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CFOs should know PE Firms want Asset Growth in Africa – KPMG’s Michael Rudnicki

Has this professional growth changed you personally as well?
“I think so. My wife would say I am a complete introvert, but most of my colleagues and clients see me as an extrovert. Not sure who I need to believe. I guess, with my clients, I can put on a bit of a show if required. I have consulted in tax for 22 years and have worked with a variety of personalities, extroverts, those with a degree in flamboyancy and introverts who were and are really successful. You don’t have to be a loud, flamboyant professional to generate fees.”

What makes KPMG’s PE offering unique?
“We provide a complete, comprehensive solution, which gives us a very competitive advantage; from tax, to legal, to corporate finance, to BEE advisory. We have been extremely successful, I believe, in helping clients explore new markets and broaden their business objectives. Clients in South Africa that would not consider expanding to countries like Nigeria, Zambia or Kenya, have made the leap because of our hand-holding.”

“Our PE advisory team was established in 2005 and I was part of its establishment. We started with very little experience but have built great client relationships and still work with most of those clients we met at the time. I have also always had a good working relationship with the PE regulatory body, South African Venture Capital Association (SAVCA). This year we are partnering with them again to deliver the 16th Annual SAVCA Private Equity Survey.”

How has your life changed since the appointment as head of PE?
“I have more commitments and longer hours, which I need to manage very carefully. Luckily I have a great team; interestingly consisting of three females, which is a breath of fresh air in the male-dominated world of PE.

CFOs should know PE firms want asset growth in Africa, says KPMG’s Michael Rudnicki – CFO South Africa
What did you do during your first 100 days at the helm?
“We have achieved quite a lot since I started in September last year. I have met with almost every single major PE firm in South Africa and abroad. We meet the CEOs and team (a number of which are tax clients of mine) and talk about their needs and our compatibility. Together with the Heads of PE from East Africa, West Africa and North Africa we travelled to London to meet five of the top PE houses in the world to showcase the capability of our team in our respective countries. All of these meetings have resulted in great relationship builds and various advisory assignments. Some of the people we met have not visited South Africa and now we do business with them.”
What is your leadership style like?
“I spent the first month making sure that the team bought into each other’s ideas. One of us has a television production background, one comes from corporate finance and I am an accountant who has always worked in the tax space. That means we are a very diverse team. I have always consulted but now I need to be a leader and make the team feel together and sufficiently independent to approach the hard-core PE environment. That is why the team is client-facing in one way or the other.”
What goals have you set yourself for 2016?
“I want to give sufficient attention to my tax and PE clients and as a team we want to increase our PE market profile. I work from a great platform, built by my predecessor Warren Watkins. As a newcomer I want to create confidence with our client base and the industry, given my experience up to now as a tax specialist. I also want to spend more time with the team this year and specifically focus on deal origination as well as grow our M&A team.”

CFOs should know PE firms want asset growth in Africa, says KPMG’s Michael Rudnicki – CFO South Africa

“Manufacturing, retail and infrastructure are still sectors of interest for the PE industry in South Africa. Manufacturing and retail have the advantage that they can be scaled up to countries north of South Africa; investing in infrastructure brings longer-term yielding assets.”

How much do CFOs know about tax issues and how much should they know?
“From an advisory perspective, we say ‘get tax into the boardroom’. Ten to 20 years ago tax was a small, compliance-related section of

Michael Rudnicki, Head, KPMG Southern African Private Equity (PE) practice

Michael Rudnicki, Head, KPMG Southern African Private Equity (PE) practice

the business. Times have changed dramatically, especially in the last five years. The media has also played an important role in exposing tax themes within large, multi-national organisations. Base Erosion and Profit Shifting (BEPS) is a global phenomenon (but relevant in a South African context) that contemplates the shift of profits to low tax jurisdictions and the use of legislation to prevent the consequent tax avoidance. Every organisational risk committee considers tax and so should CFOs. Recent legislative change in South Africa around the limitation of interest deductions is a consequence of the BEPS intervention.”

“CFOs still need to be more internally focussed to understand the tax sensitivities around transactions, for example. You don’t have to be an expert, but you do need to be alert to change in legislation, the theme of tax morality within an organisation, etc. Relevant tax training with an organisation is also important. The head of accounts payable doesn’t need to know the principles of employees’ tax, but should have a reasonable understanding of transfer pricing principles.”

David Okwara

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