Listing at the NYSE - a chat to Megan Pydigadu (MiX Telematics)
Not many South African CFOs will guide their JSE-listed company through a second listing in New York, but Megan Pydigadu did just that. We chatted to her about the ups and downs MiX Telematics has gone through since then, the balance between an entrepreneurial attitude and compliance and shifting the company culture.
What do you like about being a CFO?
"I love numbers. They tell a story of how the company is executing against its strategy and will quickly highlight where things may be amiss - numbers don't lie. It is also critical in executing the company's strategy that the key levers are fully understood and the impact they can have on the long term plan of the company. Over 70 percent of our revenue is subscription-based which makes running the business and understanding the levers very metricised. What I like about my CFO role at MiX Telematics in particular is the challenge. Being listed on two exchanges and understanding the different rules is complex.
What is your recipe for success?
"Surrounding myself with a good team, which I think I have done. The head office team I have built up is young, but energised and very innovative. You have to be innovative to be able to adapt. Being in touch with the business is also crucial. That is why I speak with our 6 regional financial directors on a weekly basis."
Your CEO is based in the United States. How does that dynamic work?
"We use technology and do a lot of Skype and Google Hangout calls. When I was appointed, he was already working from the US, so it took a bit of time to build up a relationship. He is more of a visionary (he founded the business); I am more the conservative accountant, but we have healthy debates. We discuss the business including structure, strategy and performance. Sometimes when you are looking at how you can streamline or make the business more efficient it is an ongoing conversation and dialogue that will ultimately lead to the final decision."
"The COO works half from the US, half from South Africa. He runs the day-to-day business. It is crucial that the 3 of us have the same face internally and externally and that the group is aligned in terms of executing on our stated strategy."
How does listing on the NYSE compare to the JSE?
"The NYSE listing has required us to start reporting quarterly, give guidance and for the first time we have analysts following us (in South Africa we do not currently have any analysts following our stock). It has been a huge learning curve, and we have very quickly had to put a team in place to meet the additional governance and reporting requirements."
"We listed, through the simplified regime of the JOBS [Jumpstart Our Business Startups] act, but there is still a large amount of compliance. As management we have had to comply with Sarbanes Oxley and give a 404a certification over the financial controls in our business. We managed the process by outsourcing our Sox compliance to EY and appointing a group risk & compliance manager."
SOX requires a deep level of compliance within the organisation - how did that go?
"It has been a big cultural shift to ensure our operators understand and embed the required SOX controls into their business. Operators are based all over the world and sometimes they don't realise the ramifications of what they do and the impact it can have on the group as a whole so communication is also a key."
Some analysts feel the listing hasn't really work out, but you are still confident. Why?
"Listing in New York was a big structural change and it is still early days. We wanted to get a bigger free float, raise our profile and get a revaluation to enable us to do possible global acquisitions. We have definitely raised out profile, we have cash reserves and while our stock price has come off from when we first raised capital on the NYSE the fundamentals in our business are still good with us growing organically in the mid- teens (subscriber and subscription level). Time will tell in the long term."
"As a result of the listing, we have gone from being very entrepreneurial to very compliance driven. There have been growing pains."
"I am really proud of the NYSE listing. We were running multiple timelines under very tight deadlines with NYSE, JSE, SEC, shareholders and the Reserve Bank. It could have easily fallen apart."
What have you changed during your tenure?
"I have had to bring in more structure, systems, policies and processes to the greater finance function. This has also entailed building a team to grow with the business that is agile enough to deal with complexity and change."