The challenge

Capricorn Energy PLC was left with significant surplus cash balances and it was looking for a solution that allowed the company to easily and safely diversify cash holdings across multiple high-quality names and products, whilst maximising the return on this cash in a rising interest rate environment. Capricorn prides itself on detecting themes and trends in the treasury space, and for finding innovative and time efficient solutions and this was no exception so the company looked to address the opportunities.

The solution

Capricorn Energy PLC implemented TreasurySpring, which involved onboarding and approving a new fintech provider, whilst managing multiple stakeholders.

“Everyone knows how challenging it can be to implement a new provider at a large corporate so this was no mean feat – but it was totally worth it here,” says Robert Scriven, Treasury and Financing Director.

Since doing so, the company is now able to maximise the return on its cash with little treasury effort whilst not compromising its number one goal of capital preservation – by accessing secured exposure to banks, sovereigns, supranationals and agencies (SSA), and government risk.

Capricorn Energy PLC now has access to over 500 short-term cash investment options across multiple currencies and tenors; enabling it to significantly expand its investable universe.

By using TreasurySpring to ladder cash between different maturity buckets ranging from one week out to three months the company is able to effectively manage its liquidity and counterparty risk.

Best practice and innovation

Using this platform has opened the door for Capricorn Energy PLC to invest excess liquidity in the same way as the world’s largest and most sophisticated treasury functions, without the need for any of the lengthy setup and legal processes, infrastructure or connectivity typically required to do so.

The company has accessed secured exposures to banks via repo; giving better risk adjusted returns than previously available. The company utilises a laddering technique to term cash across multiple maturity buckets to make the most out of rising interest rates.

“We have also opened up access to the SSA market, enabling us to place cash with multiple government like institutions,” explains Scriven.

Key benefits

• Process efficiencies.

• Return on investment (ROI).

• Increased automation.

• Risk mitigated.

• Improved visibility.

• Manual intervention reduced.

• Much reduced legal and administrative effort and overall setup time.

Capricorn Energy PLC has streamlined an entirely new financial asset class, called a fixed-term fund, and this is optimised for the short-term financing markets. This is ideal for forward-thinking treasury departments that want to diversify. It not only allows the company to be ahead of regulatory updates, but also to take advantage of future benefits such as accessing newly onboarded banks. This has been immensely valuable as the company was able to implement this without the need to invest in a new financial infrastructure or using additional internal resources. By delivering a “one-click” access to the repo (secured financing) market for all institutions holding excess cash balances, Capricorn Energy PLC is democratising access to a sector that has historically only been available to the largest global financial institutions.