Treasury in the Private Equity Space with Julie Fabris

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 treasurers about how they've built their careers, where they are now and where they see both themselves and the treasury profession going to next. In this week's show, I'm joined by Julie Fabbris, the treasurer at Britax Childcare Group Ltd. Now, for those who don't know, Britax is a British manufacturer of childcare products, car seats, push chairs, high chairs and automotive safety equipment. For many, many years, throughout the 70s, they grew and grew and grew, headquartered in the UK, they've got divisions based across the world. And later on we'll get Julie to explain exactly how Britax runs and everything else, because a really interesting business as well. But Julie herself, many, many years experience, which is great, an active member of the act, the UK association of Treasurers. So she works, you know, does panel discussions, joins in, really great networker. She was also pleased to say on our Bounce Back program, where treasurers, you know, improve their profiles and stuff like that. She was wonderful on it. Thank you. Julie, let's start your career. So you were training accountant and Menzies, so you first ever thought, oh, do my A levels, do my levels, I want to be an accountant. How did it all start? Take me back.

Well, I know, well, it goes back to obviously school and what I wanted to do with my life when I left. I was good, arithmetically. I did some work experience at a retail bank, a local branch, and I must say that after a week there, I decided that retail banking probably wasn't going to be for me for one way or the other. So I then, you know, chose the accountancy route, wanted to become an accountant and had some very good advice from a teacher at school that says, you know, I was going to go for this, the lower profession rather than the elite chartered accountancy route. And she said to me, why? Why don't you just aim high? And then what's the worst can happen? So that's what I did. So I was very successfully trained as a chartered accountant and it went from there because after I got my chartered accountancy, went round few audits on route and thought, actually, I don't want to stay in the profession, I'd like to go out into industry and into working for companies, thought that a small family sized business where I could fit in with the people and help them would be great. Then I got the call saying, well, how would you like to be treasury accountant for Redland and Redland at the time, Redland plc was in about number 52 in the FTSE 100. And I thought to myself, they're not that small. And they said, well, the treasury team, the treasury team's small, so go along and have a chat. Really, that's where it took. It took off because I was just so excited and so interested in the work that treasury encompassed that I really never looked back from there. So I started off as the treasury accountant.

So I was going to say, for people that don't know, maybe explain what Redlin do and how that then impacted on, you know, the work you did in Treasury. You know, what was their.

Well, they were a multinational building materials company. I mean, their annual turnover was around two and a half billion. They had operations globally of uk, us, Europe and the Far east. And its UK head offices were in London. Had a Treasury team of about half a dozen people at the time. And that helped me because I really lent on the treasury people to learn the skills. Because I came in as an accountant looking at an interest rate swap and thinking, how do you do a mark to market value on that? How does that work? It was really kind of the team, there were quite. The team, there were quite elite in terms of they were pioneering at the forefront of the swaps market at the time and other sort of financial instruments. Within three months of joining Redland did a hostile takeover of another PLC company and then six years later became, you know, was defending a hostile takeover by Lafarge, the French building materials materials company, which they was unsuccessful, unfortunately. So during my time there, I got to see at the head office in the treasury and the finance function sort of like the big picture of companies and the strategies and as well as sort of learning my treasury skills, took my association to corporate treasury, did a little bit of work abroad as well. You know, there were different cultures within the organization as well, which I found fascinating.

Just diverting off for a moment, you say, about doing the ACT exams. So that was really in the earlier days of the ACT exams. Now they're much more. More well established, you know, 20 years. What was it like then? What were they? Were they just, here's the exam, off you go, and stuff like that?

No, no, not at all. I mean, I gained a couple of exemptions from being a chartered accountant looking at the corporate finance. And one story I've got, I went along to the lecture hall, the lecturer sort of had a set of accounts up on the board and he said, right, I want you to have a look at the ratios of this Balance sheet, you know and tell me what the, you know, what you think the value of the company is. And so we all worked know debtors days and now all this kind of stuff on their balance sheet. And what he did, he took a big back mark and he goes right and he just scrolled across a lot of it and he said that's so wrong. He said that's historical cost accounting. He said that tells you nothing about the future value of the company or very little.

Yes.

And that was kind of. Wow. And again another big moment for me is where treasury is at, it's looking at the future. Of course they're quite toughly exams though.

No, well it's.

They'Re very good. I'm not, I'm not a natural exam taker either. If you want to progress in treasury then my one advice is that you, you need them.

Yeah, yes. So you did that and then you were at Redland, your Treasury manager and then you moved on. What happened?

I did. Well, completely different company. So this is a London UK based property company, gained a large PLC, the fourth largest property company, had assets 4 billion on its balance sheet. And so a very different perspective. So there was a lot of capital markets activity. They had very long dated debt instruments with very long dated swaps against them. And at that time the sort of investment property world was changing and MEPC wanted to develop a strategy whereby it sort of had business parks or owned business parks and almost managed the space for the business parks for individual tenants and turning over those parks, sort of doing up the properties and then renting them out and having that sort of like turnover of tenants and building the parks and very successful at doing that I have to say. So in my time there we had a lot of bilateral bank facilities which we renegotiated and then I was very fortunate to go into the capital markets world and raise the euro. Medium term note program started off at a billion euros and then went to 2 billion. And at that time we could source some very cheap money from Japan. It was a time when a lot of the Japanese investors were in the market and crazy, crazy money because on the swap we'd do a currency swap on the back of that. So you'd have an all in sterling funding cost of some really low rate. So it worked very well for us, the medium term note program because it's kind of investor driven. Rather than you going to the market saying I want to raise half a billion, you wait and the investors are there and they say well actually I want to invest in 50 million, you know, 20 million or whatever. And so that was really interesting. And then what happened was the company itself was taken private and then it basically meant that there was less capital markets activity to do and the Treasury Department itself was no longer really needed. It got swallowed up by the sort of like the funds that bought the company. So then I was made redundant.

And then you took some time out and also lectured for coming back into Treasury.

Yeah, that was quite strange again through somebody I knew who was leaving, was halfway through doing a sort of FEMA course for adult students and said, well, we need someone to fill in. And it was an evening role. So I was on maternity leave looking after girls. So I did that and what that taught me was whilst it's probably a very rewarding career for most, it wasn't really something that I wanted to progress. Great experience again though, I feel nothing ventured, nothing gained in life sometimes that was good.

And then you joined. Well, we were just talking before the show. My first ever school job, if you like, was at Woolworths and I said, I'm, you know, scarred by the turquoise and bright orange tie that you had to wear and everything else. But you joined it a few years later and you were the group treasurer of Woolworths. What was that like?

I joined it fortunately, at the last stages of Woolworths existence. Really that was very interesting because as I was joining, it was September 2007 and they just completed an asset backed lending facility which was a great funding facility for a retail company. As you can imagine, all of the stock is bought in preparation for the Christmas trading period. A lot of it was very seasonal and therefore having having sort of money lent against your stock as it builds up then sort of like works from a timing perspective. So the facility was great. Unfortunately the markets weren't. The high street was not and you know, it. It became a casualty. It had. It also had a logistics arm called Entertainment UK at the time which was applying G and the videos etc. To Woolworths as well as other stores and the credit insurers as well at that time were also getting hit and running for the hills a little bit and all that put pressure on cash. So my, my real role at Woolworths was a site and sort of bedding down the new facility and how it operated and worked was cash management, it was cash forecasting, it was liquidity, it was. And it became more and more detailed as things got more and more difficult. And at that time, what I learned, I mean I learned an awful lot from I have to Say, not something that you'd want to particularly repeat, but some things you just become a little bit more resilient and learn as a treasurer where your role and responsibility ends and where it starts and where it ends and think it's important to make the board aware of that and your boss, assist, CFO or whatever aware of that, because you are propelled into a spotlight situation when everyone is fighting, when everyone wants cash. So it was a really interesting time, like I say, not something else. Want to repeat that. A good experience, really good experience.

And you then moved on joining Glue Foods, who became Nomad, but, you know, they were private equity owned. And you talk there about cash and everyone sort of says to me, a lot of the time, oh, private, just about cash, cash, cash, cash, where's the cash? Bring it out. And, you know, I want clarity, cash, clarity, great. You know, that's what treasurer does. But was it like that or, you know, how do you. Then you therefore worse than joined this new group. What were they like?

Well, it was really interesting because after sort of, I suppose, yes, I joined in in February, so I had two months off where I was kind of recovering from Woolworths, if you like, went for an interview for Bird's Eye. So it's Bird's Eye, the frozen food group everyone knows in the uk, Igloo Foods from Europe. And whilst it's private equity and everyone thinks of private equity as being a highly geared company, they did have lots of cash. And that was the one thing that I was sort of sighing a relief for. I was thinking, crikey, I'd like to work for an organ, actually, you know, is able to use cash. So that was great. But having said that, it's private equity at a world of which I'd never been in before, and it was getting really interesting. It's so dynamically different from a PLC organization is what I found anyway. And it took a little while for me to get used to the ways of working in private equity. It is different and it's different in terms of the decision making, in terms of the board makeup, in terms of the focus. You know, with a PLC company, it's sort of bottom line with private equity, it's EBITDA multiples and cash. But, you know, you can make real differences within private equity. The decision making is very quick. So, yes, whilst focus was on cash, they did have cash and we did some several sort of refinancings, recapitalization, acquisition of the Italy group as well. So there was lots going on within treasury, you know, there's a lot of debt to manage and FX as well. So within that time I was able to also hook up with the supply chain and purchase managers for example, and trying to get a more efficient way of understanding their FX exposure, something they hadn't looked at before. And I thought actually, you know, we need to set a policy so that we do proper risk management here and that everyone understands. And so sort of presented a few board papers on it.

Awesome. And with that, so just I want to get back onto that private equity thing. How does the relationship work, you know, with you as a treasurer? Is it that you. Because I've had mixed reports, I'm not specifically focusing on your private equity fund and stuff like that, but is it that you just describe the relationship and how it was as a treasurer? How did he feel?

Well, I think you have to very much get the fact that in private equity the treasurer is in a slightly different. Has a slight perspective. I think it's very much a case of you have to roll your sleeves up. There's no hiding under any rocks. Private equity run a very lean finance function. In fact, I know you know, quite a few private equity companies don't have treasurers for example because they have the CFO is accountable and of course exp houses themselves are very finance orientated. So getting the sleeves rolled up and getting them to understand, well, what can you bring to the party, you know, what can you bring show them the risk that they have within the company. Are they hedging themselves outside or do they need your help in hedging? Do they help need your help in the cash? Because cash is still key and the focus to them. So you know, working capital management, finding liquidity solutions there. When it gets to the big refinancing and capitalization, you'll find that the PE house will bring in their people to help you, but you can get involved as much as you like. I talk about quick decisions. We did a floating rate note. We issued a floating rate note in the market. We'd never done it before. Within 30 days from start to finish, we had to get the prospectus, the information memorandum prospectus out and everything from start to finish. I remember having a call and they actually brought the time forward rather than extended it for us. I mean it was quite crazy. It was, yeah, 30 days, within 30 days from start to finish is quite something. And we got there and it was an achievement and it was great. So you do get help with the, with the higher end sort of funding and financing, however, sort of within your day to Day treasury job. It's very much up to you to kind of like, this is what I see risks are in the business and this is what we need to manage. And very much put yourself there in front of your CFO and help them.

To help them achieve and everything else and then shine and everything else. So you did that till 2015 and then you joined Britax. How did that come about or what happened?

I did. I mean it was five years and I think you mentioned at the start of the call, I've got a quite a varied career. I think you sort of, you, you come in, you do your job, you get to a certain stage and then think to yourself, okay, right, what more can I add here? Or do I. Am I looking for another new challenge? And I think with me it was. Was the latter. It's looking for another new challenge now. So I then became the treasurer for Bush. That's where I am now and that was exciting. They were, they're a global manufacturer of car seats, like you said, and manufacturing based company, PE based as well. Location was good for me because it was out of London as well with sort of youngish kids still. That was quite attractive. So again, we've done some interesting things there. We did the rebase, the policy FX hedging structure strategy and I've become much more involved in the slightly smaller organization, much more involved in the regional FDS activities and you know, become, you know, a sort of support for them there and you know, again on the purchasing side with suppliers, we've got a huge supply chain out in China which you can imagine in the last six months has been quite interesting times. So we have a big China partner out there and also a supply chain finance solution, something we put in place last year. And then unfortunately Britax went through sometimes its revenue wasn't coming through, there was competition out there, various other, other reasons and it actually went through a restructuring recently, a sort of debt for equity swap type arrangement now. So we have new owners as of the beginning of the year.

Just team wise. You've got some. I know you've got some members of the team there.

Yeah, it's quite a small team though at Britax and in private equity, like I say, you know, it was. It's really sort of two of you do. It's very small and it's fine. I think with a bigger organization they afford more treasury people. I think at private equity, again it's less so it is important that you work well together being a small team, especially with the. The of rest.