Oriol Pinya: "A good manager has to know how to make coffee"

Oriol Pinya is a founding partner of Abac Capital, holds one of the vice-presidencies of Barcelona Global and FemCat, and presides over SpainCap, which is the Spanish association of venture capital investors andprivate equityHe trained at Esade, UAB, HEC Paris, University of Michigan, and Harvard. He developed a large part of his professional career at Boston Consulting and Apax Partners, where he was also a partner. All for a chocolate soufflé. He made a vital change of direction and decided to co-found Abac, seeking triple profitability: finance, planet, and people. 135 investors told him no, but 15 told him yes. Yes to purpose, yes to accountability, and yes also to the craft of farmer and hunter within the world of investments. We'll leave Barça for dessert.--- Why did you decide to dedicate yourself to finance?I studied at Esade and UAB and started working in strategic consulting at Boston Consulting in Madrid. I did an MBA at Harvard where I met my wife and the opportunity at Apax Partners came up. They invited me to a dinner in Boston, it was a very cold day and I wasn't entirely sure about it. My wife told me to go because the restaurant made a very good chocolate soufflé. I ended up working in finance because of a chocolate soufflé.--- All for a chocolate soufflé![Laughs]. I started working at Apax Partners after dinner. Private equity combines the strategic thinking of consulting with entrepreneurship because you invest money and take risks. There's also the adrenaline of doing a deal. During my MBA, I worked at Merrill Lynch. Apax? Why not? Let's try it! I've traveled a lot for work and have learned to connect different parts of the world in a business.--- It runs in the family.Yes, my family was entrepreneurial. My father had a small textile company and at home there has always been the business vision of the typical Catalan entrepreneur.--- How is the "typical Catalan businessman"?From the outset, it is textile and comes from a centennial industry. The great-grandfather, grandfather, father, and older brother dedicated themselves to the family business. However, the entrepreneur has to reinvent himself because businesses are changing and are in constant restructuring. You have to travel, see the world, and get smart. This is what Catalan entrepreneurs and companies do and have always done.

"You have to travel, see the world, and get smart. This is what Catalan entrepreneurs and companies have always done"

--- You used to take up to 200 flights per year.An Apax office opened in Madrid, I got married and had three children. We used to spend Christmas in Barcelona until my wife, who is not Catalan, suggested we live here. We moved and the following years I commuted between Barcelona, Madrid, and London. I took many flights to the United Kingdom, China, Russia, India, South Africa, Germany, Nordic Countries... For quite a few years I was always up and down and I realized the personal cost my job had. At my children's school, they thought my wife was a single mother, but I wasn't there because I couldn't be.--- Vital change of course.We said: either we all go to live in London or we simplify family logistics and, therefore, we furl our sails at the multinational and start a new project, close to home and where we can combine a way of life with the work I like.--- This was the seed of Abac Capital.We opened an office with a couple of colleagues and named it: Abac Capital. It's true that we weren't too original, but it's a name that wasn't taken yet and, in fact, it's the one we came up with by looking in the dictionary. The abacus is used for counting, which is, precisely, what we do in the world ofprivate equityandventure capital. --- To count.Exact, we do a lot of numbers. We pass the plate and look for trustworthy people who believe in us. We talked to 150 investors, of whom 135 told us no, but 15 told us yes. We raised a first fund and invested in 10 companies from different sectors because we believe in both the entrepreneurs and the projects. Afterwards, we also created a venture capital fund forstartups.

--- What is your day-to-day like now?

--- Distracted and different. When my children were little, I used to tell them that I didn't do much: read emails, talk on the phone, and attend meetings. Jokes aside, my day-to-day involves a part of fundraising with investors from all over the world. In fact, more than 80% of the money we manage ---more than 600 million euros--- comes from non-Spanish investors.

"My day-to-day is fundraising with investors from all over the world, being on the board of directors, or talking with the management team to design a strategic plan together"

--- What is your fundraising strategy?There is a part of thefundraisingwhich is to explain to potential investors what we do and what we want to do. We have to convince them to invest in our funds. We also have to look for operations acting as a farmer or a hunter.--- Peasant and/or hunter?Being a farmer and planting seeds means talking to people and explaining our business project. We plant many seeds because the entrepreneur and their family have the vital need to make the transaction to a fund. You also have to be a hunter when a company goes up for sale; we are with the shotgun ready to analyze the operation and see if it fits our investment criteria.

"We look for operations by being a farmer (planting seeds) and a hunter (analyzing operations)"

--- What if it fits?When we identify the opportunity, then we make a due diligenceand a detailed analysis to understand the company and the market. There is a fiduciary responsibility and the money is not ours, but we invest money from people who trust us. We propose to guarantee an operation with a face and eyes, without assuming unknown risks. If the company is doing well, we work with entrepreneurs and future executives, making a business plan so that the company is worth more tomorrow than it is worth today.--- Time as a rising value.--- We hold many meetings to see where we need to go, how we need to proceed, and what we will do. We have a business plan, a purchase agreement, and we still need to set prices and conditions. We assume that the risks of the past are yours and the risks of the future are ours. We buy a percentage of the company, and the entrepreneurs stay with us because they also keep a part. We have raised afundraising, we have sought and analyzed the opportunity, we have designed a plan, we have closed a contract and now we are partners.--- Sounds much easier than it should be...There is a part of my daily life that involves being on the board of directors and speaking with the management team that reports while we jointly design a strategic plan that goes from theory to the practice of operation. We do this with three tools: people, systems, and processes.--- People, systems, and processes.We want to make sure we have the right talent because playing soccer with Messi is not the same as playing without him. We try to have a Messi who makes the ball go in and also have the people, the system, and the processes.

"We try to play like Barça with three tools: people, systems, and processes. We live off the difference between the price we buy at and the price we sell at."

--- It's a dream to have Messi on the team.You can play as Barça withMessi and the tiquitacawhich is a system where they were alsoXavi, Iniesta and Busquetsor you can play like Napoli, who had a superstar likeMaradona,but without a system. We try to be Barça because we want the system to work and for the company to be more international, more sustainable, and more digital over the years. This way, the company grows, generates jobs, and we can sell it for a higher price than we bought it for. We live off the difference between the price we buy and the price we sell.--- The other day I was reading a reflection that went like this: "An entrepreneur believes that the whole is worth more than the sum of its parts, while a financier believes that the sum of the parts is worth more than the whole."--- This is a mess! Decades have passed since that classical liberalism that tried to maximize shareholder value at work and left philanthropy for home. Capitalism is evolving towards conscious capitalism and companies are increasingly agents of change.

--- Conscious capitalism balances life and business.

--- Social media is changing people's social interaction and our way of living, working, doing, or falling in love. Everything is influenced by what a series of companies decide, companies that are involved in the global world we live in, but before this was not the case. It is the evolution of capitalism and we cannot shirk our responsibility as agents of change. We also have social and governance problems and climate change.

"Capitalism is evolving towards conscious capitalism and companies are increasingly agents of change. We seek triple profitability: financial, people, and planet"

--- "There is no Plan B," warns activist Greta Thunberg.

--- We have an elephant in the room called climate change. It is a very serious problem and we have to solve it. We have to work 24 hours a day to fight climate change and have a more just, more diverse, and more inclusive society. As investors, we have to go beyond profitability for our shareholder and generate profitability for people and the planet.

--- What factors do you take into account when investing?

--- The triple profitability: finance, people, and planet. Our purpose is to create sustainable value for companies, workers, and their community. It is our reason for being as an investment fund. When we invest, we define a 100-day plan with partners and the management team to understand their purpose.

--- Deeds more than words.

--- We set concrete indicators to measure our investment period in the company and not only guarantee financial sustainability, but also ensure that the different stakeholders can also benefit.

--- In a context of tight margins, how can Private Equity help companies and society?

--- We do not consider investing in a company without purpose. It is not worth making money at the expense of generating negative externalities that end up harming third parties. We have to include within our profitability those cases that are positive. It is the impact economy and intentionality when investing in businesses that make us have a better world.

"We have an elephant in the room called climate change. It is a very serious problem and we have to solve it"

--- At what moment is Private Equity in Catalonia and Spain?

--- Last year, 9,000 million euros were invested among all private equity and venture capital funds in Spain. In the last five years, 35,000 million euros have been invested. In the last 20 years, 70,000 million euros have been invested. That is, in the last five years, the same amount of money has been invested as in the previous 15 years. In fact, the last year is a historical record and there is an acceleration.

--- Good investment news for the business ecosystem.

--- Private equity investment in Spain is 0.7% and exceeds the European average. In recent years, we have made a catch up with respect to the rest of Europe in the penetration of private capital in the economy. Last year, as a sector, we invested in 960 companies, of which 750 were startups. Of the 9 billion euros, 7 billion are in private equity investments and 2 billion in venture capital.

--- More data.

--- Of the 9 billion euros, 2 billion euros were invested by Spanish management companies and 7 billion euros by international funds. All this means that today in Spain there are 3,000 companies participated by private equity that generate 500,000 jobs that also have an average salary that is 10% higher than the national average. We are very happy with the impact we have on society as agents of transformation that promote innovation in sectors such as technology, health, education or renewables. We are helping to transform the productive fabric of our country and we are very proud to help in this process.

--- A year of opportunities?

--- A year of uncertainties, we started 2023 without knowing how the interest rate hike and inflation would affect us. It has been a first quarter on pause and a second quarter of consumption, inflation relaxation, interest rates with less effect than expected, and delinquency without major increases. All of this has caused M&A operations to accelerate again, and we believe it will be a good year for private equity. We are increasingly taken into account within the economy, and today we no longer have to explain what we do because everyone knows what private equity and venture capital are.

--- What perception does society have of private equity and venture capital?

--- There is everything, but the more they know us, the better they perceive us. People who have worked in a fund or in an investee company know that we are people who get up early and go to sleep late, we work hard and try to be professional when making rational decisions that help everyone: shareholders, workers, clients, and suppliers. We have more and more success stories and more people who evangelize private equity and explain that we invest resources in new products, employment, social awareness, or corporate social responsibility. However, it is also true that there is still a part of public opinion that does not know us enough and speaks from hearsay.

--- And what does this public opinion of ears say?

--- A falling tree makes more noise than a growing forest. There have been operations that surely have not been done well enough or that we have not known how to communicate, and this creates the fear of ignorance and, therefore, the benefits of private equity are not fully seen. Those who have experienced it, in general, have a very favorable view. This is how the enormous growth we are having in Spain and in the rest of the world to help change the economy is explained. We provide the capital for an idea from a businessman or entrepreneur who wants to transform the world, but often lacks the resources. We have to communicate more and better.

"More and more people are evangelizing private equity and venture capital, but sometimes a falling tree makes more noise than a growing forest"

--- A matter of narrative.

--- A part of society still has this perception that we are the devil with horns and a tail because we still haven't explained ourselves well enough, and this is our obligation both at the level of managers and individuals. That is why we strive to publish more reports that show that we not only generate profitability ---the sector has generated an IRR of over 11% annually during the last 15 years, which is better than investing in the stock market---, but also generate employment and innovation and pay better salaries.

--- In which sectors do you see good opportunities?

--- The transformation of the planet, the energy transition, climate change, the circular economy, water.... There will be a lot of public and private investment to transform the economy and generate good opportunities. There are people who are making a lot of money. Also in the world of education. As a society we have tangible and intangible assets and education is what each one takes from the school of life.

"As a society we have tangible and intangible assets and education is what each one takes from the school of life"

--- The school of life.

--- When a person is born, they accumulate learnings that they put in their backpack and that must serve to have an occupation. Throughout life you do projects and you will have more or less value depending on the learnings you accumulate in your backpack. There are very good investments in education and health.

--- The university of life.We live longer and a greater percentage of GDP is dedicated to health. We must also take into account thesilver economy,which is the economy of older people who enjoy a better quality of life and have money to spend. Attention must be paid to this group that has been forgotten for many years and has a lot of potential. We could go on...

--- Let's continue.

--- Industry is very important for Catalonia. With COVID and supply chain problems, we realized that producing very cheaply in Asia was not a good idea. Now we see that it is worth paying a little more if we have supply security and flexibility to sell in the neighborhood and in the rest of Europe. Robotization is greatly reducing productivity differences between Europe and Southeast Asia.

--- Do we have to humanize companies more?

--- Yes, it's what we were talking about before, planet and people. We have to think about how we work on equality, inclusion, diversity, or work-life balance. You can't think of a company as a group of workers who, when their workday ends, become people. We spend a large part of our lives in a company, and working makes us who we are. The person is at the center of the knowledge industry, and we have to make sure there are systems, digitalization, and processes, but above all, people and talent that may need training and flexibility.

--- "History is not written by those with the most talent, but by those with the most motivation," Peter Drucker used to say.

--- Yes to humanization, but Drucker also talks about objectives. With more educated people, you don't have to be saying how or what needs to be done at every moment, but rather that certain results must be achieved. There's a fantastic word in English which is accountable which means that everyone is responsible for their actions, both for good and for bad. We give autonomy so that people meet their objectives.

--- ¿Accountability in the political world?

--- We are improving. It's the same thing we said before about football. You can train a lot, but it's the players and not the coach who play the game on the field. The goal? Win the game and if the season doesn't go well, then we will change some players.

--- What are the leaders of the 21st century like?

--- When investing, you just have to be honest and recognize that we never know everything. The executives are the ones who know how to manage a company and we are good at asking questions so that they can give an answer. When you are looking for a key executive, you often already have them within the company, but if you have to look for someone new, then you have to look at their aptitudes, experience, sector, technical knowledge, and attitude.

"When investing, you just have to be honest and recognize that we never know everything. Executives have the answers and we ask the questions"

--- What kind of attitude?

--- People who are leaders and know how to work in a team. I really like to see if the executive knows how to make their own coffee. There are executives who have succeeded in a very large company, but they are too used to delegating and have lost touch with reality. We invest in SMEs and we want people who are grounded beyond ideas and know how to make their own coffee.

--- Making coffee as a philosophy of life.

--- It is also very important to ask for references. We use headhunters to hire, but when you see that a person might fit, you have to call and ask the key question: "Would you hire this person?". People tend to be honest if you ask the question well. The cost of making a mistake is very high, and we dedicate a lot of time to making a good selection wherever we invest.

--- How do you see Barcelona?

--- There are people who talk about decadence, but I don't agree. Evidently, things could be done better in the city and everywhere, but the reality is that everyone really likes Barcelona when you travel the world. The city has a charm and not only because of the climate or the sea, but also because of the architecture or our way of doing things and welcoming people.

--- Opportunities and/or threats in the Catalan capital?-- It is a city where there are opportunities, talent, ideas, and projects. Barcelona always ranks very well among cities when it comes to creating attractive companies. We Barcelonans are not aware of the gem we have in our hands; I don't believe there is decadence, even though we like to argue a lot and form small cliques.

"We Barcelonans are not aware of the gem we have in our hands; I don't believe there is decadence, even though we like to argue a lot and form small cliques"

--- To make little chapels?It's hard for us to push forward projects that unite the city, and we have to be a bit more entrepreneurial, take the plunge, and leave the details for later. We are not very practical, we go a bit slow, and we cannot let opportunities to do business and culture escape because of the little chapels that have to agree. Here we are three Catalans and we have five opinions. [Laughs]. We have to be a positive Barcelona.--- The Barcelona of yes.The Barcelona and Catalonia that are willing to open up to the world and say that they are a land of opportunities. As they always have been, where people of all kinds mix and live together in peace and freedom while being able to earn a living and be happy. We need politicians to help us work for the yes and see how together we can remove the sticks from the wheels and make the electric car move faster.--- Is administration a facilitator or a hindrance to business activity?It would have to be a facilitator, but some business projects have been unfairly demonized during the last few years. In order to have a more equitable and inclusive city, we need to generate wealth through business activity and be able to distribute it. An administration has to favor activity that meets sustainability criteria and has a positive impact on the city and the standard of living. If we don't generate wealth, there's nothing to distribute.

"If we don't generate wealth, there's nothing to distribute. The administration should be a facilitator, but some business projects have been unfairly demonized in recent years"

--- What role should civil society play?We have to get involved. The world is increasingly global and, therefore, needs public-private collaboration. We have to be able to make concessions, dialogue, and make the whole worth more than the sum of its parts. We have to be willing to understand each other with people we like and with people we like less because the city and the country belong to everyone. In other countries, they agree much faster and don't wait as long. If we collaborate, we will be unstoppable.--- So, we need to collaborate more here?In Barcelona we have our own model and Catalans have a different character from everyone else. We can all learn things and we don't have to copy from others, but we do have to be faster in making decisions because we compete in a global world. Not making a decision is making a decision. Inaction is making a decision. Not doing is making a decision and in fact, the worst decision is not doing in a global world.

"Not doing is making a decision and in fact, the worst decision is not doing in a global world"

--- "The paralysis of analysis," as businessman Antoni Pont says.Exactly!--- He is a great Barça enthusiast. How does he see the club?I am a member and a fan. How do I see Barça?Josep Guardiolahe says that in Manchester he is calmer because if he wins it's fantastic and if he loses he is only criticized a little, but he can live well the rest of the week. Sometimes we forget that Barça is a fantastic club, but it's sport and the club's famous environment ends up having harmful elements. If Barça's environment were like that of most teams, surely the bad decisions of recent years would not have been made, which have severely damaged the economy and forced us to tighten our belts until we manage to deleverage. ---Joint-stock company in sight?I am not a catastrophist. The club has enough capacity to generate resources with the new stadium and therefore, I believe the situation will straighten out, and if with a bit of luck the ball also goes in, then even more so. Barça should learn to separate the board more from the economic management, and in fact, the board should act more like a company's board of directors. This means there is a general manager who reports to the board, but the current governance harms the club because there are too many people talking, leaking, and making decisions in an uncoordinated way. If Barça were a company...--- The previous interviewee of Persona a Persona, Pau Relat, asks you the following three questions: 1. Traditionally, Private Equity funds have had the image of being very short-term oriented and looking at short-term value generation to maximize their return on investment. This has historically compromised the long-term viability of some reference companies in the Catalan industrial fabric. Has this approach changed over time?This is more of a myth than a reality. Both theprivate equityas theventure capitalthey try to create long-term value, we do not pay dividends along the way and we invest money in ideas and people. The reality of the data is that private equity in Spain has generated a return of more than 11%, while also generating more employment and better salaries. It has been a backbone of wealth and innovation in both Catalonia and Spain.2. According to your experience, what is the difference between managing a global (multinational) fund or doing so in a more "local" fund with ties to the territory? Do the decision parameters change when prioritizing investments?The global (multinational) fund tends to be more specialized and the companies they buy are larger, assume more leverage, and enter into merger and acquisition processes of companies within the financial game. The small fund is for organic growth, establishes alliances with the founders, and contributes to making the company more digital and sustainable.3. Which sectors of the Catalan economy are most interesting for investment?Education, health, energy, export industry, circular economy, and sustainability.

---

SEVEN LIVES 1. Reference: My father2. Book:How will you measure your life, by Clayton Christensen3. Movie:Titanic4. Song:The Stake, by Lluís Llach5. Favorite corner:La Cerdaña6. Life motto:The Babylonian golden rule: treat others as you would like them to treat you7. DreamRun the 6 Majors

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