Archive for the ‘Understanding Western Finance’ Category

Western viewpoint Specialized versus General

Wednesday, October 28th, 2009

•Funding institutions are now very much specialized by teams covering:

•Financial requirements (debt finance, project finance, construction,  JV, M & A)

•Market sector activity (industry sector – energy, construction,  agriculture, plastics etc.)

•Geographical areas (Russia/CIS)

•Decisions by investors are always collective, and made through a decision making procedure, legal, fiscal, managements etc.

•Decisions will be through written files leading to contractual agreements

•The project owner has to become a financial expert!

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Western viewpoint Guarantees by project owner

Wednesday, October 28th, 2009

Valuations on assets/security – land, plant, buildings, cash, vehicles, other assets
Government guarantees?
Valuation on shares of project company
Value of sales contracts and terms

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Western viewpoint Risk versus Gain

Wednesday, October 28th, 2009

•More important to realize what has been announced in the plan than to anticipate to gain fortunes

•Importance of decision making process within project team with financial team

•To be prepared to invest in studies (feasibility & marketing studies etc.) to assure accurate projections 

•SWOT analysis

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Western viewpoint Analytic versus Global vision

Wednesday, October 28th, 2009

•Presentation, advice & support of Western specialists highly appreciated (ADVENT CAPITAL INVESTMENTS)

•Strong insistence on details

•Business model clarity

•Legal & fiscal structure of project owner, shareholding, balance sheets, assets all very important

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Western viewpoint Management versus Investment approach

Wednesday, October 28th, 2009

•Importance attached to initial precise studies of:

•planning

•budgets

•markets and competition, market position

•alternative scenarios

•Preference for careful forecasting

•Implementation of an accurate management of the investment phase

•Energetic project driver team, age and experience

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Western viewpoints – main points

Wednesday, October 28th, 2009

•Analytical expectations rather than only a global vision

•Limiting risks on forecast profits more important than maximizing possible earnings

•Access to raw materials & how you access markets

•Guarantees & security of exit at term

•Emphasizing management & control over investment implementation

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Understanding Western Finance Prime banks

Wednesday, October 28th, 2009

These banks are potential lenders for corporate lending (debt finance) and/or project finance with the period of the loan and the interest rates to be decided according to different factors.  Sometimes the banks will syndicate large loans with other investors, and they expect the project owners to have invested over 25% into the project. They will look for guarantees against finance which could be guarantees by the City Administration, by another prime bank, mortgage on the land for the project, mortgage on property owned by the borrower, options on shares in the corporate structure of the borrower, and sometimes other guarantee requirements. Today there is very limited access to debt finance

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