As a child, my family often struggled with money and I spent much of my youth living precariously (financially). Perhaps, after considering many other options (academia, judiciary, psychology, monachism and priesthood), this was my reason for pursuing a financial career. Not only did it appear to be a field that was defining the world in which we lived, but it operated at a level of complexity and opacity that made it fascinating, alluring and rewarding.
I was never destined to be a financier.
A passion to understand
A powerful career drive was fueled by a constant appetite to understand the world of finance beyond the conventional wisdom and to be part of this powerful and mesmerizing profession. After the financial crisis, what had become a vocation did also become a mission. A dark side of finance had emerged — one more corrupt, self-centered and cynical than I ever could have anticipated.
I selected the word financier because my experience in the “jungle” was in more than just banking. I also worked and functioned as an asset manager, a finance director, a European institution manager, an adviser, an exchange executive, an insurance director and a professor of finance.
Finance is essential and at the crossroads of all economic realities
Its valued added is not restricted to itself as an industry or a sector. Finance is at the service of the economy while simultaneously allowing for populations and economies to operate. I am passionate about the world of finance and am grateful to call myself a financier. I am far from sharing the values of part of the financial world as it is now, but the industry is redefining itself and will eventually serve an even more significant added value.
A true financier needs to be passionate about its clients
Without that passion, he or she will miss what makes this profession exceptional and challenging. The best moments of my banking careers were those meetings with clients when, together and in confidence, we were trying to find a solution to a complex problem. It could be the emphyteotic structure of the University in Louvain la Neuve, how to make the Saudi Arabian Monetary Authority accept non-bearer bonds, the need to create governance rules around the board table, the mortgage of a family, a new structure to help Mexico to finance itself or creating income when central banks deprive investors of their legitimate returns. This is where my passion for finance lies: in the value it adds to governments, non-for profit organizations, corporations and individuals.
The advisory activity we have developed and the services we offer have, at their core, a significant element of trust based on personal relationships. It makes this activity an exceptional opportunity to develop human and professional interaction.
If there is one thing I have learned from the advisory business, it’s that it takes special people to accept that recognized names, be it investment bankers, lawyers, accountants or consultants, often have their own agenda. Many companies or governments prefer to look to an adviser for validation of their righteousness and well-being. What honest advice aims to do is help think independently and “out of the box.” Good advisors recognize the company’s or the client’s strengths and weaknesses, and look with open eyes at the challenges and opportunities.
This is one of the primary reasons for which the advisory business continues to struggle to establish itself as a valuable service. I believe, however, that smart and honest advisory from experienced independent professionals can be essential to successful businesses and leadership. It is this belief that has driven me to do it for the past twelve years. Lateral thinking might, at first glance, seem like a perilous exercise. However, those who have entrusted us know the value it has brought. Their recognition is our pride. Here are some of the most important advisory assignments of the past years.
- When Ratan Tata decided to take on a substantial internationalization of the Tata Group, he asked me to advise the Group’s holding company, Tata Sons, in its internationalization. This project and relationship eventually led to additional assignments for TAJ hotels and palaces, Tata Motors, Tata Steel and many others.
- A few of the most significant assignments have included the creation of the financial services subsidiary of the Group, Tata Capital, the US developments of TAJ Hotels, the Pierre Hotel in New York, the former Ritz Carlton, (now TAJ Boston), and the European Investment Bank financing of Tata Motors. Most importantly, the development of this unique relationship has been the backbone of these exceptional ten years — a time during which India has blossomed.
- Tata Consultancy Services is probably the most successful IT Company in the world, and certainly in India. Being associated with its international strategy, business development and management, is a continuous source of challenges and exceptional opportunities. Galileo Global Advisors would not be what it was without the support of its two successive Managing Directors, Subramanian Ramadorai and N. Chandrasekaran.
- Formerly called GDF Suez and now renamed Engie, our advisory assignments were a natural fruit of the relationships I built as CFO of Societe Generale de Belgique – a position I held after Suez took over in an epic battle against Italian tycoon, Carlo de Benedetti.
These three assignments, and many others, are a constant source of pride and define who we are at Galileo Global Advisors. As the advisory field continues to become increasingly diverse, we are able to advise on strategic, managerial, financial and international matters.
Boards of Directors are an essential element of corporate governance
However, in my experience, boards can easily become complacent, manipulated or simply negligent. This has likely been a major factor in the financial crisis. Directors, knowingly approved compensation systems, risk taking and speculative practices. How much did they truly understand? Many of them had no financial experience and while they often pleaded ignorance, they did not protect the company or its shareholders against the hubris of management.
The selection process of Directors is barely subject to shareholders’ approval. Often chosen (directly or indirectly) by the Chairman and CEO, a director’s relationship with management can often be submissive. Being the counterweight of a powerful CEO can be disruptive, but often necessary.
I have had the opportunity to sit on dozens of boards in my life. Without being overly confrontational, directors have a unique opportunity and duty to assist the CEO and offer advice, vision and oversight.
In the cases where CEOs are Chairs on the Board of Directors , the duty of a director is even more challenging. In some cases, resigning from a board is the only way to maintain one’s integrity. I experienced this twice while serving on boards.
- The first board seat was with Caraco, the NASDAQ listed US subsidiary of India’s company Sun Pharma. The company had ignored the warnings of the Federal Drug Administration (FDA) and manipulated the information given to the board. Their operations were halted by the FDA for several years.
- The second board strengthened my belief that institutional shareholders, too often, only play lip service to governance. I resigned after being elected to the board of Fortis, now called Ageas, a Belgo-Dutch financial conglomerate who was rescued by the Belgian Government. Its board took acquisition risks with ABN Amro, increasing its capital in penalizing shareholders without telling them of the toxic assets that were being purchased. Shareholders lost 90% of the value of the company. However, the combination of Chinese, Dutch and Belgian institutional investors ignored their own governance and it became obvious, when I was elected, that some of the necessary measures would never be taken to reform the company.
I currently sit on the Board of two companies in Asia:
AXA Tian Ping is a joint venture between Chinese shareholders and AXA, in the field of Property and Casualty Insurance. I represent the Chinese shareholders. The company is based in Shanghai and is one of the few private auto-insurance companies.
Avant is a JASDAQ listed Japanese company in the field of financial technology. I have been asked to serve as an independent director to assist in the internationalization and development of the company.
My inspiration for the creation of Galileo Global Advisors came primarily from watching international companies being misled by unscrupulous financial institutions, happy to use their clients’ inexperience to their own advantage.
This was particularly true in emerging markets where clients are seeking truly independent advice and expertise. We have no other business than the good of our clients. Galileo’s international network provides clients with access to decision makers around the world. not just knowing who is who, but having access to leaders who are by definition overwhelmed.
The company’s twelve-year existence has been a challenging journey. We were faced with risk of collapse during the financial crisis, but our extraordinary team survived the storm.
Throughout the years, our M&A business has widened its scope to include capital raising in private markets and placement of funds and mergers and acquisitions. Galileo operates across countries and continents, and we have become experts in understanding cross-cultural issues and mentalities. Our leadership has decades of experience in international markets around the world.
We are an independent firm whose primary focus is adding value to their clients. Our firm does not trade or invest, and therefore we do not compete with the balance sheet of our clients. It is our challenge and our integrity. Every penny is earned but our balance sheet is limited to the unamortized portion of our furniture.
Our main focus is financial services, fin-tech, hospitality and alternative energy. We also advise investors on asset allocation, and increasingly find ourselves advising non-profit organizations.
Strangely enough, we require to be paid. Those who give free advice have an hidden agenda. There is no free luncheon in business. And when we do it for free, there is a compelling reason. There is a huge gulf between greed and fair remuneration.