After achieving both his Bachelor of Technology and Master’s degree in Petroleum Engineering, Amit Singh began his career as a Petroleum Engineer at Schlumberger Oil Field Services in the Gulf of Mexico. At the time, he wasn’t even aware of treasury as a potential field. With Schlumberger offering a rich background for developing effective leadership skills, and having risen to the top of the engineering ranks in just five years, Singh decided to go to business school to develop his growing interest in corporate finance.
“I had every intention to come back to the oil and gas sector after my MBA,” he explains. However, during his studies he learned that a finance role can be industry agnostic, and so he searched for and selected a strong corporate finance programme at Pfizer. The programme rotated candidates through various finance departments, one of which was the treasury team in Dublin, Ireland. “I was really hooked. The main draw was treasury’s combination of analytics and technology, both areas of interest for me,” he says.
In his current role as Group Treasurer at Takeda Pharmaceuticals, Singh explains that his responsibilities include the “usual three treasury pillars”: capital markets, treasury operations and financial risk management. He also manages the global insurance programme, as well as overseeing pension investments.
“What makes this role particularly interesting to me is its strategic nature, given Takeda’s current situation,” Singh says. Indeed, In January 2019, Takeda Pharmaceuticals completed its US$62bn acquisition of Shire PLC, considerably increasing its leverage.
The company is now focused on paying down its debt and improving its balance sheet, which Singh describes as “a sweet spot for treasury”. Despite the challenges posed by COVID-19, he is optimistic about the treasury team’s progress, and notes that the company has been steadily deleveraging itself.
When it comes to the new, strategic role of treasury, Singh says, gone are the days where corporate treasury primarily meant cash management. “These days, CFOs look to their treasury team to help them achieve the company’s key financial goals, which differ greatly by industry and company-specific factors,” he says. For example, treasury solutions employed by a cash-rich, highly rated pharmaceutical company bear little resemblance to those needed at a highly leveraged, low margin consumer goods company. “The pharma company may not care for the FX impact on their high margins and may be able to manage without an FX hedging programme, but at a consumer goods company, doing the same may lead to an existential crisis.” It’s the treasury team’s job to recognise such factors and suggest tailored solutions to the CFO. “Only a strategically-thinking treasury team can do this,” says Singh.
The ongoing COVID-19 pandemic has brought new strategic challenges – but again, says Singh, these vary across industries. “Treasuries at hard-hit airlines and in the hospitality industry are in liquidity crisis, and securing funding for the next several months of cash-bleed is likely at the top of their mind,” he says, adding that this is likely to involve negotiating covenants with bankers and drawing upon revolvers, while planning to issue long-term debt. In other industries where the impact has been less severe, Singh says treasury teams may be in a “monitor and wait” mode, instead focusing on working capital and conservation of cash.
Adapting and thriving
The current global situation has proved challenging for many, as teams work from home – some for the first time. For Singh, one of the biggest realisations has been on the importance of keeping a team motivated and engaged. “I take the professional challenge of keeping Takeda’s treasury excited about the team’s direction very seriously,” he says.
According to Singh, this is done in a number of ways. The first is to secure agreement as a team to continue to strive for improvement in systems and processes, while acknowledging “that there is not an end-state at which we will stop completely.” This ensures that there is a steady stream of projects to work on that stretch the team beyond their day jobs. As Singh observes, “a learning team is an engaged team.”
Secondly, where traditional treasury management is concerned, Singh directs the team to plan and model many more transactions than are actually being executed. For capital markets and risk management, this keeps team members on their toes and reduces the chance of missing a fleeting market opportunity. “We also try and rotate the team members across treasury to keep developing everyone,” he adds.
Finally, Singh says the team often goes out to meet other treasury teams in order to benchmark themselves against the best in class. “I have discovered that when we get a chance to meet external treasury teams, we get to see new fact patterns and new treasury solutions deployed in other industries,” he explains. This allows a new perspective on how things can be done differently, and why certain industries tend to deploy particular treasury solutions.
A Top Treasury Team
Singh’s method is clearly one that works well, as the team scooped the award for Top Treasury Team in the 2020 Adam Smith Awards, as well as being named Overall Winner in the Best Trade Solution category, and also Highly Commended Winners in both the Best Risk Management Solution and Best Short-term Investing Solution categories.
The Top Treasury Team accolade came as a well-deserved recognition of the company’s monumental achievements following the acquisition of Shire in January 2019. Singh led the legacy Takeda and Shire treasury teams in their integration efforts, having only joined the company several months prior. His first task was to form an integrated team, which meant tackling the geographic challenge of having a 40-person combined treasury team spread across four time zones.
There were multiple issues that needed to be addressed, including governance and policies, risk management systems, IT systems and liquidity, leverage management and cash visibility. After several months, Singh selected his new 28-person treasury team and worked on keeping the best of both companies’ policies.
Before the acquisition was even complete, Takeda’s CFO, Costa Saroukos, identified corporate treasury as a function that would be key to the company’s success. As such, it was essential to have a treasury team that was efficient across all fronts. One year on, and Singh has delivered on that. Treasury is functioning as an integrated global team out of Tokyo, Zurich and Dublin, having dismantled the historically siloed legacy regional treasury centre (RTC) approach, where each RTC only managed regional activities. To do so, the team had to bridge many of the cultural divides that often derail Japanese integrations.
Learning on the go
When it comes to his career, Singh has been the SVP, Group Treasurer at three companies, two of which have undergone acquisitions. In addition to the Shire acquisition, Singh was working at Jarden Corp when it was acquired by Newell Brands.
Including his first role at Schlumberger, Singh notes that he’s had the “good fortune” of working across three industry sectors: oil and gas, pharma and consumer goods, as well as across the credit spectrum (AAA to BB rated). “This has opened my eyes to the fact that different things matter to different companies/industries, depending on their balance sheet, profitability and strategic goals,” he says.
While working at an AAA-rated pharmaceutical company with high profitability and low leverage, Singh noticed that treasury’s focus was on managing the company’s US$50bn+ cash portfolio – much like a large hedge fund. The treasury IT infrastructure was already strong, but this meant he had little opportunity to learn how to build one from scratch. “They were also doing large M&As and spin-offs, all of which were great opportunities to learn when these one-off events occurred,” Singh says. “However, given their financial heft, corporate treasury’s direct impact on the company was not hugely strategic on a day-to-day basis.”
In contrast, at BB-rated Jarden Corp, which had low profitability and high leverage, managing the cash flow was paramount – and there was a risk that failing to do so could lead to an existential crisis. “Similarly, FX hedging to manage their comparatively weak margins was super critical, and developing their weak IT infrastructure was a must,” he explains.
It’s this variation that has meant Singh has learned many lessons – all of which have helped prepare him for his current role at Takeda. He notes that he sometimes sees treasury colleagues become very specialised quite early in their careers, for example in capital markets, risk management or treasury operations. “While there is nothing wrong with a career in those treasury sub-specialisations, it is hard to progress to a treasurer’s role without having a good all-round knowledge – and plugging your knowledge gaps,” he says.
Consequently, Singh says, a company like Takeda is a “sweet spot” for treasury professionals. “We are a strong BBB-rated firm, but also one where treasury can make a strategic difference day-to-day,” he says. For example, the team recently completed a US$11bn refinancing exercise that has positioned the company strongly for the next few years. They also negotiated Takeda’s global banking covenants and harmonised them across all types of debt instruments. “We are developing our IT infrastructure, which is making a clear and quantifiable difference to our balance sheet,” he adds.
Strive for improvement
It’s not just technical treasury skills that Singh has learned. He lists three main lessons that he has cherished throughout his career. Firstly, he says, “It is very hard to progress in your career by simply doing your current job well. You need to constantly improve yourself and strive for more responsibilities.” Singh suggests that in order to stand out, an individual needs to go beyond their current role, learn new things, ask for new projects, develop financial modelling skills and in general, build an aura of credibility around themselves. “In other words, bite off more than you can chew – and then chew it anyway.”
Secondly, he says, “Hard-working team players trump individual superstars every time.” And lastly, “More projects fail due to poor communication than for any other reason. There is no such thing as ‘over communication’.”