Wyn River Ltd

We are pleased to include a guest blog from Frank Lewis, an experienced Chairman and Non Executive Director with a deep track record spanning 25 years as either Finance Director, CEO, Non Exec Director or Chairman within a wide variety of sectors and cultures.  Frank is a successful entrepreneur who co-founded and grew South Africa's largest retail computer chain which he listed on the Johannesburg stock exchange.

He now succesfully manages a diverse portfolio of Non Exec Directorships which include rapidly expanding AIM quoted SMEs in the UK along with overseas ventures. He is actively involved in mentoring CEOs and SME Boards and working with entrepreneurs to grow their businesses.

Frank is an example of the type of Interim Chairmen and Non Executive Directors who Wyn River can access for our clients, especially but not exclusively those with operations in Africa. We hope you enjoy his assessment of the role of NEDs, and the personal attributes that are needed to fulfil the function successfully. 

"The late “Tiny” Rowland once described NEDs as “baubles on a christmas tree” which revealed how little dominant chief executives expected to be questioned by fellow directors.

Since the glory days of the maverick empire of Mr Rowland between the 1960s and the 1990s, it would seem that nothing much has changed. He considered that many members around the board table were like baubles, doing nothing more than decorating the table. A non-executive director who challenged a powerful CEO such as Mr Rowland was not expected to remain a non-executive for very long.

This story is not over. The test for non-executive or independent directors is to prove wrong Lord (Michael) Grade, who once observed with characteristic wit: “A non-executive is a bit like the bidet in your bathroom: nobody is quite sure what they are used for, but they add a touch of class.”

The commitment and engagement required, especially in big businesses, is vastly greater than some might imagine. You are not there to be a bauble, have lunch, make polite conversation and pick up a fee. There is a job to do: a vital and challenging one.

I am sure most NEDs have come across many boards who are not tolerant of challenge and if someone speaks up or asks too many questions, they are branded as part of the “awkward squad”.

Lord Walker in a speech once said:- “The ability of NEDs to stand up to executive management is more important than the qualifications those directors hold.”

While there has been a whole lot of discussion about the need for NEDs with relevant experience, that knowledge is little more than useless if it is not accompanied by a willingness to challenge the executives.

In my opinion, my definition of a good NED is that he/she should:

The President of the European Bank for Reconstruction and Development has just given a speech covering both the latest expansion of its operations into North Africa and parts of the Eastern Mediterranean, as well as several co-investments into technology operations with Isreali companies across much of Eastern Europe.  You can read President Suma Chakrabarti's interesting presentation in EBRD's press release.  By coincidence, Wyn River is pleased to confirm this week that Len Judes has joined as the Wyn River associate for both Cyprus and Israel, also bringing his own deep connections via Israel to technology investments in Central and Eastern Europe, noticably Lithuania.  Len is the founder of the Lithuanian Israeli Technology Hub as well as having considerable engagement over the years with several associated Chambers of Commerce, including the British Israeli Chamber.  As has been pointed out by many commentators, for Eastern Europe and other nations to grow their economic wealth, they cannot rely solely on increasing domestic demand, which often results in increased demand for imports.  They must also leverage their work force's skill and cost advantages alongside an innovative culture which can create quaity goods and services which are competitive in the export market.  

There are several examples of innovation in both the Baltics and the Balkans, either in terms of the development of new ecommerce applications in the North and the growth of complex Business Process Offshoring capacity in the South.  We will return to this topic in a subsequent blog.

In the meantime we welcome Len into the team and look forward to working with the new growth enterprises of the future.  Cyprus is a key offshore jurisdiction frequently used to host an intermediate funding vehicle both for efficient tax structures but also a more predictable, UK-law based judicial system.  The domestic market in Cyprus is also encouraging as it emerges from the troubles encountered in its financing industry.  EBRD's newest country of operations is Cyprus.  You can read more about Len's background in our Team and Experience section.       

On 4 December 2014, the European Commission announced that Justice Ministers had agreed significant changes to the European Insolvency Regulations which have been in place since 2002.

One of the main objectives in the revisions is to promote more use of business rescue and restructuring solutions consistently across all 28 member states, to preserve jobs in potentially viable businesses that until now have often entered slow and inflexible formal liquidation processes.  There are also proposed changes to simplify the insolvency provisions covering both groups and cross-border corporate failure.  

The EU has been developing a framework for changes for around two years, starting with a suggested package of measures proposed in December 2012. In Juy 2013 it launched a public consultation on attitudes towards rescue and the stigma attached to both personal and corporate insolvency.  In October 2013, the representative organisation for insolvency and turnaround specialists, Insol Europe, won a tender to conduct a comparative study into the existing pre-insolvency, restructuring and insolvency processes across all 28 member states.  The report on the findings from that study was published in April 2014 (A New Approach to Business Failure and Insolvency).  Wyn River is pleased to confirm that our local associate, Ieva Strunkiene, contributed the study inputs for Lithuania in the Insol Europe study and Nigel Davies, with close support from Michael Glazer, the head of our local affiliated firm SEE Regional Advisors d.o.o., contributed the inputs for Croatia. The revisions to the European Insolvency Regulations are expected to come into force in May 2017, according to the EU press statement recently released.

For those interesed in this area, the European Bank for Reconstruction and Development has recently published its own analysis into insolvency and restructuring frameworks across many countries of its operations, not just on legislative content, but also on key enabling areas such as insolvency practitioner licencing, remuneration, ethics and case supervision.  You can read the interesting findings of the EBRD study here.

Congratulations to Rado Russev who has taken up the post of Deputy Minister of Regional Development in the interim Government for the Republic of Bulgaria.  Rado Russev was previously a senior advisor on Water and Environment with Wyn River's affiliated firm in Bulgaria, New Europe Corporate Advisory.  The interim Government, led by President Plevneliev, has stressed the importance of regional cooperation in the area of energy efficiency and renewable energy sources in his speech this week at  the UN Climate Change Summit in New York.  You can read about the President's speech here.

Wyn River and New Europe Corporate Advisory are cooperating closely on several joint projects including a large organic agribusiness development in Central Bulgaria as well as a joint bid with other consortium members for a Western Balkan Municipal Infrastructure project.

We wish Rado every success in his new position. 

Bulgarian Parliament, Sofia, 2013 (although it looks older!)

The online journal "Bulgaria Now" interviewed British Ambassdor Jonathan Allen in late June about why trading with Bulgaria and neighbouring countries makes sense for many international businesses.  A link to that interview and a set of very useful supporting notes can be accessed here.

Within a month of month of Ambassador Allen's interview, the Bulgarian coalition government is on the verge of resignation and there was a run on two large privately owned banks, Corporate Commercial Bank and First Investment Bank.  

The coalition government has been under increased pressure recently due to disageements with the EU over the proposed construction of the South Stream gas pipeline from Russia as well as a poor performance in the European Parliament elections.  A caretaker government led by President Plevneliev is expected to take over later in July ahead of elections scheduled for 5 October.  It is hoped that the interim government will be pro-business and pro-reform and that momentum will continue after the next elections.

Bulgaria has not had a banking crisis since 1997, and is often praised for its conservative fiscal policy, use of a currency board to peg the Lev to the Euro and well capitalised and liquid banking operations, under the supervision of Bulgaria's National Bank.  Confidence in First Investment Bank was restored with an emergency credit line, but investigations are continuing into the operations and future of Corporate Commercial Bank which is currently in the control of the authorities.  While the bank is closed, depositors cannot get access to their funds.  This not only includes individual depositors but also several large cash-generating state owned companies.

"Bulgaria Now" asked Nigel Davies of Wyn River to comment on the recent developments, which he believes do not alter the basic competitive advantages of Bulgaria as a member of the EU with a highy skilled and low cost workforce, at the centre of a large and strategic geography and market in South East Europe.  You can hear Nigel Davies's interview here. 

Tallinn, Estonia, 2014

Nigel Davies, founder of Wyn River, had the opportunity to lead a panel of investors in Tallinn at the Finance Estonia conference on 17 June 2014.

Attended by over 100 angel investors, venture capitalists and founders, delegates had the priviledge of a presentation from the Estonian President, Ilves Toomas, who covered the benefits and simplicity of e-citizenship offered by Estonia. More on that in due course.

During the start up panel, the themes which emerged included the need for early dialogue between the stakeholders on exit preparation, valuation drivers and expectations, the need for rehearsal and real life presentation time by founders in front of investors, as well as personal connection to funders, because cold calls rarely work. 

Many thanks go to Signe Viimsalu, former CEO of EstBAN, for organising Wyn River's participation in the event. During the week, Wyn River held a series of high value meetings with investors and start-ups whch have helped Estonian businesses to connect to the private equity world in London and international customer markets.

On 6 December 2013, UK Trade & Investment Serbia in conjunction with Wyn River Limited, ran a webinar on the future potential for Public Private Partnership financing models for infrastructure and energy projects in Serbia.  Wyn River holds the view that this approach is suitable for several, but not all, projects.  What is the best way to deliver quality services at the best cost to consumers over the life of the project?  It is all about comparing cheap finance for public projects verses more expensive finance for the private sector, but with efficiency gains from procurement and operation over (up to) 25 years. It is a complex contractual and risk sharing area where UK professionals can help to de-mystify key aspects, based on several decades of successful and less successful project experiences both in UK and South East Europe.  The UKTI and Wyn River slides are available on request.

hww weinberg wilhelm is a prominent German restructuring consultancy and insolvency administration firm.  It has a series of international cooperation partners across the world who work with hww's German insolvency administrators and consultants in a trusted relationship, available on-site whenever needed.

Nigel Davies has been asked to cover several countries across Eastern Europe and Central Asia, namely Albania, Bulgaria, Croatia, Estonia, Georgia, Kazakhstan, Serbia and Turkey, where he can either advise hww's clients on their best options personally or refer them to other Wyn River associates with excellent local knowledge. 

Nigel joined with several other hww international cooperation partners earlier in January in Stellenbosch, South Africa for their annual conference.  This coincides with Wyn River's decision to expand its  target market to include the African continent.