Pink flamingos once strolled around a rooftop garden set high above the traffic of Kensington High Street in west London, where stars including Madonna and George Harrison rubbed shoulders with the business elite.
The exclusive party venue was owned by Richard Branson’s Virgin for 37 years before closing in 2018 after struggling to make a profit.
Now, an unlikely figure is trying to resurrect Kensington Roof Gardens with a plan to reopen it as a private members’ club. Stephen Fitzpatrick, the boss of Britain’s fourth-biggest gas and electricity supplier, Ovo Energy, has chosen an awkward time to reopen the luxury venue, just as millions of households struggle amid an energy crisis that has stretched their finances to the limit with soaring utility bills.
But Fitzpatrick loves the high life: the serial entrepreneur has taken much inspiration from the bearded billionaire and his Virgin Group. He has dabbled in everything from energy and software to premium rum. His most eyecatching venture – rescuing the Manor Racing Formula One team in 2015 and reportedly pumping in £30m – ended with the business falling into administration in 2017, having secured a solitary point. Branson had spearheaded the same team, then branded Virgin Racing, eight years earlier.
Fitzpatrick also shares Branson’s love of aviation and bold new ventures, and has even modelled the structure of his group on the one used by Britain’s best-known entrepreneur. “We have followed the Virgin story very closely,” he said in 2016.
From a cluster of gleaming properties a short walk from the roof gardens, he runs the ventures that have amassed him a fortune estimated at £2.2bn. Ovo is now even reportedly considering another blockbuster acquisition, of struggling Shell Energy’s 1.4 million customers. But the former Tory donor, whose stake in Ovo is worth an estimated £2bn, faces a series of challenges to keep his ventures on track.
Sources claim Fitzpatrick continues to take a close interest in politics too, although neither he nor his firms have made a political donation since the £185,000 handed to the Conservative party in 2019, when Labour was threatening to renationalise energy companies.
Meanwhile, his Marmite personality has made him a divisive figure among peers and colleagues. To some, he is an ambitious trailblazer, to others a flashy hard-driver intent on being seen as a tech visionary but with a patchy record.
A detailed analysis of Fitzpatrick’s ventures reveals he has quietly transferred control of Ovo during the energy crisis, has taken a hit to his wealth from his flying taxis venture and shut down a project designed to share his business acumen with other companies. He declined to comment for this article.
The energy egg hatches
The Northern Irishman, 45, founded Ovo in the teeth of the financial crisis in 2009. The Edinburgh University graduate had set up a free property listings newspaper and website in Scotland in 2001 but shut the business down after realising its limitations. A stint in the City followed, as a trader at Société Générale and JP Morgan, before he launched the energy supplier with his wife, Sophy, using £350,000 of savings. Ovo – from the Latin for egg – grew, rapidly amassing more than 1,000 employees in London and Bristol as a result of its eyecatching marketing and green energy tariffs.
Fitzpatrick spent Ovo’s formative years bemoaning the dominance of “legacy” suppliers such as British Gas, accusing them of poor service and ripping off loyal customers. “He really was Mr Angry in the early years,” recalls one former insider at the energy regulator, Ofgem. “He was constantly accusing us and the government of being ineffectual and protecting the existing big guys. He took himself very seriously.”
The government later intervened, introducing the Ofgem price cap in 2019, designed to protect consumers who did not switch from being overcharged. It would later contribute to almost 30 suppliers collapsing as gas prices soared.
Meanwhile, Ovo was on the acquisition trail, first taking over rival Spark Energy in 2018, and then, on the eve of the pandemic, completing a transformative deal – snapping up the retail arm of energy and cables titan SSE for £500m after its merger with npower collapsed. The deal saw Ovo take its customer base from 1.5 million to almost 5 million. “He went from David to Goliath with one deal,” says one industry chief executive. (Shortly before this, in early 2020, Ovo had also been fined nearly £9m for sending inaccurate bills for three years.)
That deal thrust Fitzpatrick and his swollen energy empire into the spotlight just as the pandemic hit, with Russia’s invasion of Ukraine in 2022 then sending bills rocketing. Ovo faced questions over taking £17m in furlough money after making £40m of payments and loans to other Fitzpatrick companies, and MPs called on Ovo to be “transparent about its books”. Fitzpatrick was criticised for living in a £3.2m Cotswolds mansion while Ovo encouraged struggling consumers to “cuddle your pets” to keep warm. Then Ovo considered gazumping Octopus’s acquisition of bust supplier Bulb and was accused of making further billing errors.
Ovo responded by scaling down, cutting a quarter of its 6,200 workforce early last year and later selling its telecoms and revenue protection businesses. At the same time, operations chief Raman Bhatia was promoted to run its retail arm, Fitzpatrick having taken a step back from Ovo’s day-to-day running.
‘Uncertainty’
Last year, it emerged Ovo’s parent company, Imagination Industries, had made £27m in loans to Fitzpatrick and its only other director – Ovo’s finance chief, Vincent Casey. In the same accounts, auditor PwC said there was “material uncertainty” over Imagination’s ability to continue as a going concern. It said the group was “exposed to short-term volatility in wholesale commodity prices and credit losses caused by the UK cost of living crisis” and said the group was “forecasting to breach financial covenants with trading creditors”.
In 2013, Fitzpatrick faced scrutiny over taking £2m out of then-lossmaking Ovo to fund the purchase of a house in the Cotswolds. Imagination Industries also handed a £10m interest-free loan to his Manor Formula One team in 2015.
Customers’ credit balances on their energy accounts, which are typically built up in the summer and run down in the winter, have also been a source of controversy. Ofgem has said it asked Ovo to stop using customer credit balances as working capital in “about 2015, 2016”. It is understood the regulator had concerns that Fitzpatrick was using customer money to fund Manor. Fitzpatrick has said there was “absolutely no financial link” between Ovo and Manor.
A row over the issue resurfaced last year, as Ofgem ruled against ringfencing credit balances despite earlier accusing unnamed firms of using customer money “like an interest-free company credit card”.
Sources said Ovo had resisted proposals to ringfence customer deposits last year. Research last month showed energy suppliers were hoarding nearly £7bn of customers’ money despite the cost of living crisis. In February, Ofgem said Ovo was among four suppliers it was engaging with to “secure improvements or adequate reassurance of compliance” on direct debit levels.
Ovo has previously declined to disclose how much customer money it holds, or the average credit balance. However, it is understood Ovo has argued it does not use credit balances to fund growth and that, on average, customers owe it more money than Ovo owes to them during each year.
A shift in control
Since 2014, Fitzpatrick has modelled Ovo’s corporate structure on Branson’s Virgin, with a holding company – Imagination – collecting royalties from its public brand. Company filings now show that control of Ovo switched from Imagination to another business, Energy Transition Holdings (ETH), in late March; customers and the media were not proactively informed of this at the time.
Imagination is controlled by Fitzpatrick, with Casey the only other director. ETH is another Fitzpatrick vehicle, with directors which mirror Ovo’s: namely Fitzpatrick, Casey, chair Stephen Murphy and director Go Muromoto, a representative of Mitsubishi, which took a 20% stake in Ovo, valuing the business at £1bn, in 2019. It is now valued at £3bn. They are joined on both boards by two directors from private equity outfit Mayfair Equity Partners, which bought a stake for £31m in 2015.
It is understood the change in control was enacted to separate Ovo, which also includes prepay specialist Boost Energy, from the rest of Fitzpatrick’s interests, but the low-key nature of the move could raise further questions over the level of transparency from a company upon which millions of people rely for an essential service.
Imagination’s latest accounts showed that in 2021 it notched up £4.5bn of revenues and profits of £377m – a one-off gain as the firm cashed in £422m of energy contracts. The results were in stark contrast with the previous three years, during which more than £300m of losses were racked up. Since its inception in 2009, Imagination has posted annual pre-tax profits four times and losses nine times, with £402m of cumulative profits and £406.6m in losses. Royalties paid from Ovo to Imagination were £21m in 2021, and Ovo then owed Imagination £15m.
More recently, the government has handed Ovo and its competitors funds to cut bills after the Ukraine war pushed up costs, following pleas by Fitzpatrick and peers for state intervention.
As Ovo runs the rule over Shell Energy, some are worried about its capacity to digest another large supplier. Ovo already has 13.3% of Britain’s domestic electricity market and 11.2% of the gas market. Adding Shell would give it market shares of about 18% and 16% respectively.
“Transparency and accountability are so important in energy after the chaos caused by so many suppliers going bust,” says Simon Francis, coordinator of the End Fuel Poverty Coalition. “Many were private companies where the public had little visibility of their financial performance. This highlights the risk of concentrating control of many customers with one supplier, as we saw with Bulb. If Ovo does buy Shell Energy’s customers, more control will be in the hands of one supplier, reducing choice and potentially adding even more risk to Britain’s already broken energy system.”
Ovo faces another challenge: customers of the SSE Energy Services (SES) brand will be moved under the Ovo tag by January 2024 when a brand licence agreement ends. Customers will hope the transition is smooth after recently ranking SES the worst energy supplier.
Last week, Ovo Energy and Good Energy were ordered to pay £4m after overcharging thousands of households on their bills by breaching the energy price cap.
On the runway
Despite his ever-growing energy empire, one of Fitzpatrick’s main focuses in recent years has been Vertical Aerospace, the flying taxis firm he created in 2016. He has an office at the top of a block on Notting Hill Gate, near Ovo’s London home and Kensington Roof Gardens, but Vertical is primarily run out of Bristol, its shares are traded in New York and it is incorporated in the Cayman Islands.
Vertical hopes to revolutionise the world of travel, allowing short trips in light aircraft with eight propellers and a cruise speed of 150mph. As its name suggests, they would be able to take off vertically and land in confined spaces in cities.
Vertical aims to get its VX4 model into service by 2025. The company received a £14m grant from the UK’s publicly funded Aerospace Technology Institute this year.
It even has the backing of Branson: in 2021 his Virgin Atlantic took out an option to buy 150 VX4s, aiming to provide a UK network of Virgin-branded taxis. Fitzpatrick said the deal “unites two entrepreneurial organisations who share the same passion for innovation and best-in-class partnerships”.
But despite the hype, the company has been one of several UK businesses to suffer amid the US tech rout. Vertical floated with a valuation of $2.2bn, swelling Fitzpatrick’s paper fortune by about $800m. But the stock is down more than 80% since its debut in late 2021. Fitzpatrick has witnessed his near 70% stake crumble by about $500m, and the company is now valued at just over $400m (£320m). Electric flying taxis have long been touted as a neat solution for solving traffic problems in gridlocked cities looking to cut their carbon footprint and pollution. However, doubts over their feasibility have weighed on investors’ nerves, despite a order book of about 1,400 aircraft. The company has likened its difficulties to the doubts around Tesla in its early days, and hopes more customers will follow American Airlines in agreeing to make pre-delivery payments for aircraft to ensure priority orders.
It has said as “an early-stage company with a history of losses, we expect to incur significant expenses and continuing losses in the foreseeable future”.
Software glitches
In line with several energy upstarts, Fitzpatrick has long tried to cultivate an image of Ovo as more of a digital enterprise than a traditional energy supplier. One senior industry executive says he has always hoped “to position Ovo as a tech company and himself the leader of a new generation of energy companies. He seems monomaniacal [in that mission]”. In 2019, he formed a “grid technology” business, Kaluza, within Ovo, offering software handling tasks ranging from billing to smart electric vehicle charging. It lists Nissan, EDF and BP among its customers.
But reality has yet to match the ambition. Bosses at the platform, which is named after German mathematician Theodor Kaluza and has now been spun out of Ovo, kicked off talks for a new round of funding late last year, but no fresh funds have been announced. Accounts show it made a loss of £14.6m in 2021. Auditors at PwC said the firm was reliant on Ovo for funding and warned over uncertainties around wholesale energy prices and the cost of living crisis.
Fitzpatrick also launched a remote-working software business aimed at helping organisations prioritise their workloads. He founded Just3Things with Kim Atherton, who was the chief people officer at Ovo, in 2018, spinning out the app in 2020 as the pandemic spurred a surge in remote working. Just3Things has been quietly mothballed, and Atherton’s LinkedIn page says she left it in December. She is now an occupational psychologist and declined to comment.
Then there is the rum brand, Duppy Share, that Fitzpatrick has invested in alongside ex-footballer Ian Wright and rapper Kano. There is also Akili Partners, a management consultancy dissolved this year; as at the end of 2021, Akili owed Imagination a loan of £941,000. Another interest, Imagination Industries Incubator, owed £9.8m in loans to its parent, Imagination Industries, in 2021.
When will the party start?
None of this appears to have deterred Fitzpatrick from his latest racy project. He took a 15-year lease on Kensington Roof Gardens in the early months of the pandemic, in July 2020, and there is speculation it will relaunch this summer.
The striking venue opened in 1938 and has Grade II-listed status. Plans submitted to the council show Fitzpatrick wants to attract chefs from around the globe to four new restaurants but also create the “antithesis of an ostentatious Mayfair private members’ club”.
Kensington Roof Gardens is owned by Imagination and accounts show it provided a £3.75m loan to the gardens in 2021, with an interest charge of £139,000. At the end of that year, the venture owed £4.3m. The Mail on Sunday reported that local residents have resisted plans for parties until 3am and complained that guests may be able to peer into their properties from the gardens.
Fitzpatrick will hope that, when the champagne cork finally pops on its opening, his other ventures have not already left him nursing a hangover.
