Who is Julia Wilson? From outside private equity firm 3i’s super-sleek veneer, group finance director Wilson is rarely seen or heard. She is one of the few FTSE-100 FDs who has not hitherto been wheeled out in press briefings to defend or cheerlead the numbers in the past couple of torrid years – and for 3i, they have been particularly torrid.
She declines invitations to be an active member of the Hundred Group of FDs and her voice has been conspicuously absent from 3i’s reporting materials, because she took time out to start a family some six months after becoming group FD in autumn 2008.
Once inside the castle walls, though, it is clear that the sheer volume of change, financial overhaul, management upheaval and business model transformation 3i has worked through since Wilson became group FD has ensured that people throughout the business know who Julia Wilson is. Her voice is fundamental and, through her teams, it resonates at all levels of the business.
Her team, surprisingly lean for a company with a £2.5bn market cap and £9.6bn in assets under management, numbers 50 finance people and doubles when it includes the tax, treasury, IT, property, group communications and investor relations teams reporting into her. Wilson’s skill has been to use those reports to ensure the finance function is as embedded as it can be in 3i’s operations.
The “finance and portfolio executive” programme she established in 2008 has given members of her finance team an opportunity to become mini CEOs – line managers of individual businesses 3i owns, from the time 3i takes a stake in it, through to exit. Those executives are responsible for ensuring the accounts for the companies they manage appear correctly in all of 3i’s reports and for working with 3i’s dealmakers, getting right into frontline operations.
“It’s a good way of motivating people to feel some sense of ownership of what they are doing,” Wilson says. The finance team is responsible for a number of assets that they will see through from the point of acquisition to the point of realisation and everything that happens inbetween. “It is still primarily a finance responsibility, but working with the deal team – making sure that when we buy and sell the asset, we record it properly on the books – attending business review meetings around the assets and participating in those discussions.”
In her opinion, restricting finance people to responsibility for single sets of accounts “runs the risk that they might just see the assets come in and out, without building up the level of knowledge that we would like to see”.
That approach has been helpful in managing the wholesale financial and operational transformation 3i has undergone in recession, as private equity dealflow has dried up and funding has disappeared. Having fielded criticism for being a meandering, bloated business –it slashed the 762 controlling stakes in companies across a range of industries and countries it held in March 2008 down to 198 by this May – it has concentrated in the last year on slimming down into three major lines of business.
“We are a relatively small organisation, but we touch in many places around the globe. Although we have reduced the number of portfolio companies, we have a relatively small number of employees and we encourage everybody to participate in the thinking around it,” says Wilson. “It’s the way to engage with people, so my team does a lot of work in terms of preparing the strategic plan and working through with the board in terms of how we set that agenda.”
Wilson believes that handing line responsibility to her finance people has had an impact on the quality of information she reports to the business and its shareholders. “In terms of our monthly reporting packs, with the way we were structured previously, I would see people trying to understand the same transaction many, many times over because the same transaction would be touching lots of different groups of people who had
responsibility for different sets of accounts,” she says. “Then you would see frustration from the individuals who were being asked to explain those same transactions over and over again.
But I haven’t seen that for a while. We’re still learning more from this way of working and how we can develop from it.”
While not especially inventive, Wilson’s decision to outsource portions of the core finance function, including accounts payable and some areas of accounting to Infosys in Bangalore, has freed up the finance team’s time to focus on this initiative. Politically, however, it was a sensitive move, sized up in the wake of the Treasury Select Committee’s 2007 probe into what value private equity brings to the UK economy versus the tasty tax breaks it has enjoyed.
“There was a fair amount of internal and external challenge to the idea [of outsourcing back-office finance functions]. There is a feeling sometimes that private equity is very complicated in the way that it does things. But I firmly believed that we ought to outsource,” says Wilson. “It has allowed the team here to focus more on the value add, working totally with the business, thinking ahead in terms of the increasing desire from shareholders for more information on our portfolio.
“There was a lot of discussion then about our transparency and what private equity was doing,” Wilson recalls.
Free to think
And she believes the change has stood 3i in good stead by raising levels of transparency, “in the way that we disclose information about the portfolio, by taking the true back-office functions and the transactional level of what we do to where we can tap into some good-quality people. It has freed up our people in the UK to think a bit more proactively about what’s next on the transparency agenda; what’s next for the information about the portfolio that people might want to obtain. It has freed them up to think,” she adds.
Curiously, though, Wilson can’t quantify how much money the arrangement has saved 3i since 2007, but is adamant that it saves on hidden costs in recruitment and staff turnover.
The creativity comes in where 3i may be able to replicate the Infosys model to create a new revenue stream, or at least save its portfolio companies money. Wilson is pondering a way 3i could export its own in-house finance expertise to some of the companies it controls, becoming an outsourced service provider in its own right. As the pressure bears down on 3i to prove that the companies it buys are sold on bearing greater value, financially and otherwise, than they did at purchase, the hunt is on for ideas to turn its pool of skills into marketable value.
“We are placing a lot of emphasis now on what we call active partnership – working with our portfolio companies to ensure we add value. One of the things we are thinking about is whether my teams can actually add value to that active partnership in working with the portfolio companies,” says Wilson.
“It could be that one of the factors that might lend itself to a particular company is outsourcing: whether that would be 3i assisting on the treasury front, or maybe giving some sort of advice around procurement, for example – there could be areas that we can help with. There are a number of things we need to think about as an organisation that come from the way 3i operates.”
It’s hard to pick holes in that proposition. But remember that 3i has not made changes by choice alone: the past 18 months have seen it undertake a £732m rights issue, oust its chief executive and former FD Philip Yea, lose long-standing chairwoman Baroness Hogg to the Financial Reporting Council, and suffer a punishing fall in net asset values, the yardstick by which private equity companies judge their value. The business had to shed its skin in fundamental ways to survive.
The finance and portfolio executive programme somewhat echoes elements of Wilson’s own experience in finance. She is a tax expert by training, who spent her first professional decade after qualifying heading up the tax departments for Hanson, Tompkins and then Cable & Wireless. But far from simply loving to fill in tax returns and arguing with HM Revenue & Customs, she saw it as a way to be very close and indispensible to business at the top end – and still does.
“Tax as an entry point does, in the right role, give you access to the whole breadth of the organisation. If you are going to be effective as a tax person, you need to understand what the business actually does,” she says. “So you need to be close to the business: whether that is as an investor or whether it’s setting up telecoms contracts with big business, you need to understand that and you need to understand the strategic development of the business. There is no point in putting a big tax plan in place, then finding that your CEO wants to move to Hong Kong,” she muses. “Tax gave me that opportunity, touching all sorts of points in the organisation, even if you are apparently in a specialist role. And there is a responsibility on finance people to make sure they get out of their specialism… we are not here just to process numbers.”
Taking the top job?
If there was ever an FD who could not dodge the question of whether her grand plan is to become CEO one day, it is Wilson, whose current chief executive Michael Queen was her FD until Philip Yea’s departure last January. Yea was himself the FD before Queen, and the CEO before him had been 3i’s FD as well. Given this pattern, Wilson’s breadth of commercial and board-level experience, makes the question seem largely rhetorical.
She swerves it nonetheless, with the FD’s classic pragmatism – too many challenges in the current job to think about it, not long enough in the FD job to know yet, and so on.
She does hint, though, that she may prefer to go one better than CEO for her next gig. “I didn’t know the last three CEOs had been our FD,” Wilson admits. “You see a number of FDs going on to become CEOs now, but equally, you see them going straight up into the chairman route. A lot of these things go in cycles. You get more focus on finance when there is more of a challenging environment, then move to more of a preference for operational expertise,” she adds. “So you move between companies wanting operational experience to them wanting a controller who really understands the numbers.”
She pauses. “I am not that long into the role yet, so I haven’t thought beyond that.”
Wilson says what has excited her most about being an FD in the private equity world is change – responding to strategic shifts and challenges of the kind that happen when busy planning other things. “If I think of the opportunities I’ve had, how I got to where I have got to, they have all been about me being in the right place when opportunities came up that might not necessarily have seemed like opportunities at the time,” she recalls.
“Funnily enough, thinking back to joining Hanson, which was a big powerhouse industrial conglomerate taking over companies, a number of my peers had left and gone into the accountancy profession or joined other companies that were being taken over… I thought ‘oh yes, Hanson is not going to get taken over so that’s fine’. But in a very short period after joining, they announced the demerger. “Some people might have thought it a disaster –‘here I am, my first job in industry and it’s breaking itself up’,” she says. “I just thought it was a fantastic opportunity. I was going to work out exactly how this company was put together because I had to work out how to take it apart, and that’s the sort of thing that I really relish.”
She says her timing in joining Cable & Wireless just as the dot com bubble burst could have been said to be bad. “But the crash generated a high degree of activity, challenge and strategic change within the organisation that I find really interesting. A degree of strategic change is something that has characterised all the things I’ve done.”
As Wilson also thinks her industry has another 18 months to play out the conversations around the pricing of buyout deals, its levels of transparency and the big “what are we” questions, she has found herself in the right business at the right time.
This article first appeared in the September edition of sister publication Financial Director
Name Julia Wilson
Qualifications ACA, CIoT
2008 Appointed group finance director, 3i; member, group risk management, operational risk and financial risk committees, and 3i’s board committee for valuations
2006 Joined 3i as deputy group finance director; responsibility for group finance, taxation and treasury
2000 Joined Cable & Wireless as group tax director, promoted to director of accounting services, then group director of corporate finance
1999 Group head of tax, Tompkins plc
1996 Deputy tax manager, Hanson plc
1990 Qualified at Arthur Andersen, tax
Wilson has been fundamental in establishing the role of the finance and portfolio executive, a role in the finance function that places its accountants within 3i’s buyout investment teams driving the delivery of commercial targets.
A finance team member takes line responsibility for one or more of 3i’s portfolio businesses, from purchase to sale.
The programme elevates finance team members who have commercial knowledge and want to build experience communicating across the business well outside the finance function. As well as taking responsibility for instigating, leading and maintaining communication between 3i and its portfolio companies, they also lead those efforts with its outsource providers to ensure that data and financial information requests from portfolio companies are delivered on time and that the data delivered is accurate.
But it goes further. These executives are responsible for the signoff of statutory and internal allocation accounts on portfolio companies and for regular business and investment reviews of those companies, for communicating the findings with the business and for investor reports. As an opportunity for someone intent on being the next Julia Wilson, it’s a rare opportunity.
“Sometimes, as we stretch the boundaries of what people might want to do, They might need more coaching or more training, but there is nothing more rewarding than actually doing something to gain the experience,” Wilson says. “Not to say that people don’t have a traditional day job as well. But if we can actually free people up to do a bit more of that type of thinking, it’s very helpful for the business.”
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