New CEO Lenardos Plans Refocus to Return Cinnober to Profit in 2019

Peter K. Lenardos, who was appointed CEO of Stockholm-based financial technology provider Cinnober on Monday, believes he can turn around the company’s recent losses by refocusing on its core business, he tells WatersTechnology.

Lenardos says he believes the company’s financial woes—a loss of SEK (Swedish krona) 93 million ($10.1 million) in 2017 and a SEK 31.2 million ($3.4 million) loss before tax in the first quarter of this year—are a result of the vendor drifting away from its core business, and that he can manage Cinnober’s growth in a way to return it to profitability next year.

“I think the cost base had got a bit out of control, so we need to right-size that,” he says. “More importantly, the core business of Cinnober [was] being the only independent provider of clearing and trading technology to exchange groups on a global basis. That focus had been a bit lost in our growth plan, so I kind of wanted to bring it back to basics here, and focus on what we do best—that is, provide technological solutions to trading firms and clearinghouses around the world.”

As an investment banker, Lenardos completed 15 M&A deals worth over $8 billion. He also raised over $2 billion via eight public and private equity offerings. He describes himself as a “profit junkie” who has analyzed many companies from an M&A, IPO, and research analyst perspective.

“I know how a good company looks,” he says. “I know why companies have fallen on hard times before, so I think that has helped me analyze and develop a style and a plan for Cinnober—not only what to do, but more importantly what not to do, [such as] don’t overgrow. M&A can be very disruptive for organizations. I have certainly seen that.”

This begs the question: does he have any M&A plans for Cinnober? “That is inside information,” he says. “All I can say is we are a publicly listed company, so we have a fiduciary duty to maximize shareholder value. What I will tell you is that our plan, the one that we are developing, focuses solely on organic growth. Now in a couple of years’ time when we return to profitability and are nicely growing, might we look for selective acquisitions? Sure. But right now, we have an organic plan to grow and become profitable.”

In June the company sold 60 percent of its market surveillance technology subsidiary, Irisium, to London-based risk management-as-a-service provider KRM22 plc, which Lenardos—who at that time had just joined Cinnober as CFO—says was a divestment to monetize some investments the company had made.

The sudden departure of Veronica Augustsson came as a surprise to many. She had been with the company for many years in various roles, and became CEO in 2012. “The weird thing about both of these jobs, CFO and then the role of the CEO, is it happened,” says Lenardos. “I wasn’t searching for it; I wasn’t seeking it. We found one another, and it happened.” 

Lenardos previously worked at Royal Bank of Canada (RBC) in London, where he built its global market infrastructure business. It was also where he developed contacts at companies like Cinnober. After leaving RBC in January, he says his plan was to assess options for a potential move back to the US after 13 years in the UK, but quickly became “very involved” with Cinnober after Augustsson enlisted him as a senior financial adviser in April. “I had known Veronica for a long time,” he says. “She brought me in to help on some of the financial matters the business was facing, and to use my connections to help expand on the sales side.”

Despite his background in M&A and fundraising, Lenardos denies that there any plans to sell Cinnober. “This is an organic growth story. But… the best offence to an M&A is a very strong share price. And we need to focus on improving where our share price is trading, and proving to the market that we can in short order return to profitability, and recommence our top-line growth,” he says.  

The company is scheduled to report its Q2 results on August 23.