Back in 2013, up-and-coming treasury accountant Ian Cooper was profiled in The Treasurer’s special Ones to Watch publication that highlighted the potential treasury stars of the future.
Fast-forward six years and he is now firmly established in his role as group treasurer of private equity (PE) firm 3i Group.
Cooper hadn’t always set his sights on pursuing a treasury career. In fact, when he joined 3i from professional services firm Deloitte in 2010, he expected that his career would follow more of an accounting and financial control trajectory.
But he quickly discovered that he loved the treasury exposure that came with his role as the group’s valuations and treasury accountant.
“The nature of the work was very forward-looking,” he says. “And it felt like the things I was working on really added value to the company.”
Cooper also enjoyed studying for the AMCT, which he embarked on soon after joining 3i, and achieved Distinctions in all his exams.
“Coming from a finance background, taking on the treasury role was a pretty steep learning curve,” he says. “Having that treasury qualification meant that I was able to better understand the treasury products and technical skills involved.”
In 2012, an internal restructuring created the opportunity for Cooper to move into treasury full-time as an analyst. He was promoted to deputy group treasurer in 2015 and group treasurer two years after that.
The longer I have spent in treasury, the more I have enjoyed it
The latter move proved to be his most challenging transition to date, since the appointment coincided with another restructuring of the finance and treasury team, the birth of his second daughter and Cooper himself having to get into the mindset of “everything treasury is now my responsibility”.
He was also just 34 – young to be the group treasurer of a FTSE 100 company.
To add to the pressure, it was a busy time for 3i treasury across various areas. Regulatory developments impacting 3i as a financial counterparty for derivatives needed to be responded to.
3i had just sold its largest infrastructure investment, a non-sterling-denominated company, which had significant implications for the infrastructure fund’s FX hedging programme.
Treasury was also busy helping one of the companies in its investment portfolio with its interest rate hedging on a €2.3bn loan (it just happened to be the largest leveraged loan in Europe).
On top of that, the listed infrastructure fund’s £350m revolving credit facility was being refinanced on improved terms and the team was upgrading its treasury systems.
All round, it was a very challenging time, Cooper admits, but he survived, with valuable support from members of the wider finance team, and by focusing on what he could control rather than what he couldn’t, including eating healthily and exercising.
Looking back, what has he learned from the experience? “Seek advice earlier,” he responds. “I was working hard and building plans because I was focused on delivering. But I could have talked more widely and sooner to the experienced people in the business for some sage advice.”
Now that he’s more settled into his role as group treasurer, and developed an excellent team around him and stronger relationships throughout the business, Cooper is relishing the varied responsibilities that he has.
These relate to the two core businesses that 3i operates. The first is its PE business, which invests in mid-market companies, in the consumer, business and technology services, healthcare and industrial sectors.
“We find good businesses that we feel we can add value to through our expertise and network,” says Cooper. “Then we look to grow the business and realise the asset, aiming to double our money, typically over a four- to five-year period.”
Second, 3i has an infrastructure investment and asset management business that aims to generate both cash income and capital returns over the long term. The infrastructure business covers a range of sectors from communications through to transportation and utilities.
Cooper describes his role as “managing the financial risks of 3i and its funds”, which encompasses FX, funding, interest rates and liquidity. He also manages the group’s relationships with its banks and rating agencies, and provides treasury support to the CFOs of companies in 3i’s investment portfolio.
“I can really add value to those CFOs who don’t have treasury expertise in financial markets and risk management,” he says. “That secondary aspect of the role gives it quite a lot of variety.”
As 3i generates a significant proportion of its cash profits ultimately from selling businesses, its cash profile has historically tended to be what Cooper terms as “low volume, but high value”.
For this reason, the company keeps a large cash buffer for new investment, and its cash reserves exceeded £1bn at its March year end.
The group is also focused on covering its operating costs with management fee income, which mostly comes from its infrastructure business, and dividends, which are generated by some of its portfolio businesses. “So that we are not relying on selling businesses to keep the lights on,” Cooper explains.
When investing the group’s cash, Cooper takes a cautious approach.
“The nature of what we do is relatively high risk, so we want to be conservative with our investment strategy,” he says. “We very much prioritise liquidity and security. I don’t have any yield targets.
“Most of our cash is invested in the triple-A-rated money market funds. And then some cash that we feel we can lock up for a little bit longer is in notice accounts, with well-rated banks.”
Although 3i is a UK-listed company, its portfolio is international and most of its investments are in northern Europe and the US. Why isn’t it more heavily invested in its home market?
While it is on the lookout for opportunities, the UK mid-market is very competitive. Uncertainty around Brexit is likely playing a part in restricting the number of mid-market companies that come to market in the UK.
As a result, the good companies that are put up for sale tend to attract high levels of interest from the record levels of unspent capital available to UK and international PE investors, driving up prices. This makes it hard to find good UK assets at a reasonable price. “There’s a bit of a supply and demand imbalance,” is how Cooper puts it.
Brexit has also affected how 3i complies with regulation. “We prepared early for a no-deal Brexit and assumed the worst straight away,” says Cooper. “So, we set up a parallel investment management structure in Luxembourg, and if we leave the EU tomorrow, we could still operate as we do now.”
Then there is FX volatility to consider. Since 3i’s main listed fund doesn’t hedge its balance sheet, and its portfolio mostly consists of non-sterling-denominated assets, it has benefitted from the weakness in sterling since the referendum result.
Cooper acknowledges the risk that sterling bounces back unexpectedly high once the UK leaves the EU, but says that the group is comfortable with taking this translation risk and is very open and transparent with shareholders about its FX sensitivities and where the risk lies.
Nevertheless, 3i does occasionally choose to hedge the FX risk associated with its portfolio companies. One example is the Danish ferry company Scandlines, which the group owns as part of a consortium.
As a long-term hold asset transferred to a newly created Corporate Assets business line and one with lower risk-return characteristics, FX movements could potentially have a big impact on the return generated by the asset.
So, Cooper did some analysis that established how it could be beneficial to put an FX hedging programme in place. Shortly before Christmas he got the go-ahead for the programme from 3i’s CEO and FD, who wanted it set up as early in January as possible.
“I wasn’t very popular with some of our banking partners who had to dust off the credit lines and get things ready,” recalls Cooper, “but we managed it and it was a good team effort and profile-raiser for treasury.”
In June, the World Bank predicted that global economic growth in 2019 would be 2.6%, weaker than the 2.9% it had predicted at the start of the year.
Among the reasons that the World Bank gave for its downward revision were rising trade wars, renewed financial stress and sharper-than-expected slowdowns in several major economies. So, is Cooper concerned about the impact that changing economic conditions could have on 3i?
“We think we are pretty well positioned for an economic downturn,” he says. “A large proportion of our portfolio is quite defensively positioned, including our infrastructure assets that usually perform well through the cycle. We also have a strong balance sheet, with net cash of £495m at the end of the last financial year.”
Cooper adds that the company is “much, much better positioned” than it was before the global financial crisis, after which it suffered some heavy investment losses.
Given how much he has under his belt already, what should we expect next from the man who was identified as a rising treasury star six years ago?
Going forward, Cooper wants to develop himself as a leader and a manager. So, he is undergoing executive coaching with a view to honing his non-technical skills, such as influencing.
When he appeared in Ones to Watch in 2013, his long-term goal was to make CFO in an investment management firm. The goalposts have since moved, however.
“The longer I have spent in treasury, the more I have enjoyed it, and the more I think I will remain a treasurer,” says Cooper. “I think it is important to stay flexible with career progression. What’s most important to me is that I’m continuing to learn and develop, and I am engaged in what I do.”
What I value most about the ACT is… the information and network it provides, whether through conferences, webinars, emails, online content or The Treasurer.
These sources are crucial to ensuring I keep up to date with the issues, risks and opportunities that relate to the technical side of my role. On the non-technical side, I think The Association of Corporate Treasurers (ACT) has done a great job of developing the Career Hub as well as its resources on soft skills and career development.
I enjoy reading up on personal development and this has been a useful resource for me. I also found the AMCT qualification very valuable when I was transitioning from my accounting role.
What I like best about treasury is… the fact that we can really add value to a business through our specialist knowledge of how to manage risks that arise from operating within financial markets that are impacted by real-world events in real time.
In treasury, we are able to use this specialist knowledge to lead or steer decision-making on a wide variety of issues. Other great benefits from working in treasury are the network that you can create from working with banks, lawyers and advisers and being able to share ideas with peers.
The person who has most inspired me in my work life is… not just one person. I have been inspired by a number of great people whom I have worked with over the years.
Some had the ability to handle company restructurings delicately or to execute company strategy in a disciplined way. Others were dedicated to self-improvement or distinguished by their happy and positive outlook in almost all situations.
2017–present Group treasurer, 3i Group
2015–2017 Deputy group treasurer, 3i Group
2013–2015 Various treasury roles, 3i Group
2013 Featured in Ones to Watch, a special publication by The Treasurer that highlights the treasury stars of the future
2010–2013 Group finance, valuations and treasury accountant, 3i Group
2005–2010 Audit manager, financial service group, investment management department, Deloitte
AMCT (2012)
ACA (2008)
Ones to Watch 2019 will be published later this year.
Sally Percy is a freelance business and finance journalist
This article was taken from the August/September 2019 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership