Listen to podcast
Each local entity managed its own payables and receipts, but Brink’s worked with its bank, Bank of America, to set-up a US dollar notional pool with the header in Hong Kong. Asian subsidiaries could call on the pool for funding, and surplus cash in the pool – anything over US$1m – was transferred to Brink’s global in-house bank (IHB) in Switzerland, where it could be used to pay down debt.
In 2020, Brink’s announced the acquisition of the majority of G4S’s cash operations for US$860m. For the lean treasury team, this presented a considerable challenge. In Asia alone, Brink’s would need to take control of multiple new entities across nine countries and consolidate them into its cash management structure.
Each new entity had to be separately acquired, a process made more complex by the fact that many were part-owned by other companies. The acquisition was across nine countries, with the process starting in March 2020 with the valuables transport businesses in Singapore, China, Thailand, Hong Kong and Australia, and ending with cash transport in the remaining countries including Malaysia, Indonesia, Philippines and Macau by February 2021. It was a massive project.
Fortunately, Brink’s treasury team was able to call on two important assets: the presence of its own small finance team in Hong Kong, and its longstanding relationship with its bank, which was able to help by deploying its own resources to expedite the process.
Between them, the Brink’s and Bank of America teams were able to manage the shift from more than 125 bank accounts held with more than 40 different cash management banks to one primary global banking provider in just 12 months.
A final step was to look at excess cash held by those businesses and move that into the IHB to help fund entities with cash deficits and pay down debt. In total, more than US$70m of cash was freed-up and moved to the IHB, paying off some of the debt incurred in the acquisition and saving an annual US$2m in interest charges.
By mid-2021, the process was complete for all the newly acquired businesses in Asia. Remarkably, Brink’s had added nine new businesses and around US$245m in revenues to its Asia Pacific operations without problems. What is still more impressive is that it had done so during the height of the COVID-19 pandemic and without increasing headcount.
Best practice and innovation
Both teams applied a strong programme management approach with executive involvement. A key risk management initiative was a FX hedging strategy throughout the lifecycle of the G4S acquisition, covering individual currency hedges that would be timed to ensure funds were available for drawdown before each acquisition while locking in an acceptable exchange rate.
Each newly on-boarded company now uses CashPro so they can see their own activity but not that of others in the group. Central treasury, however, has full oversight of all the cash in the region and can make decisions about when and how much cash to move to the pool, utilising global funds sweeping.
All these new companies were brought on-board without disrupting the business and client operations and, post implementation, more than 99% of transactions are straight through processed (STP).
Reduced fees and interest costs.
Improved control and visibility.
Freed up more than US$70m.
Increased standardisation, automation and STP.