12th Sep 2022 10:12
(Alliance News) - Investors will be disappointed that Serco Group PLC's long-serving chief executive, Rupert Soames, is departing, analysts said on Monday.
However, his replacement seems to be "a safe pair of hands".
Soames intends to retire from the firm in September next year, at which point he will have served the outsourcer for over nine years.
He will step down as CEO at the end of 2022 and will be succeeded by Mark Irwin, who is currently the CEO of Serco's UK & Europe division.
"It has been the privilege of my working life to lead Serco for the last eight years, but it is now time for me to outsource myself," said Soames.
Shares in Serco were down 6.7% at 168.20 pence, amongst the worst performers in the FTSE 250 on Tuesday, but have risen 25% since the start of 2022.
Still, the stock remains well below highs nearly a decade ago in excess of 600p.
Soames - grandson of wartime prime minister Winston Churchill - joined Serco in 2014 from temporary power unit company Aggreko, tasked with the revival of the business after well-publicised UK government contract issues.
"Soames is widely credited as reviving Serco's fortunes. He restored the outsourcing group's credibility after the electronic tagging scandal where Serco took responsibility for three offences of fraud and two of false accounting between 2010 and 2013," said Russ Mould, investment director at AJ Bell.
While the share price is still merely a "fraction" of pre-scandal days, Soames leaves the business in far better health, Mould added.
Further, broker Liberum said Soames' replacement, Irwin, is well known to investors and analysts and is highly respected.
"We see Mark as a safe pair of hands who, together with the rest of the leadership team, are likely to ensure stability and continuity," said Liberum.
Soames's departure has been a key risk factor for the firm and investors will inevitably be disappointed that he is leaving, Liberum said, but the board has had time to plan for this and he has completed the firm's transformation.
By Lucy Heming; [email protected]
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