What Vecchi did was transform the company treasury into a value-added cost center. The advantage of making the treasury just as accountable as any other department is that the strong team he assembled would know that their performance would be measured – and rewarded. Operating
with the belief that a central treasury is vital to liquidity management, Vecchi set up Al Futtaim’s treasury to act as an internal bank.
Majid Al Futtaim Group’s developments attracted 110 million visitors last year. In 2008, the company had Ebitda of $395 million on sales of $3.8 billion.
Within those vast operations, two different models coexist: The first, developing malls, is extremely capital intensive, while the second, managing hypermarkets, generates positive cash flows upfront.
They are extremely complementary businesses, but they can keep a treasurer on his toes. From an operating point of view, the company needed a model that managed fragmentations in the business,
according to Vecchi.
He also addressed the issue of financing and capital structure, not to mention financial risk management. Because he came to the Middle East from Europe, Vecchi found it very different to find the right level of support and commitment among treasury management companies in the region. That task has gotten harder during the recession, he said.
Majid Al Futtaim’s successful creation of a central treasury hinged on the fact that management liked what they saw. “There’s a certain cultural change that’s going to happen within the company,” Vecchi said.
“You need to build a solid business case. You can be the ultimate politician and marketer
of yourself, but if you can’t make a sound business case and quantify advantages
to your CEO, it doesn’t work.”

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