Operating partners go plural with Apax

This month, Private Equity International revealed that Apax Partners had made a senior UK addition to its Portfolio Support Group (PSG), the small but growing internal team that helps its portfolio companies improve their operations.

 The new man is Gary Hughes, an experienced public company CFO with senior-level operating experience at a number of big corporates, including United Business Media and EMAP. He currently sits on the board of listed UK supermarket chain J Sainsbury, where he chairs the audit committee, and is a non-executive director of the Scottish Exhibition and Conference Centre. He’s also familiar with private equity, having been CFO of leisure group Gala Coral between 2008 and 2011.

The PSG was formally constituted about three years ago, under the leadership of Steve Hare, the former CFO of Invensys and Marconi. It’s now 11 people strong, although that’s actually a bit misleading, at least as far as Europe is concerned: Hughes is only the second senior Europe-based operating executive to join, after Hare himself.

So it’s been a relatively slow start – but Hare says he wants to hire another “two or three” senior operating people in Europe in the next “12 to 18 months”.

According to Hare, one reason for this is that Apax wants to make greater use of the insight that senior operators can provide pre-deal. “We can assess processes, or management teams – or if the business is in the middle of a big IT implementation, say, we can go and have a look to help the deal team assess the risk and how the project is being run. And we can do that because we have 25 years of working in businesses and running these types of projects.”

But it’s also a response to a changing world. In the past, he says, Apax has focused on growth. But in a low-growth world, margin improvement through efficiency of execution has become increasingly important.

Hare says there’s no definitive profile for future recruits; the firm has a wish-list of skills, but it may also recruit opportunistically if the right person comes along.

One thing that may not change, however, is the employment model. Hughes is contracted to work 100 days a year – which means he can combine this role with his non-executive positions and other interests. This gives him the best of both worlds, he tells PEI. “I felt I was too young to go down the traditional plural route … I wanted a hands-on role rather than a ‘sit back’ non-executive position. [But] at the same time I wanted to keep my other external roles.”

What’s more, says Hare, it’s also good for Apax – not only because it helps them to attract people like Hughes, but also because they’ll be more effective in their roles. “I expect this to be the model [for future hires], because it attracts people interested in doing a couple of different things. Gary will remain on the board of Sainsbury’s, so he’s very current in his industry. That’s valuable to us. If they work exclusively for Apax, then they don’t have time to stay connected with their network.”

Some firms now make a virtue of the fact that they have full-time operating executives. Apax may provide an interesting counterpoint.