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CFO profile: Prem Mohan Raj, NorthEdge Capital

by The Drawdown 8 January 2018

Having joined NorthEdge in 2016 from Livingbridge, CFO Prem Mohan Raj speaks to The Drawdown about his first year in the role and his recent promotion to partner.

The Drawdown
: You joined NorthEdge last year, having spent more than 10 years at Livingbridge, and prior to that you were at Coller Capital – how did these roles come about?

rem Mohan Raj: I started out in private equity at Coller Capital, and when I was thinking about taking on that role – learning more about the industry – I talked to one of the partners at Livingbridge. A year or so later, that initial contact led to me taking on a role at Livingbridge.

I was with Livingbridge for a long time; it was a great place to work and I learnt a lot there. However, I knew the COO would be there for a while and I wanted to take on the senior finance role so moving on felt like the right thing.

We had a very open discussion about that and so I was able to speak to our advisors at the time about my next move. Livingbridge and NorthEdge have the same auditors, which was a really good way to reference NorthEdge; the audit partner was able to speak not only about the firm being at an exciting stage in its development but also about culture, fit, and getting on with the team as people.

TD: You’ve been with NorthEdge for more than a year now, how have you found it so far and what have been your main areas of focus?

Before I joined, there was a good CFO in place but they didn’t have specific private equity experience. This is normal in younger GPs, as the founding partners typically have accounting backgrounds, meaning they are able to pick up or support the finance role, and compliance function.

But, as NorthEdge is becoming more complex the partners felt it was increasingly important to have a PE experienced CFO to allow them to focus on their core investment and portfolio roles.

They already had a lot of good systems and procedures in place when I joined so the first thing I focused on was strengthening the team, which I did by bringing in an experienced financial controller.

Within the first week of my joining, NorthEdge had made its first investment from Fund II. Within the first two months, it had completed three investments from that fund, and within the first six months, it had also carried out its first two exits from Fund I. With so much activity we needed to strengthen the team.

The Manchester market doesn’t have many finance professionals with private equity experience but there is a deep pool of people with good accounting and finance backgrounds. So it was about finding the right person and then training them in PE.

The first six or seven months was very busy day to day; and that’s important when starting a new role – it’s about getting into the weeds early and really understanding the business.

I have since taken on more of the compliance function and I wouldn’t have been able to do that without focusing on the detail early on.

TD: How does the CFO role at NorthEdge compare with your previous role?

The main difference is having the number one finance role, which means getting used to making decisions frequently. It’s having the responsibility.

Another difference is being involved in partner meetings; being the person taking the partners through what’s happening at both the management company and in the funds. Being someone who helps run the business; giving opinions, presenting, debating – not just working on tasks.

It’s a subtle difference. I’ve worked on all of the building blocks previously, but now I’m also much more involved in new investments and our portfolio, so I’m closer to what’s going on.

And I’m more likely to go to investment committee meetings. I’m there partly with a compliance hat on, but also to better understand the investments from the outset.

I can also help out on investor relations, as I might be the first point of contact for some LPs. Finance and IR are always linked and without the dedicated IR role, the CFO must get involved.

TD: You mentioned you have taken on the compliance function. How was it being handled previously and how does taking on responsibility for it impact your role?

Previously, compliance was looked after by one of the founding partners with the help of specialised regulatory consultants and the CFO. When I joined, however, it was clear I would take this function on at some point.

During the first six months I was focused on getting my head around the finance function and building the team. Then, I began to take on more compliance responsibilities. It’s a natural fit, and it’s important to have someone independent from the investment team looking after it.

To start with, I shadowed the partner that had been dealing with it. And then after a few months, we went through the approval process and I formally became the compliance officer.

For all CFOs, compliance is taking up much more time. You need to keep on top of things and thankfully, there is good support and training from our regulatory consultants and bodies such as the BVCA.

Having an experience of compliance handling; it’s something that has always been adjacent to my roles at previous firms – that helped a lot in taking on the compliance function at NorthEdge. But now, having the overall responsibility is a major difference.

Legislative and regulatory changes are often known well in advance, so rather than changing or implementing procedures as part of someone else’s plans, I have to see what’s coming down the line and then figure out what the options are to deal with it.

There’s also an element of lobbying; thinking about how new rules might impact us. It’s important to be involved in that conversation. I think CFOs in private equity are generally good at this; it’s our responsibility to give our input.

TD: When speaking to COOs, CFOs and compliance officers, it would seem one of the hardest parts of compliance is getting the entire team to fully appreciate and understand the rules and regulations – how do you go about doing this at NorthEdge?

We recently ran a compliance training day, covering all the things everyone (investment team and support staff) need to know, and what’s coming down the line.

You need to stress the importance of how real it is. To understand the implications. It’s about getting the team to think about doing the right thing; they need to be asking themselves: how would people feel about my behaviour after the event? Would they understand my actions?

TD: Beyond the finance and compliance functions, what else are you responsible for at NorthEdge?

Another area I deal with is operations. We have two office moves happening at the moment; my part in that is taking overall responsibility for those as well looking at the budgets for them.

I also deal with IT systems. We recently moved everyone from Macs to PCs (it wasn’t a popular decision!).

Being a CFO at a smaller GP means you have to wear so many hats. As the firm grows you will have more support, and we’re moving into that stage. We now have a head of administration, who is able to offer a lot of support on operational issues.

TD: You recently became a partner at the firm. Was that always on the cards when you joined NorthEdge?

When first speaking to NorthEdge, I made it clear that I would like to be a partner eventually, but it wasn’t an explicit part of joining - I needed to prove myself first. But yes, it needed to be approached at the beginning to know that it was a possibility.

I’m pleased it has happened so soon. It shows we enjoy working together and that trust has been built.

I had been involved in presenting at partner meetings, so within six months of joining I knew there was a good relationship with the partner group. Then after my first year, I made a presentation, detailing what I could bring to the partnership and the business.

I had to think about what I could offer, what I’ve done so far, my views on the firm and what it needs to develop. That was a really good exercise to get used to the concept of being a partner, of getting in the right headspace.

TD: How has becoming a partner changed your role?

It’s nice to be recognised, and to feel valued.

Equally, people want to see that you are capable of doing the job before getting the title, so there’s an element to it of the role not actually changing that much.

The key difference is being involved in the partner meetings; thinking about how we run our business.

TD: After such a busy and successful first year or so, what’s your outlook for the coming year?

As always there’s a huge amount to do but it’s very exciting.

A lot of the growth of the business will be about institutionalising ourselves. There’s so much change and that won’t stop. That’s a sign of a good business (you don’t want to be stagnant).

I’m excited about the future growth – I like the change. There’s something new every month.

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