recruitment process outsourcing. RPO is, to all intents and purposes BPO, where the ‘business process’ is recruitment. In other words, Spring takes over the recruitment functions of its clients, filling permanent and temporary positions directly or through other staffing agencies. RPO was pioneered by recruitment firm Alexander Mann Solutions and I will tell you more about them soon, being as I met up with their CFO, Gordon Stuart (yes, he of Xansa fame) just last week. By the way, Spring NED Jonathan Wright spent some 10 years at Alexander Mann Group, the ‘parent’ firm of Alexander Mann Solutions founded by ‘Dragon’ James Caan.

There really is so much else to tell about how Spring got from there to here and what they are doing now, but that will have to wait for another time. Meanwhile I’ll add just one more snippet to the wonderful story. Spring’s largest shareholder (37%) is ET Training LLC, part of Knowledge Universe, a US-based education player founded by Michael Milliken, Lowell Milliken and Larry Ellison. How would you like to have that bunch as ‘silent partners’?