If there was any proof required that treasury is a constant source of surprise even for the most seasoned in the field, witness the last few years in Henrik Fries long career. As Group Treasurer for Ingka Group, made up of flagship IKEA Retail – in 32 countries with millions of customers around the globe – Ingka Investments and Ingka Centres, leaving Russia after the 2022 invasion of Ukraine proved one of the most challenging periods of his career.

Like many large Western firms, IKEA closed its Russian retail operations shortly after the Russian invasion of Ukraine and finding a buyer for its shopping centre portfolio proved challenging. As financial markets and sanctions markedly tightened, it was problematic settling the transaction, including finding an appropriate financial institution to support the payment and managing all the FX risk that comes with a large payment in a foreign currency.

“Exiting the business quickly in Russia was simply not possible,” says Henrik Fries in an interview with Treasury Today from the company’s treasury headquarters in Dublin. “Divestment of the entire Russian portfolio of MEGA shopping centres took time as it was a sensitive, highly complex and confidential process. This was due to the scale of the portfolio, operational complexity, the regulatory landscape and the importance of MEGA shopping centres to the people and communities.” Ingka Group finally completed the sale of its Russian shopping centres in September 2023.

Until Fries played his part in Ingka’s departure from Russia, he’d have put navigating the pandemic as the most testing time in his career. Although IKEA has a store in Wuhan and “knows the place,” the treasury team didn’t realise the scale of the crisis unfolding, and it was the company’s banking partners who first sounded the alarm.

In the first eight weeks of the pandemic the company drained a significant amount of its net liquidity, unprecedented for the cash-rich company, primarily backstopped by a cash and carry model.

“There was nothing coming in. However, our financial approach is based on 80 years of earning money before we spend it. We think in generations not financial quarters. Money is saved for rainy days,” he says.

Ingka had hardly ever drawn on its short-term credit facilities with its core banks. Treasury engaged with the company’s banks and credit was not an issue, but the team also identified alternative options.

Ingka’s growth is primarily funded by its own means; it has a large store of excess liquidity which is mostly invested in investment grade bonds. However, accessing funds in the capital market by selling bonds wasn’t simple at the initial stage of the pandemic.

Treasury found a solution via establishing repo lines with its core banks whereby it lent bonds to banks which, supported by similar facilities with the ECB, lent to the company. “We weren’t forced to sell [bonds] at a discounted price. We were able to use our banks credit facilities and our bond portfolio to tap repo facilities. It was a very educational process.”

Constant learning

That appetite to learn has been a constant seam through Fries career and was the reason he went into treasury in the first place. After graduating from Copenhagen Business School, he joined the capital markets team at Danske Bank. Four years later in 1992 he jumped ship to Morgan Stanley’s capital markets team, moving to London to serve the bank’s Scandinavian clients amongst which was the fast-growing IKEA. “I think IKEA retail sales then was about US$7bn then. It’s approximately US$45bn today.”

As the company grew so had its excess liquidity, and soon the finance team began scouting for someone to manage its financial risks. It wasn’t long before Fries’ daily contact with Ingka’s finance team from his desk at Morgan Stanley led to a job offer.

He says leaving banking to join a corporate was a surprisingly easy decision. Not only did he feel the pull of his Scandinavian roots draw him to the region’s best-known corporate. He also wanted his two young children to benefit from growing up in rural Belgium where he would be based for the next 20 years. “We decided this would be a better work life balance,” he said.

Other factors were also at play. He had begun to feel constrained in a bespoke investment banking role. The appeal of joining a growing company with an expanding remit won him over. “I stopped being a specialist in one area and became a generalist,” he says.

Over the years Fries has worked in activities related to treasury and corporate finance. He started out in Ingka’s internal bank in Belgium before moving into investment and financial risk management, where he was responsible for overseeing the company’s FX, interest rate, credit and liquidity exposures. As the company accelerated its expansion, he established a US private placement funding programme.

Additional milestones include making Group Treasurer in 2011 and steering and transforming treasury activities where the lion step has been establishing Ingka’s Financial Asset Management and in-house bank (IHB) a Centre of Excellence (CoE) in Dublin, where his family has lived since September 2016.

I am focused on delivering to the IKEA vision of ‘creating a better everyday life for the many people’.

Career highs

Many of the career moments Fries values most are achievements that have come about over the long term. Like the enduring pride he feels seeing co-workers grow and supporting the growth of Ingka’s balance sheet with financial risk management.

He can’t hide his pleasure in a recently completed, sweeping consolidation and transformation of the Irish operations which operate Quantum and Trax from FIS, and Aladdin from BlackRock. “It’s been a fantastic journey and I feel so proud to have had the trust of Ingka Group Management to carry out this transformation and deliver on our targets.”

The technology piece also continues to evolve. The company is in the early stages of integrating a new ERP with SAP. He is also beginning to introduce AI, notably in liquidity forecasting where the team’s three data scientists use predictive analytics.

Another focus is Continuing Professional Development (CPD) for co-workers with the objective of building an ‘Advanced Treasury’ for the group which also includes a broader treasury knowledge regarding the company’s climate transformation plan.

To encourage innovation and creativity, each of his team are allotted six days a year as CPD days with the objective to up and reskill and stay relevant for the treasury mission. “So much of our learning is on the job as we run a lean treasury. We must embrace change and giving co-workers the time to learn on a 70/20/10 framework is essential.”

Fries values the importance of people and relationships in treasury just as much as the latest IT. It manifests in his deep relationships across the business and outside the finance function that offer valuable insights into where the company is moving next.

For example, he has a ‘seat around the table’ regarding significant investment decisions including decisions related to direct investments in renewable energy, backstopped by the company’s commitment to 100% renewable energy consumption across its value chain. “You need a seat at the table to see where a company is heading. Don’t be isolated – it’s very important as Group Treasurer to have close cross functional engagement,” he says.

Future focus

Current tasks at hand include drawing on his capital markets expertise to decide whether equity or debt financing is the best corporate financing solution to fund expansion. Although equity finance would be simple, repatriation costs in emerging markets could make debt financing easier. On the other hand, he’s aware debt financing could get costly if the investment takes a while to earn a return. “Corporate financing in markets where there is regulation is occupying us a lot,” he reflects.

Fries’ commitment to sustainability is a constant seam to the conversation. After world peace, one of his most cherished wishes is that the world aligns to the Paris Agreement and treasury is actively involved engaging the company’s banking relationships on their own net zero commitment. “Sustainable treasury is not just about using funding arrangements for renewable assets, it’s about the entire ESG agenda including EDI,” he says.

Fries’ optimism in the future is knocked by a palpable sense that the world is going into reverse, manifest in geopolitical and climate uncertainty, and the cost-of-living crisis. His response is to navigate unknowns with a strong focus on being authentic and honest to himself and his co-workers, and creating a work environment where psychological safety is key.

In a fast changing and difficult world, where pandemics and wars have become familiar treasury territory, Fries’ North Star remains supporting the purpose and expansion of the business he loves.

He concludes with a nod to a corporate strategy which measures performance by more than numbers alone. Ingka Group’s four value creation areas focus on better homes and better lives for the company’s customers and co-workers; a better planet for all and a better company now and for future generations.

“I am focused on delivering to the IKEA vision of ‘creating a better everyday life for the many people,’” he concludes.