FACE TO FACE : Lloyd Morrison – the honourable broker

It’s interesting that one of the attributes to emerge when Infratil recently subjected its culture to spot of self-analysis was that of being “honourable”. Interesting not just because the word has slightly old-fashioned ring when applied to modern-day investor (though maybe that’s sad comment on how business is viewed), but also because it probably reflects some quality of the man who heads one of New Zealand’s most successful companies.
Not that Lloyd Morrison would necessarily lay any personal claim to the descriptor. He doesn’t like talking about himself much. The word actually came up in answer to question about the values that drive his leadership style – and is fairly typical of how he neatly deflects anything that verges on the personal back into business context.
It’s just that “honourable” seems to fit someone who embraces ethical behaviour, believes in hard work, lauds Kiwi egalitarianism and, while regarded as strategically brilliant CEO, obviously feels uncomfortable about taking too much personal credit for his company’s impressive performance.
Formed in 1994, Infratil has consistently delivered returns of 20 percent year to its shareholders and was recently promoted into the NZX top 10 with market capitalisation of over $1200 million. It now has some 4000 employees spread across operations in New Zealand, Australia, Europe and the UK.
It’s this expanding scale that prompted the company to try and pin down some of its implicit cultural values. “Honourable” was one suggested by colleague, explains Morrison. It’s about being true to the intent of contract rather than just adhering to the letter of the law.
“It’s not unusual to find people who believe that if contract is written certain way – whether that was intended or not – then that’s the way it is and bad luck if it didn’t express what the parties had agreed.
“What this colleague believes is that we honourably aim to come up with win-win outcomes and don’t try and take advantage of other parties – and I think that is good description of the organisation.
“That said, if we are cornered, we’re pretty good at scrapping. We certainly have had few instances where bigger organisations have tried to bully us and I would back us to fight our corner both legally and in terms of our wider skill base.”
Fighting fair and making it on merit seems very much part of the Morrison mantra. Although his track record as an astute investor and wealth creator has recently earned him series of accolades (including Infratil’s designation as Deloitte/Management magazine Company of the Year and Morrison as Executive of the Year in last year’s Top 200 business awards), he doesn’t take success for granted. It is, he says, all about working hard and staying focused.
“The truism in business is that there is no rest – it’s treadmill. If you can keep pace that’s OK but if you stop, you’ll fall off. It’s not uncommon with bit of success for people to get out of sync with that reality. But it doesn’t last forever and no matter what the markets say to you or what accolades you get, there simply is no rest. Which is not bad thing,” he adds with smile.
He’s lucky, he says, in having found work that continues to challenge and excite him – three decades after he first ventured into stockbroking during the mining boom of the mid-’70s. Straight out of school, he spent year with Daysh Renouf, then one of the country’s largest stockbroking firms.
“I had wonderful year in Wellington with them and decided that was what I wanted to do.”
He’d already had some exposure to the investment markets through his father – an accountant who still shares his fascination with the working of the markets and, says Morrison, is an ongoing influence.
“I talk to him at least three or four times week and it’s always about markets. He’s in his late 80s and he wakes up every morning interested in the world. I think if you have fascination for economics and markets, it’s something you never get on top of – they’re constantly challenging and I think it’s good way of staying young. He has very active mind and we always have good conversation.”
One of six siblings and the oldest of five boys, Morrison grew up in Palmerston North and went on to board at Wanganui Collegiate. After studying law at Canterbury, he headed straight back to Wellington to reconnect with some of his Daysh Renouf colleagues.
“I tracked down Brian Gaynor who had joined Daysh Renouf week before I did and then worked for him and Bryan Johnson at Jarden & Co. It was great starting point because I was working in research and [Brian] was hard taskmaster – and I absolutely thrived on it.
The 1980s also provided an intensive learning environment as New Zealand’s economic reforms freed up the markets and helped fire huge surge of capital investment.
“Jarden & Co was real powerhouse of financial markets and had some very good and growing clients. Fletcher Challenge was one. They were involved in its formation and growth. Goodman Fielder likewise and of course Brierley [Investments] was core client. I think those big industrial companies were very good companies. Then in the mid-’80s, things got bit steamed up and property-oriented.
“But it was fascinating time – I was lucky to be old enough to be involved in it and young enough to learn from it and reapply that knowledge later on.”
When market fizz turned to frizzle with the 1987 sharemarket crash, Morrison learned something that was to change the whole direction of his career.
By then he’d left Jarden and had received an offer to run OmniCorp. It was, he says, “a bull market baby” that was either an ill-fated or poorly conceived joint venture between Equiticorp, Chase and Rainbow.
“I was in my late 20s which was really too young and inexperienced to run public company but there I was. Chase bought out Equiticorp and Rainbow, and were excellent shareholders and we did quite good job – not because we necessarily knew what we were doing but we gave the company some focus and we lived within our means.
“We didn’t quite believe in the froth of the markets so when the crash happened, while we didn’t get it right in terms of timing, we responded very promptly and were debt free within three days of the crash. So OmniCorp should have been thriving survivor – well positioned to take advantage of other people’s problems.”
Instead, struggling Chase Corporation sold OmniCorp to Swiss company and that, says Morrison, was turning point in his career because he had proved powerless to deliver the best outcome.
“Really it was entirely predictable but in my own naivety I felt we’d got ourselves in good shape and should be masters of our own destiny, which of course we weren’t. So I set up my own company, Morrison & Co, in 1988. It wasn’t something I’d intended to do but I decided then that I wouldn’t work for anyone else again because I wasn’t happy with what had happened.”
Ongoing fallout from the crash had dried up investment money so it wasn’t the easiest time to set up merchant bank, says Morrison.
“We had to be quite focused and we were lucky that relatively early on we saw the beginnings of reform in the utilities area. And in terms of the whole international space, utilities is massive area of investment.”
The attraction of the utilities space has lot to do with Morrison’s reading of long-term trends as well as historic experience. You can’t grow an economy without investing in things like transport or energy infrastructure which is why governments tend to take lead investment role. But they are not efficient long-term owners, says Morrison.
“Over period of time, if you don’t provide the right incentives, you get helluva lot of inefficiency and it gets costly to maintain. And as OECD countries have had comparably slower growth compared to other economies, and as these massive sectors of investment have become increasingly less e

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