Dennis Chan looked excited. The financial controller of Pacific Andes International Holdings, a Hong Kong-listed global seafood conglomerate, had just closed a $190 million private placement with The Carlyle Group to fund expansion – the latest in the company’s plans to grow.
“The investment will allow the entire group to expand,” he said. “We are targeting expanding our fishing rights in
Pacific Andes has grown rapidly during the past decade, reporting a compound annual growth rate of 21% since 2000, as it acquired and built up operations ranging from fishing, packaging to distribution around the world. With the company since 1995, Chan is responsible for managing its finance and treasury functions supported by a team of five.
While the placement was the first topic to come up, we were not there to discuss financing. Pacific Andes global treasury, centralised in
Intelligent use of cash is important in the seafood industry. Chan explained that small things, such as a delay of the annual fishing season off the Peruvian coast by just one or two weeks, can significantly impact the company’s inventories and receivables. By extension that affects its overall cash and debt positions, which makes it all the more important for Chan to intelligently manage cash from his desk in
“Because of electronic systems, we know our liquidity positions on a daily basis,” he said. “Once the system is set up it becomes a routine procedure and we can easily adjust for seasonal changes.”
The structure of Pacific Andes treasury is simple. It maintains a central account in
As an example, Chan cited Pacific Andes’
Lead by example
Pacific Andes solution is not remarkable. Multinationals have been setting up centralised global treasuries for years. What is notable is the fact that the company is not a multinational with decades of international experience but a relative newcomer; it was founded in 1986 and has only had overseas subsidiaries since the late 1990s. It is rare for such a company to have the foresight to invest in a global treasury solution that saves money and gives it the visibility to intelligently manage cash.
Asked whether a centralised treasury is something other small companies with global ambitions should implement, Chan had a mixed view. “A centralised treasury has a lot of advantages, for example you can make the best use of funds, but it also has disadvantages,” he said. “Most important is the company’s policy – how they want to manage their overseas operations.” In Pacific Andes’ case, it decided it wanted local subsidiaries to be independent, except financially. A centralised treasury was a logical way to realise that. Whether or not that is the strategy of another firm is up to them.
Companies at this juncture include
Chan said his focus going forward is on implementing a global enterprise resource planning platform from
This story was first published in the July 2010 issue of FinanceAsia magazine.