Efficiency wins

Sayan Mukherjee, VP, Group Treasurer at semiconductor manufacturer Nexperia, discusses how he is positioning the company for growth and his key treasury priorities.

Sayan Mukherjee, VP, Group Treasurer at semiconductor manufacturer Nexperia has been a constant source of stability during phases of change and growth at the company. He is a steady hand in a firm working in a sector buffeted more than most by cyclical ups and downs and currently in the grip of fiercely tight supply. The company has also been sold twice during his tenure.

In 2017 Netherlands-based NXP Semiconductors divested its standard product business unit to a group of private equity investors who named the new unit Nexperia. Two years later, Nexperia was sold to Shanghai-listed Wingtech Technology. Under Wingtech’s ownership, Mukherjee is now overseeing Nexperia’s group treasury function and an ambitious growth trajectory.

Mukherjee arrived as head of treasury at one of Europe’s fastest growing tech companies when Nexperia’s former CFO offered him the opportunity to carve out and establish a global group treasury function, persuading him to leave his job as finance director and controller at NXP’s Manchester operations. Four months of immediately thrilling, and instinctive, learning the ropes at NXP’s Netherlands-based treasury followed. “They were long days with lots of challenges, but I loved it from the start,” he recalls.

Once at the helm, his first priority was getting a handle on cash forecasting and the company’s cash position, ensuring Nexperia could begin its journey smoothly as a new company, “We were a new company; it was essential we could meet our stakeholder commitments and establish credibility.” Control of the company’s cash position enabled an early treasury win. Nexperia refinanced within the first year of operating, significantly slashing interest payments on its debt and raising US$800m. With a tailwind of keen bank support and an emerging brand, the inaugural refinancing was well oversubscribed. “It was the first big ticket item that I led with our CFO, legal team and banks,” he says.

Leveraged buyout

It wasn’t long before the next challenge appeared on the horizon. Nexperia’s private equity investors sold the company to Wingtech Technology, one of the world’s biggest contract manufacturers of mobile phones, intelligent devices and 4G/5G intelligent terminals via a US$5bn leveraged buyout. Mukherjee oversaw a huge round of bank fundraising and set up a revolving credit facility to put a US$1.5bn financing in place. “We borrowed money at the lowest possible level,” he says, detailing how the process once again optimised cash and brought down the company’s debt. “Our tag line in the company is efficiency wins.”

It isn’t just efficiency that has reaped success. Mukherjee attributes much of the credit of both those early transactions when the company was sold, and then sold again, to the trust his small team had with Nexperia’s changing stakeholders and management team. “There was a lot of confidence from the CFO and management team in our treasury.”

Semiconductors

Today, cash is king once again, as he readies treasury to support the company’s growth ambitions. Most recently visible in Nexperia’s purchase of Newport Wafer Fab, Mukherjee is primed and ready to support more growth head. “We have a lot of dry powder.” He adds that the company has come out of the pandemic in a strong position. Production continued, and with inventory on hand when demand spiked in 2021, revenue and cash are rolling in. “We had confidence the market was going to come back; the sectors we play in are all in long-term growth.”

Keeping your pencil sharp

Liquidity is also fundamental to treasury’s ability to support Nexperia’s diverse customer base and supplier relationships. Nexperia sources wafers from foundries in Asia as well as its own front-end factories in Hamburg, Manchester and now Newport. Long-term relationships with these suppliers, as well as customers, are grounded in strong partnerships that hold steady through the industry’s ups and downs, recently accentuated by the pandemic.

For example, treasury must be ready to step in and provide liquidity to suppliers like pre-payment support or new payment terms when needed and his team is in constant collaboration with both internal procurement and external stakeholders. “Treasury has a role nurturing long-term relationships to help manage our supply,” he explains. “You need to understand the levers in treasury, and how these can be used to support customers and suppliers. It requires being alert and conscious of the risks.” He adds that supporting customers and suppliers is a live, constant conversation. “I can’t just wake up one morning and provide support – you have to keep your pencil sharp.”

Banking relationships

Nexperia currently has around 14 global banks in its lending and services group, offering a mixture of cash management, FX services and financing. Should he need to tap financing in the future, he says he has strong relationships and support on hand, describing the company’s bank relationships as steeped in “mutual trust and growing confidence in Nexperia’s credibility and ability to support growth.” He adds, “People want to partner with us; we are well known in the banking space.”

Hedging

Mukherjee oversees a range of hedging policies including P&L hedging and interest rate and balance sheet hedging – including a euro-denominated loan. Strategy is shaped around “total analysis” of the risk whereby Mukherjee anticipates every possible scenario using processes and techniques engrained during his studies. From this, the in-house team designs a hedge that works “no matter what the turbulence” which banking partners then independently review. “Of course, you can’t capture all scenarios, but if you do enough due diligence, you can cover 90-95% of cases. If you only look at one specific risk, then you don’t look left or right.”

He also advises on keeping focused on the purpose of the hedge and what risks treasury is trying to hedge. He is wary of the costs of hedging long-term, hence his preference for programmes with roll over hedges. “We design a hedge from a pure treasury financing perspective,” he concludes. “It’s particularly important to review how it shows up in the financial statements – these are high value hedges and if you don’t give them the right treatment, it can create significant accounting issues.”

Rising inflation and interest rates have raised the profile of the hedging programme. “It’s not about taking risks,” he says. “We hedge to protect ourselves against losses.” His primary concern is that the US Federal Reserve and other central banks, worried about repercussion in the economy short term, have been slow to react to inflation. It could mean sharp rate rises ahead that threaten economic growth. “If we pursue incremental growth using leverage, if interest rates go up it could backfire in a big way unless we are protected with a hedging programme. We don’t want to find ourselves in a challenging situation in five years. My fear is the unknown, not the known. You can plan for the known.”

Tech investment

Liquidity is also essential to finance Mukherjee’s ongoing tech investment, something he views as a key tool to creating efficiency, minimising risk, and improving the quality of reporting. The company’s TMS automates all cash flow reporting and bank reconciliations, and he is poised to roll out a large scale, next-step SAP transformation. On a smaller scale, he keeps an eye out for opportunities to work with fintechs, particularly around using AI. Indeed, his treasury preference is to leave well alone if technology can do the job. “We are constantly looking at ways we can optimise technology. Where a transaction doesn’t need to be touched, it shouldn’t be.”

He is particularly enthused by big data and AI opportunities that promise to transform analysis in areas like suppliers’ account data and smart accounting, as well as predictive cash flow planning. “I am hopeful that in the next five years we will have credible software that can testify the assumptions we are making in our cash flow planning. With AI, we will be able to improve the way we work and keep our ‘house’ well organised.”

Mukherjee qualified as a chartered accountant in India and later picked up various financial qualifications in London. He worked in a variety of roles in India at HCL Technologies and IT and services group CSC before joining NXP in Manchester in 2008, just as the semiconductor group spun out from Philips. All his previous roles offered him the opportunity to apply the finance he’d learnt from textbooks to the real world, he says. “I don’t believe it’s always necessary to have done something before. If you go through the process, new challenges are entirely possible.”

It’s indicative of a self-belief he credits first to his parents, subsequently nurtured by teachers, and then memorably cemented by his former CFO, who encouraged him to take the group treasurer job at Nexperia. “He thought it would be a good challenge for me – if it was not for him, I would not have got this opportunity.” More recently, Wingtech Technology’s gruelling due diligence process which singled out his treasury for praise, has been another source of professional pride.

Mukherjee believes a successful treasury depends on always “trying to do more than is required,” a healthy dose of patience, working with strong partners and adopting a pragmatic approach when things go wrong. He says good relationships with all stakeholders, particularly legal teams for their “different perspective” and senior managers in relationship banks, are also essential, as is close cooperation with in-house colleagues. “Our senior finance colleagues are always my first point of call to discuss things and check that I am doing the right thing,” he says, adding he also works closely with finance colleagues in Wingtech’s own treasury team.

Amid all he’s achieved, he is most proud of building up a young, motivated treasury with intellectual curiosity to learn and a diversity that reflects his own. “I am a British national, born in India; my wife is Greek, and we live in Hamburg,” he laughs. Indeed, the diversity and social side of the job is one of the aspects he enjoys most. “I can speak to people representing five or six different cultures during the course of the day.” It has given him a cultural fluency and ability to read the most diverse of meeting rooms.

He concludes with a nod to the importance of intellectual curiosity and collaboration. An appetite “to learn on a continuous basis” is vital in treasury given fast changing regulations and technology while collaboration is fundamental to building networks and relationships. He also loves Nexperia’s can-do culture, free from bureaucracy and where it is possible to approach anyone within the organisation. “We are a big company, but we have the culture of a start up.” As for relaxing, he increasingly seeks out green spaces alongside spending time with his family. “It’s been an amazing opportunity growing a global company,” he concludes.