Richard M Powell sets sights on Jamaica

Business Leader Nominee #1

BY MOSES JACKSON

Wednesday, October 26, 2011

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IN a world where Wall Street has become a metaphor for everything financial, the city of Orlando, Florida seems the unlikely host for a company with credentials perfectly suited to the iconic New York business district.
 
 Yet this temperate heaven for soft adventure fun seekers, is the address from which two investors with inalienable Jamaican heritage have made a habit of snapping up multimillion-dollar corporations, nurturing them, then flipping them for profit.
 
 In 2002, Richard M Powell and fellow Harvard University alumnus Frantz Alphonse teamed up to create AP Capital Partners Inc (APCP), a middle market private equity fund. Powell, now 32 and mature beyond his years, has been senior managing director of the firm, and Alphonse, its CEO.
 
 Just how prodigious this partnership has been becomes immediately apparent with a quick glance through the balance sheet of the investment outfit.
 
 The first number that is likely to stun those flipping through the document is AP's US$300 million ($25.6 billion) plus capital base, built up over less than a decade. It's a piece of information that underscores just how adept the two principals have been at using this vehicle to spin yearly profit.
 
 Another propitious balance sheet line item is the US$1.4 billion combined consolidated gross revenue that the various companies in which the equity fund holds majority and controlling stakes, produced in 2010. A welcome byproduct of this enterprise is the 7,000 jobs that have been created across the globe, but primarily in America.
 
 These numbers compel two basic questions: Who exactly is Richard M Powell, and how did his nascent company rise so far, so fast?
 
 To be clear, his is not the evocative rags-to-riches odyssey that typifies the Jamaican diaspora experience with wealth creation and personal transformation.
 
 Indeed, the fact that Powell may have set out on his entrepreneurial journey from the vantage point of relative privilege does not in any way devalue the authenticity of his personal achievements.
 
 The progeny of a mechanical engineer father, Richard (Snr), and a mother, Hazel, who works as an auditor, young Powell seemed destined for greatness the moment he left Campion College in Kingston, half way through his A-level programme to take up a US$55,000-per-year
 
football/academic scholarship at the Phillips Academy in Andover, Massachusetts.
 
 “This is the high school that produced several US presidents and senators including the Bushes,” he preens.
 
 A full scholarship to Harvard (yes, the school that produced Barak Obama!) followed, ending in a degree in economics and a job in the emerging markets group at Bear Stearns. Powell later did a stint in corporate finance at UBS Warburg.
 
 At these institutions there was plenty of stuff to ingest: leveraged buyouts, sponsor-backed management buyouts, debt financings, initial public offerings, mergers and acquisitions, equity & credit derivatives, capital raising and selling to large corporations, board-level management, e-business strategies.
 
 There could hardly have been a better training ground for the self-driven, future entrepreneur than these Wall Street juggernauts, with their global reach and financial prowess.
 
 “I always wanted to start a private equity firm that would create wealth, that would help businesses grow,” Powell says. “I knew that I didn't want to be involved in a hedge fund, because I was not interested in making money at the expense of others.”
 
 The earliest contours of these plans can be traced to the day when Powell met Alphonse, a Harvard MBA student, at the university's gym. Born in Jamaica of Panamanian mother and Jamaican father, he had emigrated to Boston at age eight.
 
 We immediately knew that we would work together so we kept in touch after he graduated and was in Europe working for a year and a half,” says Powell.
 
 Always mindful of the potential challenges facing minority entrepreneurs trying to break into America's vaunted financial sector, Powell and Alphonse agreed on one basic approach to their future partnership.
 
 “We did not want people to think of us as two Jamaican-born entrepreneurs,” he explains. “As minorities we did not want to add anything to the stripe already against us. We wanted people to think of us as smart people period; and that incidentally they were born in Jamaica.”
 
 Despite what some may interpret as a move towards 'de-Jamaicanising' AP's corporate identity, Powell is the first to point out that Jamaica was never far from his strategic vision and plans.
 
 “For us, Jamaica was always a question of when,” he tells the Business Observer. “In fact, our location in Florida allows for easy access to the island. We wanted to create jobs in Jamaica but needed to get our grounding in the USA where we could do things on a massive scale. We wanted to invest in businesses that create significant jobs in Jamaica. As a student of economics, this was in line with my own developmental passion.”
 
 His, however, is passion tempered by thoughtful pragmatism.
 
 “We made sure we started with strong mentors and advisors,” says Powell, explaining some of the early decisions that set the stage for his company's success. “You can be the smartest person in the world, you need to recognise that there are people who can help. We surrounded ourselves with top people to ensure we were on the right track. We knew that if we did it properly, we could create a billion dollar company — we did not know how long it would take, but knew it would happen. The Harvard network was very supportive.”
 
 In a nutshell, AP's business plan called for it to take majority positions in the companies on its target list. Where possible, partnership would be forged with existing management.
 
 We acquire a controlling stake and leave the rest on the table,” says. Powell “We want to control the direction of the business.”
 
 This decision is driven in part by a practical economic consideration. As a minority-owned business — with 51 per cent shareholding being the ownership threshold — AP can take advantage of opportunities for service outsourcing with Fortune 500 companies, many of which, as a matter of policy, welcome partnerships with minority firms.
 
 “We are pioneering a space in the US for minority business enterprise,” the entrepreneur lets on. “In the US, the Fortune 500 companies realise that increasingly, more of their business is being generated by minority consumers, so they have put in place policies to spend money with those ethnic groups. We can go to these companies and source business from them. We are leveraging this opportunity like no one else.”
 
 There were a few defining moments along the growth path of this equity investment company, of which the 2004 leveraged acquisition of ZeroChaos, a temporary workforce management company, remains the most spectacular.
 
 That year, AP Capital pooled together a group of investors, raising around US$6 million of the US$15 million price tag for the modest-sized outsourcing company. Sixty per cent of the purchase price was funded through a bank loan.
 
 In December 2010, AP Capital offloaded ZeroChaos to the Snow Phipps Group, a New York-based private-equity firm. The deal fetched US$200 million, and made headlines as one of the biggest transactions of its kind in central Florida.
 
 At the time of the sale, ZeroChaos was doing US$1.2 billion in annual web-based payroll processing for clients' back office management and other services. Its clients had a combined workforce of 50,000.
 
 “It speaks to the scale of the market in the USA and why we did not immediately come back to Jamaica,” notes Powell.
 
 AP Partners' portfolio of subsidiaries is in and of itself, quite impressive. But it is the long list of household-name client companies which they serve, that truly reflect how far this private capital outfit has come. Names such as GE, Northrop Grumman, JetBlue, BAE Systems head this line up.
 
 While Powell is known mainly for his role in AP Partners, this acquisitive Jamaican businessman has been quietly venturing into new areas in recent times.
 
 He is chairman of the RMP Group, an outfit he established in 2009 to manage his diverse business and philanthropic interests.
 
 Powell describes the RMP Group as a private investment and advisory firm “designed to handle all non-APCP activities including: consulting, international investing, philanthropy, and more”.
 
 The portfolio is populated by a range of assets: real estate, technology, integrated media, industrial suppliers and business sales support systems.
 
 Additionally, as part of his unbroken ties with Jamaica, Powell serves on the board of the Victoria Mutual Building Society.
 
 What's more, his inexhaustible list of charitable and civic engagements, and personal achievements defy his relative youth.
 
To name a few:
 
• The Powell-Bull Scholarship Fund,
 
 and the Campion High School
 
 Alumni Association.
 
• A member of the Young Presidents
 
 Organisation, the Marathon Club, the
 
 Council of Urban Professionals.
 
• He was also named one of the “40 under 40” leaders in mergers & acquisitions by the M&A Advisor, and “40 under 40” executives to watch by the Orlando Business Journal.
 
• He was selected by the World Economic Forum as a Young Global Leader (2009) in recognition of his commitment to positive social change.
 
• He has represented Jamaica in four sports (soccer, tennis, track & field, and table tennis) at the youth-national level, and was the youngest person from the Caribbean ever to be scouted by a professional soccer club (PSV Eindhoven) in Europe.
 
• Powell has been recognised as one of the rising stars of global finance, and has spoken at Harvard Business School, MIT's Sloan School of Business and the Marathon Club.
 
• He has been featured in various business publications including Inc. magazine, the Boston Globe, and the Wall Street Journal.
 
• He is also co-author of The Buyout Game, forthcoming later this year.
 
Powell insists that despite AP's success to date, its best performance lies ahead.
 
“What we have seen so far is just the start,” he says. “We have learned; we want to create five different multibillion-dollar businesses over the next five years. We will be raising more capital to do it even bigger. We will be launching APC Holdings to buy billiondollar companies then turn them into minority businesses and create value.” In the coming years, Jamaica is expected to take a more central stage in his business plans as this savvy investor looks around for growth opportunities. Here, he sees medium term prospects in health care, energy and education
 
“If I found the right opportunity, I would follow suit,” he notes. “I am very passionate about youth education, health care and energy in Jamaica. This country could be a prime destination for lower-price health care.”
 
Moses Jackson is the founder of the Jamaica Observer Business Leader Award programme. He may be reached at moseshbsjackson@yahoo.com

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