17/11/2021 - 08:00

Wynne builds a global business

17/11/2021 - 08:00

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APM is a rare example of a Perth company becoming an international market leader.

Wynne builds a global business
Megan Wynne focuses on APM’s strategy while Mike Anghie leads its global operations. Photo: David Henry

Megan Wynne seems an unlikely candidate for building a global business worth more than $3 billion.

The daughter of a bank manager, she studied occupational therapy at Curtin University.

After graduating in 1987, Ms Wynne’s first job was at Collie District Hospital.

She showed her first hint of entrepreneurial flair three years later when she was working at Royal Perth Rehabilitation Hospital.

That’s when she started working after hours and on weekends as a sole practitioner at St John of God Hospital in Subiaco.

“I always wanted to go into private practice,” Ms Wynne told Business News.

“It was my goal to do that; I had never thought about the possibility of doing something on this scale, but I guess it just evolved from one step to the next.”

The something she refers to is APM Human Services International, the multinational company that was valued at $3.25 billion ahead of its listing on the ASX this month.

The growth of APM has been spectacular, especially over the past five years.

It has more than 7,000 staff across 10 countries delivering a wide range of employment, disability, and aged care services that governments have outsourced to the private sector.

The company expects to generate total revenue of $1.33 billion in the year to June 2022.

Despite her remarkable achievements, Ms Wynne has never sought the public limelight. Far from it, in fact.

Until a few years ago, she was barely known in Perth’s business community.

Nor does she project herself as a powerful, dominating personality.

When Business News interviewed her for this profile, Ms Wynne let the executives around her answer many of the questions.

Perhaps she is happy to let the company’s track record speak for itself.

Ms Wynne was 27 years old when she established APM, in 1994, and continues to be fully engaged as the company’s executive chair and major shareholder.

In her first year as a business owner, she got into a habit that has served her well.

Ms Wynne signed up for a government scheme that paid half the cost of a business plan.

“I was really fortunate,” she said.

Leslie Chalmers from PwC did our first business plan with us.

“It got us into that frame of mind early of setting goals and going for it, and then doing it again.

“The next year we did world’s competitive practice through the same program.

“It then became an annual thing.

“We planned every year, we set goals and then set about achieving them.”

APM's global operations are run from a modest office in West Perth. Photo: David Henry

Another habit that stuck was brevity and simplicity; APM still seeks to condense its business plan to what it calls a ‘plan on a page’.

Ms Chalmers, who has since retired from PwC, proceeded to become a long-serving adviser to Ms Wynne, and for a period served on APM’s board of directors.

She is one of many people Ms Wynne credits with helping develop the skills needed to build and run a global business.

“I’ve found throughout my career, people have been incredibly generous with their knowledge,” she said.

“Even this process of whether we list. When I rang and asked people if we could come and have a chat, people were incredibly supportive, sharing their experiences, the good, the bad, the things to be mindful of.

“Way too many individuals to list.”

Ms Wynne also credits the US-based Young Presidents’ Organization, a group she joined in the early 2000s.

“YPO has been incredible for me,” she said.

“The people within the YPO community have been great mentors.”

APM’s early business plans were designed to support its growth within Western Australia, with a focus on rehabilitation services.

After about five years, APM started gradually expanding interstate.

Ms Wynne was helped by local team members who were prepared to move interstate to open new offices and lead the growth in new markets.

The scale of APM’s operations grew rapidly after the company won its first Australian government contract in 2002, to deliver work capacity assessments nationally.

“That was delivering services from 232 locations around Australia,” Ms Wynne told Business News.

“The organisation doubled in size overnight with that contract.

“That was quite a game changer for us because it gave us significant scale and … exposure to delivering services on behalf of government and, from that, other opportunities came.”

Family backing

That period was also when family backing helped Ms Wynne overcome a major challenge.

She tried to borrow money from banks to help fund the national expansion, but they were not interested in supporting a young, female business owner.

To this day, she said it was only with banks she had ever encountered a credibility gap.

“Which is a bit sad for me, because my father was a banker, and I grew up loving the bank,” Ms Wynne said.

Other than in these dealings with the banks, Ms Wynne believes her gender has not been an issue.

“I don’t feel as though I’ve been held back by that. I was fortunate to be raised in a family where there was a belief you can do anything you set your mind on,” she said.

“The only constraints were hard work and how much effort you are prepared to put in.”

The 2002 expansion proceeded after Ms Wynne borrowed the money she needed from her husband, Bruce Bellinge, who established and heads Subiaco-based Concept Fertility Centre.

Dr Bellinge later converted the loan to equity, making him a major shareholder in the business.

The 2002 contract was followed five years later by another big win.

The company secured an Australian government contract in 2007 to deliver vocational rehabilitation services and two years later started providing mainstream employment services.

They are the basis of the company’s biggest Australian contracts today.

International growth

Having spread nationally, APM started looking further afield.

It began operations in the UK in 2011 and New Zealand in 2012.

Growth did not come easily, however, so the company started to focus on acquisitions.

“We had been in the UK since 2011 trying to grow organically but just didn’t have the scale to win contracts because of the size and maturity of the market, so that’s when we did an acquisition,” Ms Wynne said.

In fact, APM bought businesses in both the UK and New Zealand in 2015, providing a template for later growth.

The group has acquired a total of 16 businesses with a total value of more than $300 million since 2015.

Ms Wynne said she didn’t stop to reflect on the company’s growth.

“I don’t think we ever stopped and did that, we just kept on setting the next goal,” she said.

“We are quite competitive; we don’t like coming second.”

One important step Ms Wynne did take was to put business advisers around her.

She established an advisory board in the early years, transitioning to a formalised board around 2005.

The members included Ms Chalmers, Dr Bellinge, business adviser Paul Fiddes, who chaired the board, former Canberra public servant Lisa Paul, and chief operations officer Dale Wilcox.

Megan Wynne. Photo: David Henry

Private equity

APM’s growth trajectory accelerated after May 2017, when investment group Quadrant Private Equity bought a majority shareholding for a reported $240 million.

The deal was pulled together by Mike Anghie, who at the time was running EY’s corporate finance practice in WA.

His experience showed just how much APM had sailed under the radar.

“It was through that transaction that I first met Megan and Bruce,” Mr Anghie said.

“I was trying to find out if anyone knows this person, Megan Wynne.

“I said to the team, ‘Go and find out what you can about this company APM’, which was pretty hard to do.

“It took six months before she would have a discussion with us, and it took a few more months to convince [her] to do a deal.

“I had to convince Megan that private equity was a good idea, which took a lot of hard work.”

Private equity funds are seen by some as ‘vulture’ funds: buying businesses at bargain basement prices, sprucing them up and selling out for a big profit.

They can also provide the funding and expertise to help successful businesses accelerate their growth.

“It was a big decision, but Mike was very convincing,” Ms Wynne said.

“We had gone through the hard yards by then, we had gone through the growing pains and the company was doing really well.”

She believes Quadrant was the right partner for that stage of APM’s journey.

“We really liked them, they were good people and great partners.”

Ms Wynne also struck up a good working relationship with Mr Anghie, who joined APM as chief executive in 2018.

That was followed by more acquisitions, including UK-based Ingeus, which was established by Australian businesswoman Thérèse Rein and had operations in Britain, the US, Canada, South Korea, Germany, Switzerland, Singapore, and Spain.

It also bought ASX-listed Konekt for $90 million.

In November 2019, Quadrant decided it wanted to exit its investment in APM, which triggered a global search for a new partner.

Ms Wynne and Mr Anghie visited multiple private equity groups in the US and UK, before doing a deal with US firm Madison Dearborn Partners.

“There was only one firm that we felt was culturally aligned and knew this sector,” Mr Anghie said.

“They have been a great partner and will be going forward.”

Mike Anghie. Photo: David Henry

ASX listing

At APM, it appears things never stay still for very long.

That has certainly been the case this year, with the company deciding to take advantage of a buoyant stock market.

It has raised $982 million of new capital through its initial public offering.

That is arguably the largest IPO ever completed by a WA company, possibly beaten only by construction giant Multiplex, which raised $900 million in the first tranche of its IPO in 2003 and a further $300 million several months later in the second tranche.

The IPO has allowed Madison Dearborn to sell some of its shares, reducing its stake from 52 per cent to about 30 per cent.

The stake held by Ms Wynne and Dr Bellinge has also declined, from 38 per cent to 34 per cent.

At the issue price of $3.55 per share, that stake is worth about $1.1 billion.

An unusual aspect of the deal was that Ms Wynne did not simply sell her ‘extra’ shares; instead, she established a mechanism that effectively allowed her to gift shares to her family members.

Ms Wynne is not worried about the obligations and responsibilities that come with being a listed company.

“We were already operating to that level,” she said.

Mr Anghie said APM operated in a highly regulated sector, with strict compliance and reporting standards, and already had formalised board committees.

“We ran this company like a public company,” he said.

“The discussion was more about where to list.”

A factor in those deliberations was that APM does not have any close peers on stock exchanges around the world.

One listing option was the US, where Madison Dearborn is based.

Another option was the UK, where the company has large operations.

The board finally opted for the ASX, and it sounds like it wasn’t a difficult decision in the end.

“We understand the ASX,” Mr Anghie said.

“We are a very proud WA company and a very proud Australian company.

“That domicile and being ASX listed was very important for us, and it made a lot more sense.

“This is about the future of APM as a growing business in Australia and globally.”

Asked about the merits of running a global business from Perth, Mr Anghie said it had never come up for discussion.

He noted that APM had operated successfully from Perth, both pre-COVID-19 when interstate and international travel was allowed, and post-COVID-19 when it relied on video conferencing.

Growth opportunities

With the ASX listing process complete, Ms Wynne is focused on future opportunities.

Far from exiting the company, she sees the listing as the start of APM’s next growth phase.

“There is a lot more work to be done,” Ms Wynne said.

With Mr Anghie having day-to-day oversight of the company’s far-flung operations, Ms Wynne has a broad strategic focus, including new contracts and business opportunities.

That includes focusing on the National Disability Insurance Scheme and aged care as two growth sectors, to complement the employment services contracts that account for a majority of APM’s income.

There is also the opportunity for more international expansion.

Mr Anghie said Australia’s reputation as an efficient provider of human services was a big plus for APM.

“Australia is a sophisticated human services market, best-in-class globally,” he said.

“We are a key part of that system, we are a high performer across rural, regional, metropolitan and remote areas.

“The credibility of taking that globally, and the respect the Australian system has, it’s a real competitive advantage.”

Mr Anghie added that APM’s experience across 10 countries provided an enormous opportunity for information sharing and benchmarking.

This was especially important coming out of the pandemic, as authorities grappled with the fallout on people with disabilities, the impact of disrupted schooling, and the effects on social cohesion and mental health.

“Being able to share what is going on globally has been a real opportunity for us,” Mr Anghie said.

He sees enormous opportunities, which, given the nature of APM’s business, flow from issues such as unemployment and inequality, ageing populations, the emerging focus on disability, and veterans returning from conflict zones.

Mr Anghie believes all these issues have been exacerbated by COVID-19.

“Governments have dealt with the health and vaccination issues, now they will need to deal with the social and community issues that have been caused, and that’s exactly where we play as an organisation,” he said.

Mr Anghie said APM was also aiming to deliver good returns for investors.

“When we embarked on this journey of listing, we said to the [investment] banks, ‘What does best in class look like?’”

“What’s the revenue growth, the profit growth?

“What are the best founder-leg organisations globally?

“What are their returns, can we match that or beat that, so we can be market leading, not just in our sector, but in capital markets.

“We said, ‘We can be one of those companies’, and that’s the goal.”

Ms Wynne sees no conflict between APM’s profit objective and the delivery of services but is conscious of the debate.

“It is something we do come across,” she said.

“People say, ‘You are a for-profit organisation therefore this can’t be good’.

“That is why our service delivery has to be first class. You should be judged on your performance and not status.”

Ms Wynne cites a 2017 Productivity Commission report to support her stance.

The Canberra-based agency noted that human services are provided by a mix of government, not for profits and for-profit organisations.

These include not-for-profit organisations such as The Salvation Army and Mission Australia, which are among APM’s competitors.

“Experience shows that no one type of provider has a monopoly over good service provision and each has had successes and failures,” its report concluded.

“Governments should focus on the capabilities and attributes of service providers when designing service arrangements and selecting providers, not simply the form of an organisation.”

APM’s prospectus quoted some numbers to illustrate the company’s reach as a service provider.

It worked with 660,000 unemployed people, assisting more than 290,000 into sustainable jobs.

It worked with 180,000 people with disability, assisting 90,000 into employment.

APM also worked with 100,000 people with mental health needs, 50,000 people emerging from the criminal justice system, and 30,000 veterans returning to civilian life.

Ms Wynne clearly revels in her success at building a business that is both commercially successful while also being a well-regarded service provider.

“I love what I do,” she said.

“I feel very privileged each day to do something I’m passionate about and that I feel makes a difference, and that is really satisfying.

“So, selfishly, I want to keep doing that because it gives me a lot of pleasure.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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