Recognised as the leader in risk management services in South Africa, Pasco has been commissioned by the National Prosecuting Authority (NPA), the South African Witness Protection Programme and the United Nations International Criminal Tribunal in Rwanda, amongst other international corporate organisations.
What’s interesting is that Nicholls never imagined he’d be where he is today. In fact, when he started out, his vision didn’t extend beyond the humble desire to be self-employed, make a good living and do interesting work. This unplanned success might make it all the more remarkable but it would also be disingenuous to suggest that it happened by accident. Rather, his is a story of organic growth, of taking the right opportunities when they came his way and, as Nicholls insists, of having a measure of luck.
In the early 2000s the global risk company that had been sub-contracting Nicholls to provide local knowledge and expertise, decided to exit South Africa and approached him to look after its clients. It was the first step into the realm of running a small company. “I hired one employee and then, as a result of the work we’d been doing in the security industry, we were
approached by the NPA to provide them with security, advisory and training services. It was a long-term project so we employed a couple more people and this took the staff complement to five,” Nicholls explains.
This was typical of the company’s growth in the early years, with new staff being employed as new projects created a greater demand. “Unsurprisingly for someone who runs a risk management company, I’m fairly risk-averse so I was content for things to grow slowly and in line with the work that we were getting,” says Nicholls.
In June 2004, Pasco won a tender to provide skills development and training services to the South African Witness Protection Programme. “At the time we were still operating from my dining room, using the local News Café as our ‘boardroom’,” Nicholls recalls. But the project and the company’s growing expertise brought Pasco to the attention of the United Nations International Criminal Court, which contracted the company to provide similar services to the Criminal Tribunal dealing with the Rwandan genocide.
It was a tipping point for Pasco, allowing the company to rent its first offices and providing it with a taste of non-government work. “On the back of that project, we took a strategic decision to transition from government services to commercial work, and that’s where we’ve been ever since.”
A door into Africa
More importantly however, the project provided a door into Africa, “At the time, international risk management companies wanting to do work on the continent had one of two options. They could parachute their own people in, or they could sub-contract us. The result was that we started gaining lots of experience in Africa,” Nicholls explains.
Over time, Pasco developed an extensive network of African contacts, which allowed it to gain access to information that international companies struggled to obtain. “We realised that having a presence in London would allow us to speak directly to clients and obtain African-related work for ourselves, instead of being sub-contracted. It would allow us to compete head-to-head with London-based competitors,” he adds.
After establishing a holding company in South Africa and a London-based company in the UK, Nicholls spent 18 months getting Reserve Bank approval to invest money offshore, and in 2007, the company invested R8 million in the establishment of the London office. “I’d never done anything like it before and it was pretty daunting. It took a long time but we just took baby steps, building up a store of capital from our London work to fund the growth of the operation,” he explains. In 2008, using the same model, Pasco opened an office in the United States. More recently, their presence in Dubai has helped the company develop successful relationships and clients in the Middle East. Having established the company as an expert in Africa, Nicholls recognised the differentiating potential inherent in emerging markets. “Because the risk management market is sophisticated and mature in developed economies, it’s highly competitive and margins are slim. But the same is not true of emerging markets and I realised that our growth potential lay here,” he says.
But emerging markets are far more complex and opaque. International risk management companies are faced with the challenge of how to gain access to reliable information and, in some cases, to the countries themselves. “Our extensive network of contacts and correspondents, as well as the passports our employees hold, allow us easy access to these markets, often quicker than our international competitors,” Nicholls explains.
Today the company has a presence in London, Los Angeles and Dubai and its sights are set on Latin America. Wholly-owned subsidiaries that are independently run according to a decentralised structure, these offices are able to move quickly when opportunities present themselves, and have allowed the company to grow in each of its markets.
Recently Pasco has turned its attention to growth through the development of specialised safety and risk management products in two new divisions. TravelSafe provides security advice, protection and crisis response for companies sending personnel into high-risk environments, and has been used by royal households, African heads of state, CEOs and the England football team during the 2010 FIFA World Cup. ReVu, launched in 2010, is a secure feature-rich electronic discovery system for law firms and corporates, allowing them to dramatically reduce the time and effort required for document discovery and review. These new divisions have given the company an appetite to explore similar growth areas. “It’s an exciting growth period for the company,” says Nicholls.
Funding the operation
Pasco has been entirely self-funded from the outset. “Very early on I decided to run the finances of the company as an independent shareholder, which meant leaving capital in the company to build it up, instead of taking out all the profit,” says Nicholls, who frequently went without a salary in the early start-up days. “There were many end-of-the-month Salticrax moments,” he jokes.
And although Nicholls is proud of the fact that the company has never had to borrow a cent, he also admits that it wasn’t easy. “One of our biggest challenges was getting clients to pay us. I spent a lot of time, particularly on the government projects, trying to extract payment so that we could manage cash flow,” he says.