The CFO as an enabler for corporate transformation

Helping the transition  towards stability

MANILA, Philippines - Last year’s rapidly changing markets substantively changed the competitive environment we face today and demonstrated again the importance of the Chief Executive Officer (CFO) while adding to his/her credentials mix another important variable: transformation enabler.

CFOs are taking on new roles that add greater value to their businesses and envisioning possibilities for change that will help maintain leadership positions or transition companies to stronger competitive positions. During the recent uncertainty and turbulence in the market, the CFO initially had to focus on ensuring the stability of his company’s finances. He had to make sure that his company has sufficient cash to finance programmed capital expenditures and to refinance maturing liabilities amidst a tight loan and capital market situation. He also had to ensure that the financial crisis will not cause too much damage to the company’s assets.

As the CFO does these defensive strategies, the financial crisis also unfolded so many opportunities that will not have been available in a normal market situation. To take advantage of this opportunity, the CFO has to forge stronger partnerships with his relationship banks so his company can continue to gain greater access to funds at still reasonable funding costs. During this period, banks like ING have been predominantly relationship driven in their credit decision process.

The CFO becomes both a strategic and financial adviser to support his company’s growth, as he is in a position to advise his board on his company’s ability to fund its strategic decisions, or to propose alternative strategic options that could rationalise your company’s funding needs and build a more sustainable capital structure and business. ING has helped its major clients identify, value and finance these opportunities. Most recently, ING advised Aboitiz Power in its successful bidding of the Tiwi Makban geothermal plants from PSALM. ING also served as a financial advisor to Bank of the Philippine Islands on its bancassurance joint venture with Philamlife.

ING also served as joint book-runner when San Miguel Brewery issued its P38.8 billion bond to raise funds to purchase the San Miguel brand and real estate from the holding company, San Miguel Corporation. The US$ 800 million-equivalent transaction represents the largest-ever corporate bond from the Philippines and one of the largest in Asia’s local currency bond market history.

The CFOs who emerge as valiant winners when the recovery happens will find their companies better positioned to ride the up-cycle growth and themselves in a position of influence. For instance, with access to funding sources which their competitors may not have, especially during recessionary times, they will be well placed to acquire attractive assets at more reasonable levels or collaborate with other businesses to capture synergies and change the competitive landscape in their industry.

Leading model for finance

ING’s partnership with FINEX in 2007 was borne from both organisations’ belief in the importance of encouraging and reminding finance executives that they are not merely cogs in a developing country like ours, but can be a powerful force in pushing for economic and social progress.

Going into the third year of ING’s partnership with FINEX on the Search for the CFO of the Year, our commitment and belief in the project has only deepened. Over ING’s 19-year presence in the Philippines, the company has arranged the largest number among its peers of local capital market issues and provided advice on the largest and most prominent M&A transactions out of the Philippines.

During this time, we have also had the opportunity to meet a wide cross section of personalities performing the CFO function. They have included CFOs of multinationals operating in Asian countries, CFOs representing family businesses, or government controlled enterprises, CFOs for both listed and private companies, across different sectors and industries. Whatever the background, the common theme during this period has been the enormous increase in both the scope of the role and the level of sophistication required of today’s CFOs.

That the CFO has become an increasingly integral part of driving, reporting and explaining a company’s performance is no longer an issue. Today’s CFO is ensconced centre stage and it is difficult to imagine any other scenario given the strategic importance of the role. In this regard, the significance of this annual project—the search for the Philippine CFO of the year—becomes even more relevant. First as a recognition for very high standards of individual achievement and secondly so that aspiring finance executives can strive for excellence in this important profession.