The Benefits of Trying New and Challenging Things in Your Treasury Career with Maarten Michalides

Foreign.

Welcome to this week's Treasury Career Corner podcast where I interview treasury professionals.

About their treasury careers.

Each and every week I talk to them about how they've built their careers, where they are now, where they see both themselves and the treasury profession. Going to next, let's get on with the show.

In this week's show, delighted to be joined by Martin Macalides, the head of Treasury Nexus Holdings. A Nexus is a leading Dutch energy grid operator, but as I say every week on the show, they've been going for over 100 years. Martin can explain that a little bit more later on in the show. As always, we're going to get straight into it. We're going to take Martin back to the dim, distant past and how he first ever discovered the wonderful world of. Well, you started in finance, but then you wonderful world of treasury, sir. So as always, it's your show. Over to you.

So your first question is, how did I get started into finance and Treasury?

Yes.

Well, I started not really in Treasury. I started at KPMG as an audit firm. Actually I wanted to start at the bank, but it was quite difficult at that time. So I started as a financial services group of KPMG doing the audit and advisory, mainly for banks and funds. I learned a lot there, but concluded that audits will never be become my. Sorry, that audit will never be my passion. So after two years, what was that?

Was it just that it was a good grounding to learn a lot about companies but you want to do something different and what was the situation?

Yeah, that's it. I mean, audit is really a specific trade. You need to be skilled and talented. It wasn't really my thing, but it did allow me to visit many different banks and other companies, gain a very interesting insight, let's say from the perspective of an auditor. But in my view it was. Yeah, again it was not really my. My skill. And what I missed was sort of the commercial action being more in front of things. Then I moved to a bank, the General bank, that's the predecessor of Fortis bank, quickly moved there to corporate banking. Again, I learned a lot there. At a bank, you have the benefit of working with a lot of specialists, sort of work in the same field as you do. Yeah, that if you later on in life work at the corporates, then you can compare and then you sort of acknowledge the luxury at the bank. Very interesting also to get a good understanding of how actually a bank works. But over time I thought, well, again, I need to be even more closer to where things happen. And that Brought me to asml, treasury of asml and they're closer to the origination of transactions. Do more fundamental analysis about these transactions.

And so then you, Martin, you made the move from corporate banking into treasury, the wonderful world of treasury as we know it and joined asml. Now they're obviously a Dutch company which some of the listeners, a lot of listeners won't know. And what encouraged you to make that move into Treasury? How did you discovered it? What was the company? So maybe company and then the role sort of thing. Maybe explain that for people.

Yeah, ASML is a huge semiconductor equipment manufacturer area of lithography as sort of one of the most key elements components for, for making semiconductors. This is a spin off of Philips years ago sort of over time gained a number one sort of almost, almost monopoly in this, in this area. That is very, very impressive story. Very capital intensive as well and requiring a lot of research and development and of course boomed during the Internet peak bubble, so to speak. That's also when I arrived very exciting times. The company first had to reinvest a lot and only getting revenues years later, sort of eight to 10 years later as the, as the business was still growing. So from a Treasury perspective. Yeah, that was very interesting. And they issued convertibles that carried implies credit spreads of up to 15,1 5% back then. Today is very strong investment grade company. But back then situation was very different. We were just a Treasury of five including the one responsible for insurance. So yeah, as a first position there, yeah, it was very exciting. You got to do a lot. I got to focus on leasing of the real estate. The fabs very specific. Also the US GAAP elements because the company was listed on Nasdaq introduced some additional complexity focus on the interest rate, risk management, on the cash buffers that the company needs to retain. I also did a buyback of convertible bonds. So that was sort of the first steps in Treasury. That was a very, very interesting place. The Treasury Departments back then were pretty small. I said I think approximately five. So making a career there after four years is a bit difficult in particular if you want to stay in Treasury. So then a move to a different treasury, different company makes made a lot.

Of sense and I've heard that quite a lot. A lot of the time people sort of say do people move a lot? You know, I've got Craig who recently joined the team and when I explained to him that yeah, people will be in a Treasury team and as you say might be sort of four people and that the, you can't really make the Move you can't develop your career. Which is sometimes quite frustrating because you know, treasury in itself is usually quite small a Treasury team but at the end of the day you know it's a key role. But you know you had to move on really, didn't you? It wasn't through choice, if that's the right way to put it.

Well, I had to move on to make career. It was my choice actually to do that. Of course my choice also to stay within treasury before actually moving on. Different to different tradition departments. I took a sabbatical for a year a few years before I met my wife while traveling around the world. Ideal way to actually get to know each other and well than to go to a stable marriage thereafter. When we returned, I was lucky finding a Treasury position at Heineken. I said that ASML was more involved in the corporate finance and the risk side at Heineken. Gave me an opportunity to also get more experience in the operations side. Supported introduction of a new TMS SAP. Did a lot of work on FX hedge accounting and some other more projects. Hennigan back then was also small so sort of five or six today it's a lot, a lot bigger. The company also grew of course so that, that, that makes sense.

You sort of still relatively early in your career but you're now with, I mean as you say Heineken then was, was quite different to his now because it's massive and things like that. But you came in, I know that at the time you focused on that, you know, getting some systems experience. That was something that you were good at and things like that or you know, what was that, that, that role like? Because I know that, that provided you know, you went from that to sort of a much more senior role. What, what did that give you, would you say?

Well, when, when it came there they had some, some they were struggling with the FX hedge accounting and all the tools that, that, that they had to support it. So I came there. Well, it's the reserve crisis concerning that, that topic, I managed to turn it around with some Excel skills. That is always very convenient as a TRE treasurer to be proficient in Excel. Yeah, from Daryl I just grew my position there. So yeah, based on my experience with ASML and with the bank, did some work on structured finance and some other projects. But yeah, then again when I was there the strategy was not one of the growth that we did that we've seen in last years. It was more stable. So staying there didn't really make sense for me. So then yeah, I look further For a new position. And choreo came in my path there I could become a group treasurer. So yeah, it was very different industry, but also very capital intensive. Courier doesn't exist anymore. It was a reit, real estate investment trust. So an investor and manager of shopping malls across Europe. As a treasurer, real estate is really interesting. I mean, you quickly get involved both in the business side and the financing side. So this has many features. When I started there, it was just the treasurer was just me. When I left eight years later it was. I was also responsible for tax, for the corporate forecasting and I mean total managing group of sort of six or seven staff. Yeah. What I did there is also introduced tms but also graduating issued bonds with quite a few structured finance transactions. The month the one I remember Most was in 2010 was a very structured CMBS from Italy. I mean, mind you, that's sort of after the financial crisis and then doing cmbs, we actually took a lot of effort. But I still remember that very well. But it was a success.

And what was it like moving industries? Because you've gone from semiconductors to a brewing company and then you arrived in real estate. What was it like for you? Because again, you were then growing your team, which I want to dig into in a moment. But you got there, you know, what do you find the challenge of, you know, all these different industries, if you like.

Yeah. What is essential to be successful as a treasurer is to get a thorough understanding of all the risks. Also the business risks and then the finance financial aspects of those risks. Only if you understand it really well, then you're really seen as the one able to manage all the risks for the company. So that is sort of vital. I think that should be one of the the key skills of treasurer. I think I have those skills so allowed me to quickly understand all the treasury aspects of asml, up, Heineken and courier, at least sufficiently to be effective as a treasurer. Differences are said, ASML was not really startup, but really growing, but aggressively growing company. Very international environment, very cyclical. The risk dynamic was completely different than compared to Heineken, which was much more stable for that. Therefore also the focus of Heineken for me was more in operation than understanding all the risks financial aspects. But back to Corio again, real estate, yeah, it's just collecting rents. Value of the malls are mainly driven by yields, interest rates. So that's really accessible for a Treasury. It's easy to have contribute to those process and to get involved in M and A and all kind of structures as a Treasurer. I really liked that whole company. I think also in a real estate company, it makes more sense to, for a treasurer, to potentially easier to become a cfo. For example, the whole accounting and finance side is much more straightforward than a Heineken process company or ASML with all the R and D and everything, but sets the real estate for treasurer is really nice.

And once you were there at Coryo, I know that you. One of the key things, we spoke about this before the show and things that you grew the team, you know, so you took greater responsibility. What was that like for you? Sort of. You come in as sort of a sole contributor as such, but I know that you built the team and then at a later stage you took on tax as well. We'll talk about that as a separate challenge. But, you know, what was it like? What did you look for when you were looking for people again? There'll be people listening today that are going, well, I've got to recruit a Treasury manager to work for me or I've got to recruit a Treasury analyst. How did you do it? What was your key to success, if you like, in that. In that sense?

Well, I didn't really have a lot of experience building a team, unfortunately, I could do it gradually. Of course, you make mistakes and you also sort of need to accept that you cannot sort of control and influence everything. When I have a job interview or when I'm doing fewer, when I have a conversation with an applicant, what I appreciate most is if the person already sort of imagines that he or she is already in the role, sort of bridging the distance between, again, the applicant and the interviewer.

Yeah.

And sort of evidencing that they already spent some time thinking how it could be like performing that role. That's not something that you come across often and particularly with certain media and junior positions. So that's. That's a very important criterion for me to look at.

And then you took. You expanded your role, which is quite unusual in a way because a lot of people are Treasury, Treasury, Treasury. And I talked to a treasurer the other day about treasury and Tax and combining the two things. And the interesting thing was he said, and I won't say he is, because he. And he said this with respect. He said, the problem with treasury guys, and I know you and I spoke about this a little bit, that the treasury guys simplify stuff too much and tax guys overcomplicate stuff. And he said, you know, that's a broad phrase, and he wasn't being critical of either what he Was saying, is that treasury sometimes, oh, we're going to do this, we're going to move it across there. And the tax go, hang on, what about the implications of withholding tax there? And you're going to be thinking about this. And he said, the flip side is sometimes when you talk to the tax guys, because they're very technically strong, sometimes they go, oh, we'll. We'll do this scheme, we'll do this. And he said, look, well, okay, that, that will save us. How much? He said, well, it will save us 100,000. Said, okay, great. How much would it cost us to implement? It's going to cost 150,000. He said, okay, so we'll stop there, shall we? And they were like, right, yeah. So it's sort of trying to have that end goal in mind. But, you know, with you, when you were then appointed Tax as well, and you oversaw that, what was that like for you, you know, in your treasury brain, as such, I did have the.

Benefits that treasury and Tax were already closely cooperating and there were already two experienced tax managers, so they were responsible for the compliance. They know that much better than I do. So there was already a useful, strong, strong basis. I noticed that, yeah, I could inspire the two tax managers to think sort of further, sort of think beyond the rules and the structures and the regimes that they're focusing on. And in a read that is very relevant and interesting because, yeah, we typically is tax exempt and we were present in sort of seven countries and in a few we were tax exempt, a few others we were not. So we could do a lot of analysis together whether it would make sense from both the tax and the treasury angle to also get the status in other countries. Yeah, I think that the cooperation went, went really well. You have to leave sort of the specialist stuff, the compliance things really, to the tax managers and sort of find sort of common grounds stuff where you can really build together. And we were able to find that in REIT again because, yeah, it's highly text driven.

You've moved through these sometimes treasury, you know, I talked to treasury and they might be 20 years in one company. Not often, but, you know, sometimes. But you then made a move from real estate to telco telecoms. You know, what was that like? And, you know, how did you achieve that in your head? You know what I mean by that is, you know, you've made these moves. We've, you know, you've got everything from, I said brewing, then real estate and then into telecoms before, or recently into energy. So talk Us through that. If you went into that move, if.

You would telcos was a big change for me. I mean, I suddenly became part of a Treasury department of sort of 130, I think, across, across the globe and perhaps 10 or 12 on HQ. Completely different company, completely different dynamic. Also for me that took some time to get used to that and also when I moved I sort of realized how sort of accustomed and used I got to my previous role, although I became Treasurer of Tax and a lot of things changed. You sort of. Yeah, you get sort of used to your environment. Vice versa, there's sort of stability that is sort of growing. So then when I, after eight years came to Veom, a really quite dynamic company. Yeah, that was. Was a quite radical change and for me that took some time to get used to it. So for myself, soon after I started, I thought, well, was it actually the right step? Yeah, it really took some time for me to realize that I should just stay there and see how it goes and gradually sort of build my role and grow. I managed, but at the start, for myself, it wasn't really so obvious.

Talk me through the role at Veon, you know, you were Director of Treasury and Corporate Finance. You know, who are Veon again for the companies out there?

Yeah, the only telco operating in, let's say not western countries. Countries like Pakistan, Kazakhstan, Russia, Ukraine and others. Over 200 million active subscribers. So pretty big in terms of subscribers, but in value, of course less. I mean, when I started I mainly focused again on forecasting and stuff like that. There were many initiatives across field. Across field, M and A doing spectrum transactions, selling, how do you call those things, the masts. And it was difficult at HQ level to sort of compare them. So I actively took leading role from special departments to build a model that helped us to compare all these different transactions, at least from a Treasury perspective. That was sort of the basis that from there I also took other roles. Eventually I we drafted the FX strategy and there's a huge exposure to rubles. Earlier on I got actively involved in the first, the joint venture with Hutchinson in Italy. That was sort of the only western country where we were present. But later we sold our stake to Hutchinson, where I also got involved in widening a huge sport portfolio. Very dynamic, very international, very varied. Yeah. But at some point it was also sort of enough for me. Field was a bit in a difficult spot. It had some compliance issues. Also the market was a bit against them, so they decided to cut down, at least hq. As part of that I decided to move to a Different role. And that is then a nexus which is more similar to courier of smaller size, different challenges.

Explain what a nexus do internationals. They'll be like, oh, I don't know them at all. So can you explain for the listeners?

I didn't know them here before I started working there. They're the grid operator in 1/3 of the Netherlands. So in those provinces where I do not live, the regional grid operator. So they're operating the gas electricity grids. It has. We have approximately 4700 employees, balance sheet total of 8 billion 3 billion of debt, mainly bonds and we're owned by governments, meaning five provinces and ADH municipalities. The company used to be a stable grid operator, but now it finds itself in the middle of the energy transition. Has to do a lot of adjustments and expansions to the grids to enable this energy transition to reach the climate goals.

What was the transition like? I know we spoke in our pre podcast call about this, but the transition from a PLC private, you know, public company rather to a privately owned group, you know, and sort of more government owned. What's that been like for you as a treasurer, would you say?

Yeah, of course. A completely different environment. They have to take that into account. In any case, this is always sensible not to too quickly give your opinion about things. Just first to digest things, make sure that you understand what you need to understand. Didn't really have too much time for that nexus because it's also there hitting the ground running. But yeah, I mean there clearly is a kind of cultural change if you're either managed by sort of company that is mainly owned by Russian parties also listed, has a US angle and everything, or you are owned by provinces. Grid operator used to be stable. That that's a difference. You need to consider that at Fiona, I think they were sort of dealing with all the change that was, was, was was happening around them also in the past and with the next season is more. Well, how will we actually deal with all the changes that are coming in our direction? So there's a. It's a more positive dynamic as you say.

You then talk about allude to the green bond framework and things like that. What. What's that been like? Is that big driver for you guys?

Yeah, for us that's very important. Through our grids we of course transport green energy. Also by expanding our grids we connect new solar parks and wind parks to the grids. So we are really key and we have a key role in this energy transition. And yeah, issuing green balls, having a very solid ESG rating is very consistent with that.

Green bonds, renewables, all this stuff. It's the watchword everyone's putting out there saying, oh yeah, this is what we got to do, we're going to be like this and blah, blah, blah. Do you find that it sometimes may be frustrating that you know other people, you're obviously very much committed to it because that's, you know, the forefront of what you guys do as a company. Do you sometimes think that people are just paying lip service, would you say outside? Or do you like the fact that everyone's trying to get in on the ax?

I think, yeah, I think that's probably partly true. If you want to sort of realize change at the start, perhaps you need to exaggerate a bit. And I think the trend is okay, it's good to support that. And there's also no turning back. So like arguing with the auditor eventually doesn't really make a lot of sense. It's better to just to find ways how to, to go along with this change and how to adapt.

You are the head of treasury, you've got a team of treasury professionals working with you and things like that. How, what do you like as a boss? You know what, when you're setting out coaching, managing these guys, what do you like when you're, you've grown teams now you've become better and better As a manager, what are you like now as you sort of, how do you do it?

When it started, it was a team that was there sort of on average already, well, 10 years and longer. I was the youngest in the team. My age is roughly 50, so that tells you something. Also Nexus was always very stable, not a lot of changes. It was also to remain stable. So yeah, my challenge was to create a new dynamic in the team in part in areas where I wasn't really experienced and I was responsible for buying, for purchasing the grid losses. But also there we needed new energy. But I like is if people are sort of self driven, if they set their own goals, but you can only do that if they sort of understand what the overall company goals are. So I spend a lot of time now discussing that with the different team members, make sure that we are all aligned. That still takes time and effort of course, but yeah, to create more dynamic, I also hired two younger staff, roughly age 30, 35 and the other I hired last year actually initially as an intern and now he's permanently with us. I create more dynamic within the team. It's only six, but we have also six or seven topics. I mean those, those were given to specific members of the staff. By creating more dynamic, they're creating teams. So I think that worked really, really well. But it's, it's a long process, not something that you sort of change within just one or two years.

And when you're, you know, looking at the, the future of the group and things like that, as you say, you know, recruiting this team with an eye to the future. Where do you see it developing for you guys and what's the future for future treasury challenges, if you like. You and I, we used to be able to go to things like conferences. 1. One day we'll be in a real, real world conference again when they let us out of our houses, you know. But what do you see as the big challenges coming up for treasury now? You know, you, you're obviously focusing on the green bonds, which is fantastic. But you know, where are you then moving to in the future?

Currently spending a lot of time making sort of working agreements with other departments. And during COVID I realized that we need those. When you're in the same office, you find each other on an informal basis, but if you have to find each other on the phone calls, that's less obvious. So let's create a more formal corporation structure. I also asked my staff to do that, to reach out to other departments to write down well again, working agreements. I think that gets increasingly important also as, yeah, there's things only get more complex and particularly at the HQ level. I think their treasury can play a role. But then we need to sort of structure again our how we work together with, with other departments. That is my focus for, for, let's say, for the coming years. I think that's a trend that will stay there. So I think that the treasury will be more, will move more from a sort of company, that first department that was responsible for the financing to more a tour department managing projects and again the cooperation between departments.

And how have you encouraged that? I was recently featured on a panel and one of the guys was saying, oh no, treasury shrinking. And I think it's total the opposite. I think that treasury in itself is actually expanding. But I think the difference is that the role of a treasurer and role of the treasury team is changing. That is much more, you know, being there at the hub of things and trying to help the tax guys, help the finance, help fba if they're doing a project, say, look, we're here to consult and help you and things like that and support those guys. So you're very much more. And you and I have talked about this as well, Martin, that, you know, you're really there to help the business, whereas in the past it was slightly more ivory towered, you know, yeah, give us your cash and we'll look after it and do stuff. How do you encourage that with your team, would you say?

Clearly make them responsible for certain areas, for example, for procurement or for leasing or for the contacts with the planning department, so creating more dynamic there. But as I said earlier, also explain to them how that is all linked to the overall objectives of the company, of the treasury policies, sort of painting the broader picture for everybody. If you do that, if you make people understand well what it is you're after and how they can contribute to sort of joint success that supports the company. Yeah, that really works. That really unleashes energy. That's sort of how I approach it.

As the world sort of comes out of the COVID and the pandemic and everything else. Where do you see the continued development? You know, we're going to come towards the end of today's show, surely, but before we do that, where do you see treasury adding value? What are you now? As everybody gets back on their feet, if you like, what do you see as next?

What I just mentioned is this kind of formalized in cooperation with other departments. I think the finance department is very, at least in the companies I've been with, is increasingly busy with automation, ERP systems and what have you, and managing all the complexity of companies becoming more international. I think that leaves many other topics sort of unaddressed and I think treasury has a key role to play there. The topics differ per company, of course. For us it is ESG rating, the leasing risk at procurement and so on. So I think that's a sort of priority when we get back, making our footprint in the company bigger.

Yeah, you're going out there and really connecting with it. I know that's a key thing. So what we will do, as we said before, we will put your LinkedIn details in the show notes. But as we wrap up today's episode, I know that we talked about maybe some of the tips you've got for the people listening today. What would you say if someone's listening in today and maybe they're early in their career or reflecting over your career, what sort of advice would you give to the guys listening today?

What helped me a lot is to change jobs, just get a new position, expose yourself to new things and learn from them. My tip would be to do that both professionally and private, so also then travel or. I don't know, find out new stuff, read books, get inspired, be and be creative. That, that is my, my tip.

Amazing. There you go, guys. Be creative. And some great tips from Martin there. So we'll put your details in the show notes, your link to detail. So feel free to connect if you know, be great to have a stronger network and things like that. Well, thank you, sir. And that was a good, nice and easy one today. Just a nice walk through your career. And yeah, I think people will get some good, good advice from that as well.

Yeah, thanks, Max. Thanks for, thanks for having me.

Thank you, sir.

Hello, it's Mike here again. I hope you enjoyed this week's show. If you did, then maybe you want to follow the show or subscribe, depending on where you listen, whether that's itunes, Spotify, or another great place to listen.

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