The Profile: Stephen Richmond, CFO Abris Capital
The Drawdown (TDD): You haven’t followed a typical route into CFOing - you were previously an investment director. How did you move into the CFO role?
Stephen Richmond (SR): In a way it’s full circle. Prior to entering private equity, I worked in operational finance in industry in the UK. When I moved into private equity, I was first on the investment side.
I joined Abris at inception in 2007. Prior to joining Abris and while I was on the investment side at a smaller fund I got involved with fund accounting, investor reporting and general fund administration management, so I had some exposure to this side of the business.
After two years at Abris the founders realised they needed to dedicate a senior resource to the whole investor reporting and noninvestment side of the business, and I was the obvious candidate. I agreed to come off the investment side, and the role I moved into evolved and ultimately, I became CFO, which was a newly created role for Abris.
TDD: How does your investment background support your current role?
SR: Apart from the CFO role, I’m on the investment committee, so that prior transaction experience is a benefit there.
We’re still a fairly small house, which means most of the team is based in one office. That allows a lot of day to day interaction with investment staff. I’m often the ‘filter’ for information flowing around investment activity to investors. So, when I’m speaking to the investment team about potential deals, performance and issues and current portfolio companies about valuations and so on, having been on their side of the fence makes that a lot easier. It helps me in identifying what’s really important, which distinguishes me from someone who hasn’t had that background, who might lose some of that context. It is a huge benefit.
TDD: How is Abris’ operational department set up? How much are you interacting with the wider firm?
SR: For context, we employ around 40 people in total. The funds and the manager are in Jersey, but the advisory business operates in Poland, Romania and Cyprus. Poland, where I’m based, is the largest office. I sit next door to the IR partner and the managing partner, and I have daily contact with the whole Warsaw team.
In terms of formal bodies, there’s the investment committee, and we have what we call a partners’ board, which is a mix of the eight most senior partners at Abris who meet regularly to discuss and coordinate the activities of the firm. Then there’s regularly another meeting of all the partners. Finally, I am on the board of the Jersey management entities.
We’re a small-ish firm and historically we had very few formal bodies, but that’s deliberately changing, with things like the partners’ board. We are formalising but we probably have fewer formal structures than some houses simply because the majority of the team are in the same office and can interact easily.
TDD: Are there any particular challenges or peculiarities of running CEE-focused funds, from an operational perspective?
SR: In the past there was a challenge in sourcing people with experience of private equity to do things like fund accounting and investor reporting, in a way that international LPs expect. In the past you had to rely on expats or outsource to firms in Western Europe. That’s changed as the industry here has grown and matured; the staffing issue is not a big problem anymore.
Generally, there are some products and services that are regularly available in Western Europe at an economical cost, that are either not available here or not economical. For example, transaction insurance; people have been promoting it here for a few years, we may have done it once, but when we look at it now sometimes it’s the cost, or insurers get cold feet. In practice, it’s not as readily available.
On the FX side, as we’re investing in a range of countries with all pretty much their own currency. People are paying more attention to FX hedging strategies than they used to and more sophisticated products are available now. However, I’m not sure in practice they’re as readily available or as cheap as they would be in the west.
Another example would be fund financing facilities; a product that’s common in Western Europe, but generally it’s a bit later here in CEE. Although none of these things make a material difference to us.
TDD: What are your greatest challenges at the moment?
SR: For me it’s bandwidth. The amount of recurring and ad hoc investor reporting demands, and other factors; the workload to deal with has grown a fair bit and that’s partly because Abris has grown to three active funds. It’s got to the point where for much of the year I have no time to do anything else, just the routine stuff that has to be done right. I don’t have time to get involved with new initiatives and we’re considering increasing headcount to alleviate this pressure.
Separately, investor appetite for the CEE region has declined in recent years, as most investors look to other emerging markets. But the reality is, if you’re selective in which part of the market you’re going for there isn’t too much competition for deals and there are lots of attractive deals. We think CEE is a good place for investors to put money, with the right manager targeting the right deals. We want to support the CEE region.
TDD: What is your main focus, or what would you like to achieve over the coming 12 months?
SR: I think we have always provided a high level of investor reporting and that’s gone through a couple of iterations. In order to maintain that position, there needs to be a constant refreshing of our investor reports. I’m working on improving this through automation and providing data in more user friendly formats. And lastly, provided things happen as expected, we would be expecting to launch the fundraising for fund four within the next 18 months or so. So, preparing for all the due diligence, the fund structuring and so on, that will be a fairly major project and one I’ll be very involved in.
Stephen Richmond is a Partner and the Chief Financial Officer of Abris. Steve joined Abris at its inception, initially working as an Investment Director. He assumed responsibility for all financial, legal and other operational areas at Abris, focusing on creating a professional organisation acting on industry best practices. Thanks to his and his team’s efforts, Abris has always demonstrated top quality financial, reporting and compliance standards.
When not busy with managing Abris’ financial affairs, Steve, a zoology graduate, devotes a lot of his free time to safari travel and wildlife photography. Prior to Abris, Steve was an Investment Director at Copernicus Capital where, after working for four years in Warsaw, he was responsible for the firm’s office and investment activities, initially in Zagreb and subsequently in Belgrade. Before joining Copernicus, Steve held senior management positions with several UK companies.