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Ovo founder Stephen Fitzpatrick's empire racks up £300m losses

Empire Builder: Ovos Stephen Fitzpatrick owns a mansion in the Cotswolds and is also the boss of an air taxi company

The energy company, whose billionaire boss warns of “a winter like never before”, has racked up losses totaling almost £300m over three years, The Mail on Sunday can reveal.

Stephen Fitzpatrick, owner of Britain’s third-largest energy supplier, Ovo Energy, with 4.5million customers, has called for an urgent household bailout – and warned the government has just 12 weeks to act.

The former City trader launched a media blitz last week to ask the government to take “very bold” action to stop people freezing and starving.

Empire Builder: Ovos Stephen Fitzpatrick owns a mansion in the Cotswolds and is also the boss of an air taxi company

Empire builder: Ovo’s Stephen Fitzpatrick owns a mansion in the Cotswolds and is also the head of a flying taxi company

He presented a proposed energy bailout package that would cost taxpayers billions of pounds.

Annual household bills will rise to an average of £3,549 next month after regulator Ofgem lifted the energy price cap. That is three times as much as last winter.

Suppliers are vulnerable to rising wholesale energy prices, which have caused around 30 smaller energy companies to go bankrupt over the past year.

Ovo is a big operator and there’s no indication it’s in financial trouble, but Fitzpatrick’s appeal to the government shows businesses across the board are concerned about customers not being able to pay their bills.

Accounts filed with Companies House show that Ovo struggled to turn a profit even when energy prices were low and stable. Net losses at Imagination Industries – Ovo’s holding company – have widened in each of the last three years, reaching £142m in the year to December 2020, the latest available. Net borrowing for 2020 was more than £400 million.

Ovo Energy is by far the largest part of the holding group. The 2021 accounts, which are due within weeks, are expected to show much lower losses than before, city sources say. Ovo Energy last turned a profit in 2017. Fitzpatrick is said to own over 60 percent of the energy company. Ovo’s other shareholders include Japanese conglomerate Mitsubishi, which acquired a 20 per cent stake for £216m in 2019.

With an estimated personal fortune of around £1.3 billion, Fitzpatrick, who models his business after Sir Richard Branson’s Virgin empire, has achieved fortunes that exceed the vast majority of his clients’ wildest dreams. The billionaire bought a Formula One team that has since gone bankrupt and snapped up Kensington Roof Gardens – Branson’s former flagship for London parties.

He is also the CEO of a US-listed air taxi company based in the tax haven of the Cayman Islands. He is the largest shareholder with a stake of £626m.

Fitzpatrick took £2million from Ovo to pay for a home in the Cotswolds in 2013 when the company was in its infancy and making losses.

Ovo was previously confronted with questions about its finances by MPs, which saw Fitzpatrick grilled over £40m in intra-group loans.

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These include a £5.6 million loan from Imagination Industries to Vertical Aerospace – the air taxi company – at an interest rate of 30 per cent per annum until December 2020.

He told lawmakers he did not recognize the £40million figure.

Analysts warn more suppliers could find themselves in trouble as wholesale gas prices continue to rise. Martin Young, senior analyst at Investec said, “There is a clear concern that some of the suppliers may be weak.”

He warned that larger energy companies could be hurt if the financial stress on the market continues to mount. “Then you have another pear in your hand,” he said, referring to the collapse of Ovo’s rivals last year.

Unlike Bulb, which costs taxpayers billions, Ovo mitigates its exposure to volatile energy prices through the use of financial “hedging” contracts that ease the pain of global energy market price increases.

Ovo has grown following a series of acquisitions, including SSE’s home energy business.

Since launching Ovo in 2009 for £350,000, Belfast-born Fitzpatrick, 45, has built a network of businesses. There have been calls from MPs to “open the books” for more clarity on his complex finances.

Fitzpatrick has defended its financial deals, including a lucrative “brand license deal” that rakes in millions in royalties from Ovo’s public brand.

He has claimed that the Ovo license agreement was set up in 2014 to protect brand ownership.

Ovo is a pure-play energy trader and doesn’t generate its own electricity — which may put the company under more pressure than its closest peers. Power generation has been a key source of profit for some other companies as gas prices have soared.

Ovo recently hired 500 employees to handle the surge in calls from concerned customers. This followed a controversial round of 2,000 layoffs earlier this year.

The company declined to comment.

Could these cuts in the cost of living hurt your long-term wealth?

Belts are already being tightened, and as bills soar, more people will try to save where they can.

But are there things you should absolutely avoid or limit?

Simon Lambert came up with his five wrong savings to avoid inflation, but was he right to pick them? The This is Money podcast team discusses them in this podcast episode.

Press play to listen to the episode on the player above, or listen (and subscribe and rate us if you enjoy the podcast) on Apple Podcasts, Audioboom and Spotify, or visit our This is Money podcast page.

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