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A security minnow plays the big fish for a contract in Oman

by Dan Coatsworth

A £7 million Aim-quoted security group has found itself in direct competition with FTSE 100 constituents G4S and BAE Systems, in addition to French defence group Thales and German technology firm Siemens. Westminster Group claims it has been able to go head-to-head with some of the world’s biggest security companies due to rapidly building up a network of agents in over 45 countries and having niche defence technology knowledge.

‘Many of the large companies such as G4S and Siemens only have regional offices, whereas we have in-country representation, local knowledge and local people to service contracts,’ said Westminster chief executive Peter Fowler.

Westminster has reached the final bidding round of a £4 million deal to protect five palaces in Oman. The company said it was originally propositioned for joint ventures by G4S and BAE Systems on the tender, but declined both approaches. ‘We’d already started on our own. G4S managed to get through to the final round against us, but they have suggested equipment that doesn’t comply with the contract’s technical specifications,’ claimed Fowler. The decision is expected by June.

Westminster is currently bidding on an estimated £400 million of security work, including oil pipe protection and airport security in African countries. Qualifying for larger contracts could put pressure on its capital reserves if bid bonds are called upon. For example, it is bidding on an $80 million Iraqi scanning trucks deal requiring a $2.5 million bid bond. Westminster has been forced to put aside most of its £1.5 million cash position to cover the reserve. ‘If we get another large contract needing a bid bond before the Iraq money is freed up, then we would have to raise more cash on the market,’ said finance director Nicholas Mearing-Smith.

Having sold a loss-making manufacturing arm in 2006, Westminster now supplies third-party equipment and offers post-sale maintenance support. Chief executive Peter Fowler said he was surprised to learn of two significant shareholders who had invested at the IPO in 2007 without the company’s prior knowledge, but who could open new avenues for growth. Alisher Usmanov, chairman of Russian gas company Gazprom’s Invest Holdings, acquired a 15.85% stake, while Vincent Tchenguiz’s Consensus Business Group picked up 8.12%.

Fowler hopes that Usmanov will take Westminster into Russia to protect oil infrastructure, and said work had already begun with Tchenguiz. ‘Consensus has substantial investments in technology groups and acts as a broker with companies and countries involved in the offset programme,’ he said. ‘When BAE wins a contract in Saudi, for example, there is a requirement to spend some of that money in the country, which tends to either be green issues or homeland security. We’ve been talking to Consensus about

the latter.’