AECI’s treasurer: “…I don’t feel we have overpaid these banks”
In an interview with Euromoney, the group treasurer of South Africa-based explosives and chemicals group, AECI, shares his views on managing the company’s treasury operations, planning for international expansion, banking relationships and the prospect of adding international banks to its roster.
Trevor Starke is group treasurer of AECI (African Explosives and Chemical Industries), a commercial explosives and specialty chemicals company operating in the mining, quarrying, construction and manufacturing markets of Africa and beyond. He has overall responsibility for the treasury function, corporate centre accounting, payroll and office management. Starke joined AECI in 1997 and its treasury in 1999.
In a quick-fire interview with Euromoney, he answers questions on the strategic importance of treasury, managing the operation, the single most challenging piece of regulation his company is facing, and the role and service provided by the company’s relationship banks.
How strategically important is the treasury function to the growth and development of your company?
Treasury is responsible for securing adequate access to funding for day-to-day operations and obtaining best prices for forex and interest rates for the SA [South Africa]-based entities.
In addition, a treasury [office] based in Mauritius manages cash generated and maintained outside of South Africa. AECI’s growth strategy revolves around continued expansion in Africa, together with further expansion into southeast Asia, as well as LatAm.
Treasury plays a vital role in securing and managing funding for this expansion and also the forex and interest rate implications of this funding. We have a strong focus on working capital management, which is also coordinated by the treasury.
We are currently in the process of creating additional funding capacity by way of access to debt capital markets through a DMTN [domestic medium-term note] programme, thereby freeing up bank lines for anticipated international expansion.
Treasury activities are centralised at a corporate level in order to gain maximum pricing leverage as well as control of group activities within SA. Funding for international expansion is similarly centralized at corporate level in SA, whereas any surplus international cash is managed through the Mauritian-based treasury. The corporate office uses a treasury system and various banking portals to manage the treasury activities and communicate these with the group and banks.
International expansion into almost 20 countries has meant that we need be aware of and up-to-date regarding a myriad of legislative requirements, particularly tax regulations and the requirements of central banks, including the SA Reserve Bank.
A number of our relationship banks have definitely helped by way of advice regarding country specific risks as we continue to expand into new territories, as well as efficient integration of these activities onto banking platforms; consequently I don’t feel that we have overpaid these banks.
I feel there is greater competition among relationship banks, and the advice we receive is at least as good as before, if not better. In part this is a result of long-standing relationships with a very good understanding of where the AECI Group is going and what its requirements are.
The core group has remained the same, although we are contemplating the addition of some additional international banks.