...EdgeStone Capital Equity Fund – Early Phase Analysis The timing for creating a $180 million private equity fund is very opportunistic. With the strong Canadian economy positioned for continued growth, a federal budget surplus, and a low Canadian dollar, there will be numerous Canadian companies looking to PE firms for financing. This economic outlook coupled with $180 million of initial capital, EdgeStone will be able to be extremely selective in terms of potential targets, further increasing potential returns while limiting risk. Structure of Fund Type and Size of Investments It is imperative to identify the proper size and type of investments that EdgeStone will be engaging in. In terms of size, exhibit 1 identifies the average Canadian deal size was $1.8 million in 1996. However, as a first time fund with a substantial capital base, it is my recommendation that the average deal size for the first years of operating be around 3% of AUM. This will allow the fund to focus on generating strong returns on a smaller number of investments rather than being spread too thin. In regards to the type of investment, it is my recommendation that EdgeStone become a passive investor, and focus on sourcing deals with companies that are growing rather than struggling. Industry Focus With an underdeveloped supply of capital in Canada, limiting the fund to a specific industry focus could harm potential returns. Geographic Focus With less than 25 PE firms that could qualify...
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...EQUITY DIVERSIFIED MUTUAL FUNDS V/s DIRECT EQUITY: A comparative study Submitted in Partial Fulfillment for the Degree of Bachelor of Business Studies By Akshat Jain (Roll No. – 08/BBS/7160 Batch: 2008-2011 ) To DEEN DAYAL UPADHYAYA COLLEGE University of Delhi Shivaji Marg, Karampura New Delhi-110015 | | | ACKNOWLEDGEMENT Encouragement motivates a person towards one’s aim while guidance helps one to achieve it. Both encouragement and guidance take one towards success in one’s works. It would be difficult and almost impossible to achieve excellence without the blessings of God above and of elders. I convey my heartfelt affection and accord my deep sense of gratitude to Dr. Deepa Kamra, Faculty Guide for inspiring guidance, constructive criticism, unlimited interest and innovative ideas throughout the pursue of this manuscript. Akshat Jain DECLARATION I Akshat Jain have completed the Summer Training Project titled “EQUITY DIVERSIFIED MUTUAL FUNDS V/S DIRECT EQUITY” under the guidance of Dr. Deepa Kamra in the partial fulfillment of the requirement for the award of degree of Bachelor of Business Studies from Deen Dayal Upadhyaya College, Delhi University. This is an original piece of work & I have neither copied and nor submitted it earlier elsewhere. Akshat Jain Certificate from Internal Guide ...
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...Private Equity Investments - Final Exam (July/ 4/ 2011) Question 1-a a. What are financial theory and concepts that support and rationalize activities of parties involved in the events leading to the financial crisis? Why and how did the meltdown happen? Is the model used in the process wrong? Answer 1-a Moral hazard nurtured by Real estate and MBS bubble; House prices of the United States had risen steadily since 1975. This trend accelerated in 1996, and reached about 12 percent per annum in late 2005 and early 2006. One reason for the rise in house prices is the Federal Reserve’s policy of maintaining low interest rates after the 2001 recession. Under these market situation, mortgage loan and mortgage backed securities market became more popular and bigger. The financial markets’ appetite for mortgage product also resulted in more creative and complex financial products and strategies such as MBS (Mortgage-backed securities), CDO (Collateralized debt obligation), ABCP (Asset-backed commercial paper), Conduits, SIV (Structured investment vehicles). For example, according to the case, the S&L crisis also boosted the securitization of mortgages by two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Starting with bundles of mortgages purchased from mortgage originators, the GSEs created and sold mortgage-backed securities (MBSs), which delivered to holders the payments made on these mortgages. In exchange for a fee, the GSEs guaranteed...
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...Assignment 1 BEUTEL GOODMAN INT’L EQUITY FUND FINA 411 – SECTION C presented to Abraham I. Brodt by anonymous John Molson School of Business October 15th 2014 Executive Summary Description of Beutel Goodman Int’l Equity With total assets of $134.8 million, the Beutel Goodman International Equity fund has produced an annual return of 4.41% since its inception in August 1992. This fund is not managed by a separate entity; the sponsor is also the manager. In charge of portfolio management, KC Parker (CFA) and Colin Ramkissoon have chosen to invest in a variety of different equity sectors such as consumer discretionary, financials, materials, energy, and many more. Equity comes mainly from British companies (UK), Japanese companies and Norwegian firms. The purpose of this fund is to seek long-term enhancement of capital, primarily through investments in common stocks of non-North American based companies. Beutel Goodman Int’l exhibits a relatively lower MER than the average international equity fund, standing at 1.48%, as opposed to the average of 2.54%. The funds top ten holdings represent 42.56% of the total portfolio and come from fairly varied sectors. None of these top ten holdings are from the same sector, and only three of them come from the same geographical area (Japan). Perhaps these varied holdings explain the perfect correlation that this fund has with its benchmark index: the MSCI EAFE (According to the Globe & Mail, 3 year...
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...The Debt-Equity Trade Off: The Capital Structure Decision Aswath Damodaran Stern School of Business Aswath Damodaran 1 First Principles n Invest in projects that yield a return greater than the minimum acceptable hurdle rate. • The hurdle rate should be higher for riskier projects and reflect the financing mix used - owners’ funds (equity) or borrowed money (debt) • Returns on projects should be measured based on cash flows generated and the timing of these cash flows; they should also consider both positive and negative side effects of these projects. n n Choose a financing mix that minimizes the hurdle rate and matches the assets being financed. If there are not enough investments that earn the hurdle rate, return the cash to stockholders. • The form of returns - dividends and stock buybacks - will depend upon the stockholders’ characteristics. Aswath Damodaran 2 The Agenda n n n n What is debt? What determines the optimal mix of debt and equity for a company? How does altering the mix of debt and equity affect investment analysis and value at a company? What is the right kind of debt for a company? Aswath Damodaran 3 What is debt... n General Rule: Debt generally has the following characteristics: • Commitment to make fixed payments in the future • The fixed payments are tax deductible • Failure to make the payments can lead to either default or loss of control of the firm to the party to whom payments are due...
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...CHAPTER ONE INTRODUCTION 1.0 OVERVIEW This paper intent to analyze the performance of Islamic equity unit trust funds’ in CIMB Wealth Advisors Berhad by comparing with the FTSE Bursa Malaysia Composite Index (KLCI) as benchmark. This chapter will discuss the background of the study, historical development of unit trust industry in Malaysia, understanding unit trust, problem statement, research objectives and the significance of the study. 1.1 BACKGROUND OF THE STUDY A plenty of investments alternative can be seen nowadays. But it’s depends on people which alternative they prefer to invest or depend on their skills of investing in such instruments. Most of the people who are lack in financial knowledge or investing skills will prefer to make investments in unit trust funds. There has abundance of benefits in unit trust and also can be advantageous to the small investors. Unit trust is an ideal way for small investors to invest for their future. Small investors are people who earn their living engaged in activities not related to the financial arena. They are aware that investing is important to them, but they lack of know-how to make the right decisions. For people who are unable or unwilling to do research and analyze investment markets and climate on their own, unit trusts is a good way to invest. In order to maintain a portfolio of stocks in the share market, a person has to keep himself up-to-date with market information and climate. For many people, this is difficult...
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...raising external capital (Jensen and Meckling, 1976). Some financial instruments and transactions and very complex with values that can only be estimated; that’s why in most cases, auditors may rely on the internal controls. The Internal control system plays a key role in the success of the accounting system: it protects the business from abuse and fraud, ensures that the information received is accurate and timely, and assures that all regulatory requirements are being met. The internal control system is especially critical for private fund investors. Security Exchange Commission (SEC) mandates internal controls for publically traded companies while hedge funds and other private equity funds are exempts from the regulations that other investment vehicles face. Although better internal controls should decrease the likehood of fraud and the manipulation of reported performance, not all business that operate using private equity funds are likely to invest in internal controls because they are costly. Regardless of the cost, management is responsible for preparing the financial statements and the content of the financial statements while independent auditors are responsible for examining management’s financial statements and...
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...grown rapidly but still had the corporate structures of very small companies which caused great stress to the management of the business, and the assets of their target companies always being considered to be divided in order to improve the business riping for LBO. Besides, TPG is expecting to add complexity to the doing the deals and realize fiscal efficiency. Ducati is thus to be an ideal target from these perspectives. Secondly, as the one of the clearest difference between a strategic buyer and a financial buyer is that the strategic buyer wants to “Buy and Hold” and the financial buyer tends to want to “Buy Low and Exit High”. TPG hold that Ducati is a high-value added business and a low cost producer, and TPG itself is a private equity fund and must eventually sell their investment to return capital and profit to their investors, so it is concerned about the eventual exit from their investment in Ducati, and TPG also conclude that an IPO of Ducati might trigger a higher price and trade sale, setting the deal structure suits IPO. Last but not least, TPG also partially played a strategic buyer’s role. TPG is not only working for a good bid, but also a successful build out. As TPG planned to acquire controlling stake and take over operation of Ducati, they are thinking of finding a world class management team to renovate the business to the greatest extent, being more prone to build in some post-acquisition synergies. Question 2: To value the 51% of Ducati that TPG is contemplating...
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...in FM Radio and changes in single-brand retail trading norms. “Only equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares, with no in-built options of any type, would qualify as eligible instruments for FDI. Equity instruments issued/transferred to nonresidents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant ECB guidelines,” stated clause 3.3.2.1 reflecting the revised FDI policy stance of the government. “The key is to note that shares with in-built options issued/transferred to non-residents or shares supported by options issued/transferred to non-residents will not be recognized as FDI and such instruments would have to comply with the ECB guidelines.” “In other words, equity shares, fully and compulsory convertible preference shares, fully and compulsory convertible with no in-built options issued to non-residents will be eligible as foreign direct investment.” The revised guidelines, which have now been formally included in the regulatory framework, had earlier been adopted by the Reserve Bank of India which treated instruments with ‘put options’ as ECB. “It is bound to curtail investments in certain sectors and by specific types of investors (e.g. financial investors such as private equity funds) who tend to rely upon put options in securities as an essential component...
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...Entrepreneurship Name Institution Instructor Course Date The process that has been used in developing a successful venture will require a detailed evaluation of the investment opportunity that has been identified. In this discourse ,I placed my focus on the criteria used by Maclean Palmer to develop and market his private capital fund. In addition I have identified that Palmer and his partners view the year 2000 as one of the largest fundraising years hence the group has sought to tap into the opportunity availed by the year. Initial capital is going to be raised through the sale of the partner’s properties. This is going to be followed by active lobbying which is aimed at convincing investment advisors to commit capital to the enterprise. During the process of evaluating the venture, I have identified that investors have realized that they are going to contend with a number of risks. These risks include long-term investments, which offer no chance of exit, the organization’s inadequate history on successful management of an equity fund and high levels of competition from well-established organizations. However, I have identified that hiring managers from the Fortune 1000 companies can reduce the probability of these risks occurring. This will ensure that the company undertakes value addition hence attracting more clients. In addition, I am of the view that the probability of these risks occurring can be...
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...the job of raising and investing capital is always hard. It will take new approaches to get the working capital. Companies may have to build new banking relationships and strengthen existing relationships. Private equity funds will play a larger role as well. That’s because many investment banks have simply disappeared, and the ones that remain are more tightly regulated. Money market funds have changed, too. The entire landscape of institutions and markets responsible for providing capital has changed. These are the things that need to be done in order to conserve the capital it has and to obtain more: 1)shed underperformers: it’s important to have a strategy for identifying and retaining the best talent during the downturn. Otherwise many of the companys top talents will be heading out and picked up by the competitors who will be consolidating, so that they can come out fighting when the economy starts to sore again. 2)Communicating clearly and constantly: it’s important to stay in constant communication with your most important stakeholders, with a strong focus on those closely involved with finance. let them know how things are going. If they hear nothing, they will assume the worst.It is the best time to maintain absolute transparency. 3)Seeking out strategic assets There will be many opportunities to pick up assets. But only companies with strong balance sheets will be able to take advantage of this environment. There are recent examples of companies making...
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...his curry puff ‘loyalist’ grows. By the time Mr. Nam opens his third stall in Toa Payoh in 1970, he was very sure that a central kitchen is a key piece of his expansion plan. Mr. Nam managed to set up a ‘central’ kitchen in a shop house along Balestier Road in 1972 through borrowing from OCBC. By the end of 1974, Nam Kee’s Balance Sheet as follows: Balance Sheet as at 31 Dec 1974 | |$ | |$ | |Fixed Assets | |Capital | | |Land and Buildings |42,000 |Shareholders’ Equity |58,000 | |Kitchen Equipment |10,300 | | | | |52,300 |Long Term Liability | | | | |Loan from OCBC |20,000 | |Current Assets | | |...
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...1. How has the Investment Office selected, compensated, and controlled private equity fund managers? What explains the differences between their strategy in private equity with that in other asset classes (e.g., real estate)? As for private equity asset allocation the Investment Office focused on finding external "value-added investors" with the sterling capability to build better businesses not only financially but mainly operationally. They believed this strategy led to enhancing returns independently of the market downturns. Thus, a limited number of long-standing partnerships were created - exclusively with partners aligned with the generalized investment policies of the Investment Office - with "over 90% of the portfolio invested in highly prestigious funds sponsored by the general partners of the university's group". Yale sought for compensation to be as linked as possible with investment performance rather than based in high fixed fees. With this strategy they intended for private equity funds managers' to be more motivated and to align its objectives with theirs. On the other side equity firms were given a considerable amount of flexibility on their investment decisions. The control was done mainly in the selection stage where Yale guaranteed that its and the firms' objectives were as aligned as possible and so almost no deals were performed with large financial institutions, avoiding "conflicts of interests and lack of incentives". The Investment Office portfolio...
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...Ronance Adrian F. 24th November, 2013 4ABE Prof. Dimaculangan “Private Equity Today and Tomorrow” The industry of business in its entirety has undergone a number of changes both good and bad over the last century. From the limitless amount of credit people had in the 1920’s, to the great depression that soon followed, with the popularity of manufacturing in the industrial age, over to the advent of technology development after the second millennium, time has changed how we conduct and treat our businesses. No matter what circumstance, the only thing that seemed to remain constant in all businesses is the understanding that it cannot function without capital. And although the internet obliterated certain walls of businesses such as geographic restrictions and costly marketing expenses, businesses would still have the need for capital. The need for business capital now brings us to the question of its procurement. There are a number of ways in which the budding entrepreneur or business prodigy can do this but perhaps one of the most effective ways in seeking funds for a business is through private equity. Private equity or private equity funds is the combined effort of individuals in a certain organization seeking to pool in funds in order to finance high-risk and potentially high reward projects. In its initial years, the private equity industry was a rage all over the American market. Its origins could be traced within the lines of very...
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...Venture Capital and Private Equity Contracting This page intentionally left blank Venture Capital and Private Equity Contracting An International Perspective Douglas J. Cumming Associate Professor and Ontario Research Chair, York University – Schulich School of Business, Toronto, Ontario, Canada Sofia A. Johan Senior Research Fellow, Tilburg Law and Economic Centre (TILEC), Tilburg, The Netherlands AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Academic Press is an imprint of Elsevier Academic Press is an imprint of Elsevier. 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA 525 B Street, Suite 1900, San Diego, California 92101-4495, USA 84 Theobald’s Road, London WC1X 8RR, UK Copyright © 2009, Elsevier Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Permissions may be sought directly from Elsevier's Science & Technology Rights Department in Oxford, UK: phone: ( 44) 1865 843830, fax: ( 44) 1865 853333, E-mail: permissions@elsevier.com. You may also complete your request online via the Elsevier homepage (http://elsevier.com), by selecting “Support & Contact” then “Copyright and Permission” and then “Obtaining Permissions.” Library of Congress Cataloging-in-Publication...
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