Unlocking value through operational expertise: The role of Ancala’s Industry Partners

What’s the role of an Industry Partner?

Kurt: Having worked within the infrastructure market for over 30 years, I can confidently state Ancala’s Industry Partner approach is a real differentiator. We are heavily involved with the portfolio companies and deeply integrated into Ancala’s business more broadly.

Many of the portfolio companies utilise our sector knowledge and our industry experience earned over many, many years in different circumstances and in different industries. However, our approach goes much deeper. It is based on forging strong relationships and trust with the management teams of the portfolio companies that we work with.

Chris: We all have very regular meetings with the leadership teams and the CEOs in particular. I meet weekly with the CEOs I support. These sessions are about mentorship, coaching and providing a safe space to test ideas and address challenges. Ancala Industry Partners provide counsel and suggestions for how the CEO can move forward. We also provide challenge and feedback. Ultimately, these interactions are delivered with the aim of enabling the chief executive and the broader management team to realise their full potential and in turn realise the full potential of their organisation.

David: We all sit on Ancala’s Investment Committee. We’re involved in sourcing and converting investment opportunities, conducting due diligence and onboarding newly acquired organisations. The Industry Partners are fully embedded into the Ancala team acting, alongside its asset managers in delivering the firm’s highly proactive approach to asset management through the entire investment lifecycle.

How do Ancala’s portfolio companies utilise the experience of the Industry Partners?

David: A large focus of our role is enhancing the downside protection across the portfolio. A big part of this is encouraging the management team to focus on what they can control rather than what they can’t. That means, for example, looking very closely at the cost base to ensure it’s appropriate for the business plan of the company and looking at opportunities to stay ahead of the curve.

Kurt: Through our experience, we see trends emerge long before they are obvious. Acting early in these scenarios is crucial to helping companies capitalise on opportunities and mitigate risks. While every situation is different, we draw from prior experiences to help management teams navigate complex situations.

For example, on HS Orka, in the nascent stages of a construction project to increase power production, we pushed management to purchase the semiconductors and sensors. Purchasing these products early on provided certainty on costs and also protected the business from price volatility, particularly considering the steep increases in the cost of semiconductors as a result of a global shortage.

In addition, we recognised that the business didn’t have significant experience in managing and delivering large-scale projects. Utilising our network, we brought in a project management lead who helped train and mentor the management team to support the project delivery. This helped to ensure the complex project was delivered on time and on budget.

Chris: Another area we’re focused on helping management teams with is internal communication. The entire workforce needs to have a clear sense of the direction and strategy going forward, so communicating with team members in the field, letting them know that management understand the situation, they’re on top of it and in control really does help motivate teams.

We also help speed up decision-making, fast-tracking contract approvals where you often need to move quickly with suppliers, customers and so forth. It’s a key area where we can help management.

From your experience, what makes a good management team?

Chris: It’s always about the people and their qualities. Of course, they must have technical knowledge and expertise in the sector the company operates in. However, I always look for something over and above that which is the values, the beliefs and the behaviours of the team. If you have a team totally united in achieving a company’s goals, aligned with the right behaviours and the right attitudes, together, they can move mountains.

I also look back to something that someone told me years ago, which has always stayed in my head: good governance, sound administration and strong financial control. If you have those essential building blocks in place, you’re set up for success.

David: Proactivity is key. Management needs to be able to anticipate and influence change. They also need to be constantly bringing good ideas forward and staying focused on growth.

How do you work with management teams to navigate challenges?

David: One of the first things we remind our management teams is that Ancala is a long-term investor. Through our resilience, capabilities and approach to downside protection, we can offer expertise and support to weather adverse cycles. That’s an important message to give management teams.

We also stay very close to management teams alongside regular board meetings. We’re checking on plans and targets. We’re making sure that we’re focusing on those things that we can control and will make a tangible difference to the business.

In addition, Ancala provides significant additional capital to deliver on growth plans. On average, since Ancala first invested, it has provided its portfolio companies with more than 45% of the initial investment capital in follow-on funding to pursue significant capex projects and bolt-on acquisitions. This track record gives management teams confidence to bring bold ideas forward and pursue growth.

Kurt: It’s imperative to have a strong relationship with the management team to ensure they’re comfortable to speak openly about issues and seek counsel. We have regular meetings with management teams but then also more informal ad hoc meetings where we brainstorm and find solutions.

In these sessions, we can exchange knowledge and experiences, and management feel free to discuss their challenges in a more informal way which can help to produce better solutions.

How do you help management teams target long-term growth?

David: A big component of counselling management teams is to encourage them to have a growth mindset. This can be a challenge in an operationally intensive business and it’s our role to help management teams to look up and consider how we are going to grow the business over the next five to ten years.

Chris: Often when we acquire a business, due to previous capital constraints, management teams may have become very inward looking and focused on running the business rather than growth. We help them focus on changing that mindset. Ancala provides a breadth of resources to help management teams breathe and look further ahead. This approach has helped companies that would never have considered acquisitions or significant capex projects to not only explore these but deliver them. This has been essential for helping Ancala’s portfolio companies to grow revenues by more than 70% on average from when we first invested.