Why John Gillam landed the job chairing Lendlease

A Lendlease logo is seen on temporary fencing in Sydney's CBD. Picture: AAP

If Lendlease’s largest shareholder, Aware Super, had its way, former Mirvac Group boss Susan Lloyd-Hurwitz would be sitting at the end of the company’s boardroom as its chairman, according to talk in the market.

The understanding is that while Ms Lloyd-Hurwitz was the pick of the Australian super fund that has $161bn under management and over 7 per cent of the stock, other investors were not so supportive. Instead they lobbied for a fresh set of eyes to oversee the company many believe has been desperately in need of someone to shake things up.

And former Bunnings boss John Gillam could be just the person. He’s an industry outsider with the independence needed to see the business from a new perspective.

While there’s been some caution over Mr Gilliam’s lack of industry experience running a real estate investment trust, he comes highly regarded as the former chairman of building materials provider CSR and a record of 12 years as chief executive of Bunnings, one of Australia’s most profitable retailers.

Bunnings, owned by Wesfarmers, expanded into the UK with its Homebase hardware acquisition only to retreat soon after Mr Gillam’s departure, but Mr Gillam’s exit at the time was reported to be a major blow for Wesfarmers.

His announcement that he will begin as chairman in November was met with a lukewarm reception from investors on Monday, based on the Lendlease share price being down more than 1 per cent.

There’s talk in the market that another candidate considered was Boral boss Vik Bansal, but he has his hands full running the country’s largest building materials supplier for the Stokes family-controlled Seven Group Holdings.

Ms Lloyd-Hurwitz was not in the final list of contenders, and it is not known whether she was in fact even keen on the job.

But some take the view that Mr Gillam, known as a straight shooter and talented executive, will attract other high-quality directors with expertise in the REIT sector.

Only time will tell surrounding what Mr Gillam’s decisions will be on the Lendlease management, including current chief executive Tony Lombardo, a lieutenant of former boss Steve McCann and seen as part of the Lendlease old guard.

Meanwhile, investment bankers hoping that a new chair could mean a new suite of advisers get appointed at Lendlease could be disappointed, given that Mr Gillam is likely to have close connections with Gresham, being owned by Mr Gillam’s former employer, Wesfarmers.

Gresham has advised Lendlease for more than a decade, while Lendlease has also recently been close to Macquarie Capital which has been carrying out work for the $4.8bn real estate group and also has links to Wesfarmers.

Its other adviser is Morgan Stanley.

Mr Gillam’s appointment comes after building materials business CSR, that he chaired, was swallowed in a $4.3bn buyout this year by Saint Gobain.

DataRoom last month reported that the Lendlease chairman appointment was weeks away, and the final candidates were from a non-real estate investment trust background.

Earlier, John Mulcahy was tipped as the chairman candidate after chairing Mirvac, but in the end he was not in the final mix.

Lendlease chairman Michael Ullmer in May revealed that he intended to step down at the company’s AGM in November.

The loss-making Lendlease has faced pressure from activist investors – including John Wylie’s Tanarra, Allan Gray, which holds over 7 per cent of the stock, and David Di Pilla’s HMC Capital – over its performance.

The share price is still below $7, trading at $6.12 in May, before revealing a move to retreat from international markets, cut costs and reduce debt, and the company is under pressure to improve performance because its shares were at $20 in 2018.

Lendlease has taken heavy writedowns on its offshore operations, and has faced challenges leasing its office development at Victoria Cross station in North Sydney.