Gasan Finance Company is issuing €25 million worth of 4.9 per cent bonds. Vanessa Macdonald caught up with chairman Joe Gasan to understandwhere the group has come from... and where it is going. Excerpts.

You are one of the few family businesses in Malta which has actually understood the value of partnerships, whether as mergers, acquisitions or joint ventures. Why haven’t other family businesses taken this approach?

Probably because in the past there were problems and people were arguing. My father – who taught me all that I know – would have been very much against partnerships... I started off with a few on the property side which is relatively easy, but when it came to operational businesses, I am one of the few. Whether it works or not is all a question of who you have as a partner. There have been a few that were not successful but most were.

In Malta, no one ever dreamed of mergers either and they were ruled out. I have found in two specific cases – GasanMamo and GasanZammit – that it can make sense if you get two businesses that are both doing well, within the same business sector, and put them together as you get a lot of synergies, automatic growth, and cost savings as a percentage of your revenue.

The risks come when you have problems, especially if it is a 50/50 partnership and the two sides do not agree. But with the right partners, 50/50 can also be conducive to avoiding problems as both parties know that they have to find a way forward or damage their own interests.

You have a number of partnerships with the Tumas Group. I think you and George Fenech must have been brothers in an earlier life...

(Laughs) We have very different characters but we are friends and we get on well in business too. I got to know George when the Hilton was being built 13-14 years ago. I wanted the contract for the mechanical and engineering works for Mekanika, and the negotiations were tough but we won the contract and became friends.

With property projects it is easy to have more than one partner – even up to six as we have at Midi – as the decision-making process is clear. What is more difficult – and there are only a few in Malta which have worked – is when you have mergers and partners in operational business.

A case in point in the Electogas deal for the new gas-powered station – which is quite different to the projects you have had so far with the Tumas Group...

Ever since the 1960s, Gasan has been interested in these big tenders. I was involved in the building of the gas tanks and with Delimara Phase 1 through a number of companies. In Delimara Phase 2, Tumas and I were competing with two different bids; neither of us won so we decided to go for this latest one together.

In the past we used to go in for these contracts with the agents for big multinational companies. You work a lot, get a commission and you are out.

With Melita, I took a different stand: I was willing to be an agent but not for a commission; I wanted equity, to invest myself...

This is how we see this project. We are a small part of the overall project but we have a very important part to play.

Timeframes are tight...

They are doable. The whole point of having a vessel tied to the quay is to gain a year because you don’t have to build enormous storage tanks.

One of the reasons we had a strong bid was probably because we chose the right partners, which I always try to do, from Eriksson for telecommunications to Melita. With the right partner you are laughing. Siemens are the only company which could fit in.

The government formed a company which has already started getting all the permits, which means that things were happening in parallel to the tender, to get things moving. It’s quite clever.

You are not afraid to admit it when things go wrong and to change tactics... as you did with Melita, which was making losses but which you sold a few years later for €167.5 million...

It is public knowledge that Melita had problems in 2000/2001 when the dot.com bubble burst and our partners were in trouble, with their share price falling to five per cent of what it was...

In 2001/2, the Americans left and Melita was being run for the first time completely by Maltese, with myself as chairman and de facto CEO, and with Danny Rosso running it. And we turned it around. We even went into mobile telephony in 2003/2004 and by 2006, it was very profitable and we had no debt.

Our partners wanted to buy a majority shareholding but to keep me. I was not too keen on being in a minority situation and we looked for other offers and got a final bid from a private equity fund for €140 million which I was quite happy to accept, but which our American partner refused. So we did a public auction and got 24 international companies, with four who were really interested. In the end, this is what put the price up.

The transaction was meant to be a 100 per cent sale but the ones who won it eventually insisted on my coming in again as chairman for the sake of continuity. So we sold our 50 per cent shareholding but I bought 12 per cent of a much smaller amount (after they put debt on it). I agreed to be chairman for three or four years – that was six years ago. They keep asking me to stay on.

Originally the private equity firm was planning to buy, build up and sell, sometime between the fifth and seventh year. In our case, it is more likely to be the eighth or ninth. The previous shareholders had opted to stick to fixed line, television and broadband but the new investors decided to go for mobile as well and that was a big investment which takes time to build.

The actual launch was not well done: We went in too aggressively and too soon. We should not have gone to the market when we had only 40 per cent coverage. But in 2011/2012 we turned the corner and we are gradually increasing market share. Melita Mobile on its own merits is now profitable. So the whole investment which was suffering because of the loss on Melita Mobile is now looking good.

You had established good automotive contacts in Libya... Is this now dormant?

Libya had not really taken off because we were very cautious. Sales had started in a small way when the war brought everything to a halt again.

We appointed a very good dealer in the Benghazi area who is already importing cars from us – he opened his new showroom a few months ago. We are also finalising an agreement with another big Libyan private company.

We are not going to get involved in Libya ourselves. The idea is that we handle the franchises, orders and training – and then export the cars to Libya.

We had to persuade our principals Mazda and Volvo to support us in this different way of doing things.

The one thing on your property list that you have not managed to do is Comino... There were such plans...

I haven’t been involved in Kemmuna for very long. George and I only got in as 48 per cent shareholders a few years ago. With Comino, you either do it right and properly or you mess it up forever. We are taking our time; we are not in any hurry. We had meetings with government two years ago and we drew up very attractive plans, if you ask me. But it just did not happen. Frankly we have not really reactivated it with this new government but it is on the agenda.

Will I interview you again in 10 years time? What are your succession plans?

As a group, we have different partners and chief executives so I am no longer involved in the operations of any of the businesses. I am chairman of all of them but I also have my children. My eldest Sarah, who was involved with me in the business, left Malta 10 years ago to go to the UK. She is now back and I hope that in a few years she will come back into the business.

My son Mark runs the operations of Mekanika and the property companies and he is very involved with GasanZammit. He is also on the board of GasanMamo as a non-executive. With the power station bid, I and George set the strategy but Mark and Jorgen Fenech – George’s son – are the ones who put it together...

David, my second son, who was running the car business and a few other things, went to Australia a year and a half ago. It is sad for us and for the business. He comes quite often though and we always keep him in the loop.

So you are not quite ready to retire and become a full time grandfather?

Ten years ago I was really ready to retire, but now I am enjoying it. I let my team look after the operational things and I get involved in new ventures, like Libya. I chair the board meetings of each company and of the holding company once a month. I have very good people around me.

I have four grandchildren now and I am very good with them. But no, I am not a full time grandfather yet.