Wild frontiers: Sarah Clinch, Aureos Advisors
6 October 2008
Looking for a lawyer in Brunei? Step forward Sarah Clinch, legal ;counsel at private equity house Aureos Advisors.
“Joining Aureos has certainly improved my geography,” says Clinch, whose company operates solely in ‘challenging’ markets.
As the advisory arm of Aureos Capital, a Mauritius-based private equity fund providing risk capital in more than 50 countries, Aureos Advisors manages investments from a $700m (£389.23m) pot.
The countries that fall within the fund’s remit are unlikely holiday destinations: Azerbaijan, Laos, Tanzania, the Democratic Republic of Congo. But since 2001 Aureos has delved into these frontier markets with great success.
Once the fund is set up, Aureos fund managers use local lawyers selected by Clinch, who liaise with the ;London-based ;company throughout the life of the fund.
The unusual circumstances and virgin legal markets that Clinch is involved in require her to have a more intimate relationship with the end product than most in-house lawyers. The fund formation is inextricably linked with controlling risk, meaning Clinch is drawn into the commercial heart of the business.
“When we’re choosing local counsel we try very hard to find counsel familiar with private equity funds and negotiated investment agreements,” says Clinch. “We’re lucky in that our teams based on the ground are made up of locals and already have relationships with law firms.”
Most recently Clinch was heavily involved in the final stages of closing a $400m (£222.63m) pan-African fund operating in many countries across the continent. At the same time, a Central Asia fund in Kazakhstan and Azjerbaijan was winding up, making the atlas the most well-thumbed book at Aureos HQ.
Clinch may feel like she is taking a lesson in geography but she also frequently turns teacher. Spreading the word from the good book of private equity takes some schooling, especially in countries that have never heard of it.
“Emerging ;markets ;are ;by definition less developed and the term ‘management buyout’ is sometimes simply not recognised,” she explains.
Getting around this problem requires some ingenuity. To instil a device such as a management buyout, Clinch says Aureos looks for an existing financial practice that is similar and adapts it. “There’s an element of paving the way in some of these countries. In terms of a legal framework, we defer to the UK courts if possible,” Clinch adds.
All this sounds like a dangerous scenario, so what happens when things go wrong? Clinch puts the fact that Aureos has had “limited cause” to revert to the dirty end of an investment agreement partly down to luck and partly to the close relationship with the companies involved – an Aureos representative is often put in place as a financial director on the board.
Working within political regimes that operate dubious, if any, legislation for financial deals, the company has to operate strict internal policies. With the US Department of Justice straining at the leash to enforce its far-reaching Foreign Corrupt Practices Act, doing business with a company owned by an African dictator or Eastern European mafia can lead to sanctions or a prosecution.
“There are various things we can do to mitigate risk,” says Clinch. “Fundamental to this is extensive due diligence. Having local individuals on the ground who are familiar with the market helps. But we also have well-developed corporate social responsibility investments and an environmental social management system.”
Aureos is also careful about how it structures its funds, ensuring that cash is returned during the life of the investment, not just on exit. And cash is something there is plenty of. Aureos Capital was created in July 2001 as a joint venture between CDC Group, a UK government-owned fund of funds, and Norfund, the Norwegian Investment Fund for Developing Countries. Since the beginning of 2002 its funds under management have increased six times and are forecasted to double over the next two years – proving that daring to go where others fear to tread can be a lucrative business.
Name: Sarah Clinch
Organisation: Aureos Advisors
Industry: Private equity
Reporting to: Peter Grant, general counsel
Company turnover: $724m (£402.98m) in funds under management
Number of employees: 137
Legal capability: Two
Main firms: SJ Berwin, Debevoise & Plimpton, Taylor Wessing (UK), variety of local firms worldwide
Sarah Clinch’s CV
1995: University of the West of England
1999: College of Law, London
2000-02: Trainee, SJ Berwin
2002-05: Corporate associate, SJ Berwin
2005-06: Corporate associate, Charles Russell
2006-present: Legal counsel, Aureos Advisors