The rapid pace of change in the Middle East – along with its entrepreneurial culture – mark it out as a land of opportunity. For treasurers, the region offers the chance to take the lead in developing cutting-edge processes and technology as well as finding clever funding solutions.
As the drive for professionalism within treasury continues in the Middle East, organisations are seeing the benefits of centralised treasury functions with state-of-the-art systems, in-house banks and payment factories. Therefore, treasurers who are involved in putting this infrastructure in place can gain valuable skills and experience that are harder to come by in more developed markets where advanced treasury functions already widely exist.
This has certainly been the case for the winners of the team categories in this year’s ACTME Deals of the Year Awards, both of which have undertaken far-reaching treasury transformation programmes. Their achievements in terms of overhauling processes and integrating new treasury management systems with other IT infrastructure within their organisations are quite remarkable, especially as the teams in question were simultaneously juggling their business-as-usual activities with these projects.
If you like scale, you’ll want to find out more about our corporate finance award-winner, which only managed to pull off the biggest ever initial public offering in Iraqi history. Meanwhile, a Dubai-based airline, one of two runners-up in the corporate finance category, proved that treasurers in the Middle East are becoming increasingly confident as innovators. Its international sukuk was the first-ever amortising sukuk executed in the international debt capital markets.
To read about all our winners and the talented treasury teams that were also highly commended by the judges, see below.
I would like to take this opportunity to thank my fellow judges, who are treasurers or advisers working in the Middle East, for their help with evaluating the award entries. You can see who they are below.
I hope you enjoy reading about the feats of treasurers working in the Middle East in 2013. No doubt we can look forward to even greater treasury excellence in 2014.
This is the fifth year of the ACT Middle East Deals of the Year Awards and there were four award categories in 2013:
The treasury funding and corporate finance categories were judged according to the criteria of ‘excellence in treasury’:
The teams of the year were judged on:
Note: In the event a conflict of interest arose during the judging process, the relevant judge withdrew from the process and decision making.
The 2013 ACT Middle East Deals of the Year were judged by:
Matthew Hurn, executive director, group treasury, Mubadala Development Company
Andrew McMichael, group treasurer, Agility Logistics (Kuwait)
Gary Slawther, treasurer, Octal Petrochemicals (Oman)
Peter Matza, engagement director, ACT
Debashis Dey, banking and finance partner, Clifford Chance (Dubai)
Ricky Thirion, vice president treasury, Etihad Airways (UAE)
Paul Reynolds, managing director and head of debt and equity advisory, Rothschild (UAE)
Category: Corporate finance
Winner: Asiacell
Iraqi telecommunications company Asiacell stood out from the crowd with its groundbreaking $1.22bn initial public offering (IPO) in February this year. It was the largest ever IPO in Iraq and the biggest in the Middle East for nearly five years. Indeed, it doubled the value of the Iraq Stock Exchange overnight. The deal was proof that large transactions could take place in the Iraqi market and it generated significant interest from both local and overseas investors.
Asiacell, which is chaired by Faruk Rasool, is co-owned by telecommunications company Ooredoo Group and conglomerate Faruk Group. It listed on the Iraq Stock Exchange after a month-long book-building process. The sale had been a stipulation of the 15-year mobile communication licence awarded to Asiacell in 2007. It was a secondary offering that enabled founding shareholders to sell off 25% of their shares. Technically, it was not actually an IPO since Asiacell had previously completed a nominal IPO so that it could convert to a joint stock company. This is a requirement under Iraqi law for companies that want to list on the local bourse.
It was certainly an exciting challenge, but we managed to set a landmark in the history of Asiacell and the Iraq Stock Exchange.
We had to undertake lots of financial and legal steps to get the company legally ready to do the IPO,” says Pakzad Taha, director of legal and regulatory affairs at Asiacell, who managed the share sale along with director of finance operations and board member Hussam Aleshaiker and a wider team. “It was certainly an exciting challenge, but we managed to set a landmark in the history of Asiacell and the Iraq Stock Exchange.
Investors snapped up the shares, with 70% going to foreign buyers and the remainder being purchased by Iraqis. The shares jumped by some 10% on their first day of trading. “We helped to increase the awareness of the Iraqi people in the whole idea of investing in equities,” says Aleshaiker.
Sadeer Munir, managing director of financial services firm Melak Iraq, said of the transaction:
This deal served as the catalyst for more interest in the Iraq market and proved that transactions of such size can be executed in Iraq. It was a huge success for a process that had never been tested due to the magnitude of the deal. It is also a testament to the ability of indigenous Iraqi firms to successfully manage and execute such deals.
It’s very difficult to get things done in Iraq, so to get something over the line the way that Asiacell did is tremendous.
In what proved to be a hotly contested category, airline Emirates won brownie points from the judges for its international sukuk – the first ever amortising sukuk executed in the international debt capital markets. The amortising nature of the sukuk helped the company to align its debt profile with planned future asset purchases. Meanwhile, education provider GEMS Education impressed with its AED 2bn bank financing deal. It will use the money to invest in schools in the United Arab Emirates and wider Middle East and North Africa region.
Category: Treasury funding
Winner: Kuehne + Nagel
International logistics giant Kuehne + Nagel was named the winner of the treasury funding category in the ACTME Deals of the Year Awards. The team is headed by Sarah Sabra, regional head of treasury and working capital, Middle East and Africa.
Unfortunately, Kuehne + Nagel did not grant the Middle East Treasurer permission to reproduce detailed information on the treasury initiative that resulted in the company winning the award, but we can assure you that the award was well deserved.
Kuwaiti-based conglomerate Alghanim Industries was praised by judges for its KD 12.5m sukuk, issued in April 2013 for its electronics and home furnishings business. The sukuk, which were issued in two tranches of KD 10m and KD 2.5m, with coupons of 6% and 8% respectively, marked the first time that an Islamic securitisation in the form of sukuk had been issued in Kuwait. The issuance had been two years in the making and Alghanim’s corporate treasurer, Rob Farrow, described it as “an excellent means for us to diversify our funding base and access new markets”.
Category: Large treasury team of the year
Winner: Dubai Aluminium
When the judges came to assess the achievements of aluminium producer Dubai Aluminium (DUBAL)’s treasury team, it was less a question of what it had done and more a question of what it hadn’t done. Implement a new treasury management system (TMS)? Check. Rationalise bank accounts? Check. Establish a cross-border pooling arrangement with a US subsidiary? Check. Develop a web portal for the company’s global customers to fix the purchase price of metal online at real-time prices and real-time FX rates? Check. The list of accomplishments goes on. Without doubt, DUBAL has built up a world-class treasury function under the stewardship of its Australian corporate treasurer and chief risk officer, Toby Shore MCT.
But let’s focus on what is perhaps the greatest achievement of the DUBAL treasury team over the past couple of years. To say that it has put in place a new TMS is something of an understatement. DUBAL’s SunGard AvantGard Quantum TMS is about as all-singing, all-dancing as treasury technology goes. Not only does it fully integrate with DUBAL’s SAP enterprise resource planning (ERP) system, but it also links two ways to its 360T FX trading system as well as to Reuters and an SAP exposure management system, which captures FX and commodity exposures across the company on a real-time basis. The system has risk analytics capability and it also enables real-time treasury reporting, hedge relationship matching and posting into the company’s general ledger.
We have some very bright people. They like coming to work every day and if they need to put in extra hours, they are happy to do so.
We have state-of-the-art technological solutions by anyone’s standard,” observes Shore. “We’re doing things no one has ever done before. We’ve taken the core Quantum system and fully integrated it with the SAP enterprise resource planning system and we’ve put in an SAP exposure management module.
But it’s not just technology that DUBAL invests in; it also invests in its people. Out of the core treasury team of 11 (the wider team, which encompasses credit and risk management as well as insurance specialists, stretches to 28), two members are already ACT-qualified and four more are studying for the AMCT or various certificates. DUBAL also became an ACT CPD-approved employer when the ACT obtained its Royal Charter. In addition, DUBAL has trained its treasury staff in areas such as financial markets and commodity hedging.
DUBAL’s treasury team undertakes a wide range of business-as-usual activities for the company’s global operations. These include financing; cash and liquidity risk management; FX, interest rate, commodity and credit risk management; and bank relationship management. So it is a heavy workload.
“How do we do it?” ponders Shore. “It’s a testament to the team. We have some very bright people. They like coming to work every day and if they need to put in extra hours, they are happy to do so.”
“DUBAL has embarked on a breakthrough journey of treasury management with a vision of transforming its treasury into best in class,” concludes Aly Ajani, DUBAL’s relationship manager at Citi.
“DUBAL manages its resources well and puts a lot of effort into developing treasury people. Toby Shore runs a tight and substantial ship.”
The treasury team of Abu Dhabi energy group TAQA won praise from the judges for its transformation story. It has moved to a centralised approach to treasury management and focused on upskilling its people through professional training. It has also put in place robust treasury and risk management policies, which are updated on an annual basis. It has strong banking relationships and conducts half-yearly reviews on the services and support that its banking partners provide. TAQA has implemented a secure host-to-host connection with Citi that is integrated into its Oracle ERP system.
Category: Small/medium treasury team of the year
Winner: Easa Saleh Al Gurg Group
The seven-strong treasury team of Dubai-based retail and manufacturing conglomerate Easa Saleh Al Gurg Group (ESAG) has pulled off an impressive transformation in what CFO Werner Flaig describes as a ‘paradigm shift’.
Over a 12-month period, it created a centralised treasury department – complete with an in-house bank – to consolidate the cash management responsibilities that had previously been dispersed among the 23 different companies within the group. In addition, it rationalised the group’s banking arrangements by closing more than 60 accounts and set up a centralised trade finance processing centre as well as a payment factory that now makes payments on behalf of all the group’s entities.
A capable team must have members who are knowledgeable about the company and have the business acumen to analyse what needs to be changed
Inevitably, the overhaul was underpinned by a substantial investment in technology. In October 2011, ESAG’s treasury team went live with a SunGard AvantGard Quantum treasury management system (TMS), which enables it to carry out netting across all its bank accounts on a daily basis. Previously, getting consolidated daily cash balances across the group used to entail major time and effort, but now it is a smooth, automated process that has effectively eradicated debit balances.
As a result, the group has saved about AED 3m in interest payments over a year. It is also reaping the benefits of a uniform fee structure for trade finance activities. The TMS is integrated with ESAG’s SAP enterprise resource planning system. In the past, the group had no central database for its FX transactions, bank guarantees and letters of credit. Now its database records all of these transactions as well as money market short-term deposits and borrowings.
Effecting a change of this scale is not without its challenges. “In order to establish one system that would work for all, we had to identify the different procedures followed by our group entities in different industries,” says Arlene Acla, senior treasury analyst at ESAG. “Finance bundling always comes with a cultural challenge in any enterprise. In a manner of speaking, the changes were about redefining the responsibilities and authority of our business units,” Flaig points out.
When asked what makes ESAG’s treasury team successful, Flaig responds: “It is about having the right mix of expertise. A capable team must have members who are knowledgeable about the company and have the business acumen to analyse what needs to be changed. You also need fresh input through the hiring of new talent as well as professional experience.”
Thanks to the transformation programme, the profile of ESAG’s treasury team is prominent within the company. The individual operating companies appreciate the assistance they get from treasury on trade finance and other matters. “We act on their behalf in so many financial activities,” says Acla. “People working in treasury have an important standing within the group,” confirms Flaig. “We’ve received positive feedback from the group entities because they are satisfied with what has been accomplished.”
“To achieve what they have done, a full TMS implementation and centralising accounts payable with a modern solution, is impressive work.”
The judges commended in-flight catering company Alpha for implementing a multi-entity, multi-currency cash pool to offset any funding requirements against the cash balances of the group. Alpha used Bank of America Merrill Lynch’s Cashpro Online system to provide group visibility and payment initiation for each entity, which reduced the need for manual intervention in everyday treasury tasks and simplified workflows. It has also brought financial benefits for the group.
Sally Percy is editor of The Treasurer and Middle East Treasurer
