TMI | SPECIAL REPORT 1

NATURAL RESOURCES & UTILITIES

Against the pressures ofplummeting energy prices andcompetitive and geopolitical

challenges on one hand, and the need toinvest in efficient extraction techniquesand sustainable energy on the other,corporations in the Natural Resources &Utilities sector have been quick torefocus and revitalise their corporate

strategy in recent years. One of the most significant outcomesof this has been exceptional levels of M&A as companiesdivest non-core assets and realign their supply chains.

A Long-Term Partnershipfor M&A Success

We offer dedicated resources torationalise and optimise cash andliquidity management structures.

by Lance Kawaguchi, Managing Director, Global Head GB Corporates andInfrastructure & Real Estate Group – Global Liquidity and Cash Management, HSBC

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2 TMI | SPECIAL REPORT

NATURAL RESOURCES & UTILITIES

This has significant implications for

treasurers, who typically need to work

against the clock to integrate or divest

businesses quickly to avoid business

interruption and gain rapid control over

group liquidity and risk. Furthermore, the

M&A process is often not simply a ‘one off’

project but a series of diverse projects that

need to be managed concurrently or in

rapid succession. To support treasurers

through these challenging times, HSBC has

put together a series of articles that together

comprise a Cash Management Guide to

M&A for the Natural Resources & Utilities

sector, providing greater visibility over the

tasks, and sharing experiences of our expert

team within the business, and those of our

clients to help treasurers overcome the

pitfalls and maximise success.

In the first two articles in this series, we

offer an overview of the M&A landscape in

the Natural Resources & Utilities sectors,

and identify some of the key cash

management issues that treasurers need to

consider when embarking on an M&A

integration or divestment project. This is

accompanied by a practical case study from

integrated energy company CEPSA

(Compañía Española de Petróleos, S.A.U.).

This describes the integration of Coastal

Energy, whose principal assets were in Asia,

a region in which CEPSA previously had

relatively little experience, and how CEPSA

and HSBC worked together to deliver a

successful integration project. These

articles will be followed in turn by features

that drill down on some of the M&A related

cash management challenges in different

regions, and some of the specific liquidity

issues that treasurers need to consider.

A key theme that permeates these insight

articles is the importance of a banking

partner with the experience and skills,

innovative and robust technology, and

quality and reach of network to support the

integration and divestment process. At

HSBC, for example, we offer dedicated

resources to rationalise and optimise cash

and liquidity management structures,

including managing the process of opening

and closing tens or even hundreds of bank

accounts. Key to the success of an M&A

integration project is to be able to process

transactions and information flows

seamlessly, securely and efficiently, so we

employ specialist ERP teams to connect our

systems to our customers’ ERP and treasury

management systems for straight-through

processing.

When corporations look for a cash

management bank, particularly a partner

that can support them through strategic

projects as well as day-to-day activities,

they need to trust in that bank’s ability to

support them in the long term, across their

geographic footprint. This level of trust is

one of the key reasons why corporations in

the Natural Resources & Utilities industries

choose to work with HSBC as their M&A

partner. We are committed to improving

our propositions through technology

investment and innovation, one of the

cornerstones of cash management

efficiency, as well as the strength of our

network. With cash management

positioned as one of the bank’s strategic

priorities globally, customers can be

assured of our skills, network, technology

and long-term commitment to supporting

their M&A transactions and facilitating

treasury’s contribution to success. �

We are committed to improving our propositions through technology investmentand innovation.

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