André Dippenaar - CFO BioTherm Energy: "It's adapt or die"
Founded in 2003, BioTherm Energy Proprietary Limited (BTE) is one of South Africa’s first independent power producers (IPP). In October 2007, BTE commissioned its 4.2 MW Biogas Project at the PetroSA refinery in Mosselbay in the Eastern Cape Province. This project was the first non-recourse project financed IPP deal to be concluded in South Africa. This project was also the first project to successfully register and monetise carbon credits in South Africa.
In November 2008, Denham Capital Management LP (Denham Capital), a leading energy and commodities focused global private equity firm with US$7.5 billion of invested and committed capital, announced an equity investment of up to US$150 million in BTE to build out and acquire a pipeline of renewable energy projects.
The business was initially focused on cogeneration projects, but was restructured in Q1 2011 to focus on large scale renewable wind and solar projects in Sub-Saharan Africa. In December 2011, BTE was announced preferred bidder on three projects (one wind and two solar PV projects) in Round 1 of the South African Renewable Energy IPP Programme. These projects with a total capital cost of approximately R1.5 billion are well advanced for reaching Financial Close during Q4, 2012. Construction of these projects will be completed during 2013. Additionally, BTE has built out a solar and wind project pipeline of approximately 2 500MW.
BTE has created a fully integrated team which can deliver all stages of wind and solar development, project financing, construction and operation of its projects. BTE is committed to being the leading South African renewable energy project developer and operator and has a strong desire to build financially attractive projects that catalyse sustainable local economic development in the communities in which their projects are located.
Andre Dippenaar (34) joined BTE as the CFO in November 2008, “right after the investment by Denham Capital into the business”. André is a qualified CA with over 12 years of financial reporting and management experience, including seven years of financial, commercial and project related metals and mining experience primarily focused in South Africa and Tanzania. He also has over four years of renewable energy and project finance experience. Before joining BioTherm Energy he worked for Barrick Gold and PwC. He was the former Barrick Gold Regional Controller for the Africa Region before heading up the financial and commercial aspects of their US$1.5 billion Sedibelo platinum project.
What do you enjoy most about your job and why?
“I enjoy the dynamic and challenging environment. BioTherm Energy is a relatively new start-up company with a small team, so I get involved in a broad range of aspects of the business. The job doesn’t become monotonous; you never know what the day has in store for you.”
How do you perceive the role of the CFO has changed in the last five to ten years?
“The role of the CFO has definitely shifted from just being the financial lead to becoming a more strategic role. Whilst it is the CEO who gives strategic direction to the company, the support role of the CFO has become more important. Given the challenges of the current global economic climate, and the ever increasing need to manage the financial and business risks, the role of the CFO is becoming more important. The CFO has to take on a more strategic angle in the business and play an important role in determining the direction of the business. The financial side of business is inextricably linked to the strategy and success of a company. “
And for a CFO, that means...
“That he has to adapt or die, really. It was Darwin who said that survival does not depend on the strongest or the fittest, but those who can adapt. As the role and responsibilities of the CFO continuous to broaden and expand, it is those who are dynamic and have the ability to adapt with the ever changing business environment that will survive and successfully lead their companies to greatness.”
Do you think things might change once the crisis has cooled off? Or is the changed role of the CFO ‘here to stay’?
“If anything, it will become a lot worse before it gets better. I personally think that financial and business risks are becoming more and more complex by the day. Therefore I see the role and responsibilities of the CFO as becoming increasingly more challenging. If your view as the CFO is one of only wanting to limit yourself to look at management accounts and the reporting of your company, I cannot see how you will survive. The value add of the CFO has to be much greater than that. Change and new challenges for companies will always exist, thus the CFO has to continuously be able to adapt to all challenges, risks and markets.”
In terms of accurate forecasting and budgeting – is that still feasible for a financial department in today’s tumultuous financial markets?
“Well, it’s definitely becoming more challenging. Given that there are so many external factors outside ones control, it does pose challenges in terms of accurate forecasting and budgeting. However, if you truly understand what the drivers of your business are, you should still be able to forecast and budget within relatively accuracy. How? Through flexing and running a range of scenarios on the variables that are outside of your control. For the variables that are inside your control – for those you can obviously still budget and forecast accurately within expectation. For those variables outside your own control, you can flex those parameters the model, which will let you understand the potential range and impact these could have on your business and results. But again, a thorough understanding of your business and its drivers are essential.”
What do you see as the greatest challenge for South African companies in the global economic situation?
“I think the ability to attract foreign investment, and the impact of the global situation on the value of the Rand is going to continue to be a challenge. This is further impacted by the local factors around political stability of our country, ongoing labour challenges and the poor education system which creates a degree of uncertainty. There is a dire need for real leadership to create an enabling environment whereby we as South Africa can attract foreign investment. There are great business opportunities here in South Africa for foreign investors feeling the pinch in the US and Europe, looking to unlock value in the emerging markets. By attracting the right amount of foreign investment we can stimulate our economy, create sustainable jobs and transfer skills. “
Does that uncertainty also hold for your industry in particular – that of renewable energy?
“It most definitely does. Our South African business is dependent on government rolling out their renewable energy programme (REIPP) in terms of the IRP, which is the twenty year energy plan for South Africa. For BTE to unlock value in our business and pipeline, and to create a sustainable renewable energy industry in South Africa, we need visibility and certainty around the future roll out of the programme. Government policy and support is critical for getting the required foreign investment, stimulate a new industry which can create jobs and add skills in this country of ours.”
Which skill(s) do you think a finance professional should master to be most successful in his work?
“The most critical thing that anyone in this position needs is to be commercial, to have the ability to deal with people, to negotiate and have good communication skills. The ability to lead and influence is also a critical requirement.”
Define what you mean with ‘being commercial’?
“For me ‘being commercial’ is all about having a particular mindset. Being ‘commercial’ is about seeing the big picture. It is about being focused on how you and your actions can contribute to unlocking profit or creating strategic value to your business. Anything you do or say has to contribute to that commercial goal and lead to commercial success. Don’t just do things for the sake of doing them – if it doesn’t add value to the business, it’s a waste of everyone’s time.”
Which achievement or project in your business career are you most proud of?
“I am most proud of what I have achieved here at BioTherm Energy. I come from a corporate background with PwC and Barrick Gold, so joining a start-up company when it was still small and new has been an adventure. It has been a great challenge but also extremely rewarding to be part of building something new, and have the opportunity to be part of taking a business from ground zero and building it into the leading renewable energy company it is today. This includes implementation of systems from scratch, building up a team and restructuring the business - it feels like a great achievement. It’s great to be part of pioneering a new renewable energy industry in South Africa. It has been tough, but what a great learning experience.”
What particular systems and structures did you as the CFO implement?
“Well basically I have been responsible for the implementation of all our systems we have today from scratch. There is an broad spectrum of financial disciplines within the company, ranging from financial reporting, management accounting, treasury and hedging functions, project development and management, reporting and management of capital projects and operations, tax structuring, investment and acquisitions as well as the project financing aspects of the business. It’s this relatively broad basket of financial disciplines within one company which I think is quite unique and has given me great exposure.”
Who is your role model in life and why?
“I can’t say I really have one. Don’t get me wrong, there are many people I look up to, but too often you find people quoting names of people they know very little about. There are lots of amazing people out there that have achieved some incredible things. What is important is that you can recognise and embrace the principles that made these people successful. You will often find that it was their ability to spot an opportunity, their vision, hard work and perseverance which attributed to their success. I feel that everyone has to walk their own path – the fact that something has worked for one person doesn’t necessarily mean it will work for you. To me, embrace the principles and focus on why they worked for these people, and apply them to your own life, instead of admiring and attaching to the persona of a role model in particular.”
What vital piece of advice would you give young ambitious finance professionals?
“My favourite quote by Thomas Edison is that: ‘Some of the biggest opportunities in life are missed because it comes dressed in overalls and looks like work’. I think that is very true. Most people don’t know how to work hard, and not just that, but to work hard and persevere to achieve an end goal. My advice to anybody is that you need to have a vision of where you want to go in life and that vision needs to be supplemented with focus and hard work. Find an industry and a career that you are passionate about and see yourself flourishing in. Do your best to create your own opportunities, get yourself a foot in the door, work hard and persevere - and you will be successful. Don’t expect anyone to progress your career for you, your destiny is in your own hands. Make sure that you regularly take yourself out your comfort zone; the biggest learning takes place when the going is tough. Persevere in the difficult times and take the learning out of them, and don’t be afraid to make mistakes. Make sure that you are challenged in your job and that you continuously build skills that enhances your marketability. Also, make sure that you keep growing as a person. If that’s not the case, you are not going anywhere. “
If you also would like to share your ideas with the CFO community, please get in touch with us to arrange an interview with you.Please contact Jurriën Morsch on [email protected].
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