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

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


The energy supplier whose billionaire boss is warning of ‘a winter like never before’ has racked up losses totalling almost £300million over three years, The Mail on Sunday can reveal. 

Stephen Fitzpatrick, owner of Britain’s third largest energy provider, Ovo Energy, which has 4.5million customers, has called for an urgent bailout of householders – warning the Government that it has just 12 weeks to act. 

The former City trader last week went on a media blitz to plead with the Government for ‘very bold’ action to stop people going cold and hungry. 

Empire builder: Ovo¿s Stephen Fitzpatrick owns a Cotswolds mansion and is also boss of a flying taxi firm

Empire builder: Ovo’s Stephen Fitzpatrick owns a Cotswolds mansion and is also boss of a flying taxi firm 

He paraded a proposed energy bailout package that would cost the taxpayer billions of pounds. 

Annual household bills are set to rocket to an average of £3,549 next month after regulator Ofgem hiked the energy price cap. That is triple what they were last winter. 

Suppliers are vulnerable to soaring wholesale energy prices, which have seen around 30 smaller energy firms go bust in the past year. 

Ovo is a large operator and there is no suggestion it is in financial difficulty, but Fitzpatrick’s appeal to the Government demonstrates that firms across the board are concerned about customers being unable to pay their bills. 

Accounts filed at Companies House show Ovo has struggled to make 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 past three years, hitting £142million in the year to December 2020, the latest available. Net borrowings for 2020 were more than £400million. 

Ovo Energy is by far the largest part of the holding group. Accounts for 2021, due within weeks, are expected to show much smaller losses than before, City sources say. Ovo Energy last made a profit in 2017. Fitzpatrick is understood to own in excess of 60 per cent of the power firm. Ovo’s other shareholders include Japanese conglomerate Mitsubishi, which bought a 20 per cent stake for £216million in 2019. 

With a personal fortune estimated at around £1.3billion, Fitzpatrick, who models his business on Sir Richard Branson’s Virgin empire, has achieved riches beyond the vast majority of his customers’ wildest dreams. The billionaire bought a Formula 1 team, which has since gone bankrupt, and snapped up Kensington Roof Gardens – Branson’s former flagship party venue in London. 

He is also the chief executive of a US-listed flying taxi firm, based in the tax haven of the Cayman Islands. He is the largest shareholder with a £626million stake. 

Fitzpatrick took £2million out of Ovo in 2013 to pay for a house in the Cotswolds when the company was still in its infancy and loss-making. 

Ovo has previously faced questions about its finances from MPs, during which Fitzpatrick was grilled over £40million of intercompany loans. 

This includes a £5.6million loan from Imagination Industries to Vertical Aerospace – the flying taxi company – at a 30 per cent interest rate in the year to December 2020. 

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

Analysts are warning that more suppliers could face difficulties as wholesale gas prices continue to soar. Investec senior analyst Martin Young said: ‘There is clearly a concern that some of the suppliers could be weak.’ 

He warned that if the financial strain on the market continues to grow it could result in damage to larger energy companies. ‘Then you have another Bulb on your hands,’ he said, referring to the collapse of Ovo’s rival last year. 

Unlike Bulb, which cost taxpayers billions, Ovo mitigates its exposure to volatile energy prices through the use of financial ‘hedging’ contracts which reduce the pain of global energy market price hikes. 

Ovo has grown following a series of acquisitions, including the household energy business of SSE. 

Since launching Ovo in 2009 with a £350,000 kitty, Belfast-born Fitzpatrick, 45, has built a web of companies. There have been calls from MPs to ‘open the books’ to provide more clarity on its complex finances. 

Fitzpatrick has defended his financial arrangements, including a lucrative ‘brand licence agreement’ that collects millions in royalties from Ovo’s public brand. 

He has claimed the Ovo licence arrangement was set up in 2014 to protect brand ownership. 

Ovo is purely an energy retailer and does not generate its own power – which may put the company under more pressure than its biggest rivals. Power generation has been a major source of profit for some other firms as gas prices have soared. 

Ovo recently hired 500 workers to deal with a sharp rise in calls from worried customers. This followed a controversial round of 2,000 redundancies earlier this year. 

The firm declined to comment.

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