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Case Studies by Jean Wee

27 case studies

by Publication Date
published: 26 Nov 2012

  • Topic: Economics & Finance
  • Industry: Automotive
  • Region: Europe

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Abstract:
In September 2010, Dürr AG issued a corporate bond without the use of underwriters or rating agencies via a new bond issuance platform developed by Boerse Stuttgart. This reflected a growing trend among European corporations to tap capital markets instead of bank debt to secure debt financing.

Pedagogical Objectives:
To explore the sources of corporate debt financing following the global financial crisis and compare the costs of funding via corporate bonds and bank debt markets. The case materials allow students to develop a deeper understanding of sharing credit risk among different debt instruments and how this is reflected in credit spreads.

Keywords:
Corporate Debt Disintermediation, Corporate Bond Issuance, Bank Debt, Basel III Regulation, Global Financial Crisis, Corporate Funding Alternative, Credit Risk, Credit Spreads, European Competitiveness, Europe

published: 26 Nov 2012

  • Topic: Economics & Finance
  • Industry: Education
  • Region: Europe

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Abstract:
In 2009, a Macquarie consortium won the tender to build six Irish schools under a public-private partnership programme. The work was financed mainly with debt, with only €50,000 of straight equity injected into the project. Payments from the Irish government were the sole source of revenue. However, the advent of the sovereign debt crisis in Europe put the government's ability to pay in doubt.

Pedagogical Objectives:
The case study illustrates sovereign risk in PPPs, contrary to the assumptions usually made that the government will not default. Valuation of the project can also be discussed, particularly the use of subordinated debt as quasi-equity.

Keywords:
School Building, Project Finance, Irish Schools, Sovereign Risk, Public Private Partnership, Macquarie, Debt Crisis, European Competitiveness Initiative, European Competitiveness, Europe, Government and Policy

Prizes won:
- Winner of 2012 EFMD Case Writing Competition

published: 25 May 2012

  • Topic: Economics & Finance
  • Industry: Infrastructure
  • Region: North America

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Abstract:
A consortium made up of Macquarie Infrastructure Group (MIG) and Cintra Concessiones de Infraestructuras de Transporte wins the concession for the Indiana Toll Road at a bid price of US$3.8 billion in January 2006. Market observers think the amount is too high, but MIG is confident the asset is worth the price.

Pedagogical Objectives:
Valuation of infrastructure asset, determining the right discount rate, pros and cons of public-private partnerships, winner's curse.

Keywords:
Toll Road, Infrastructure, Public-Private Partnership (ppp), Project Finance, Privatization, Step-Up Swap, Corporate Governance, Auditing, Risk Control and Performance

Related:

published: 24 May 2012

  • Topic: Economics & Finance
  • Industry: Infrastructure
  • Region: Other Regions

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Abstract:
Aquasure - a consortium formed by Macquarie, Degremont and Thiess - won the concession to finance, build, maintain and operate the A$5.72 billion Victorian Desalination plant under a public-private partnership initiative known as Partnerships Victoria. Financing took place during the period of the global financial crisis and there was a subsequent political backlash.

Pedagogical Objectives:
The structure of project finance; how risk is allocated and mitigated within the structure; the pros and cons of public-private partnerships; the discount rate as a measure of the transfer of risk; political risk in PPP.

Keywords:
Public-Private Partnership, Partnerships Victoria, Project Finance, Global Financial Crisis, Public Sector Comparator, Discount Rate, Transfer of Risk, Political Backlash, Corporate Governance, Auditing, Risk Control and Performance

Prizes won:
- Winner of 2011 EFMD Case Writing Competition, Public Sector Innovations Category

published: 25 Jan 2011

  • Topic: Economics & Finance
  • Industry: Water Industry
  • Region: Asia

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Abstract:
The growth of Hyflux Limited (Hyflux) required it to become more financially sophisticated. As part of its “asset-light” funding strategy – optimising the use of capital by realising asset values early to keep a lean balance sheet - Hyflux spun off 13 water plants to a business trust, Hyflux Water Trust (HWT).

Pedagogical Objectives:
To study the different options of funding for Hyflux, the pros and cons of listing a business trust, including the corporate governance issues involved in such a structure, and which is a better investment opportunity - Hyflux or HWT.

Keywords:
Project Finance, Business Trust, Renewable Resources, Infrastructure Funds, Spin-Off, Water Industry, Asset Light Strategy, Corporate Governance, Corporate Governance, Corporate Governance for Family Firms

Prizes won:
- Winner of 2010 EFMD Case Writing Competition Award

published: 22 Feb 2010

  • Topic: Responsibility
  • Industry: Banking
  • Region: Global

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Abstract:
Microfinance investment opportunities have been well received by Credit Suisse clients seeking socially responsible investments. They provide a "double bottom line": a positive financial return (despite the global financial crisis), and a social impact by offering first-time access to financial services to the poor. From $5 million in 2003, total assets under management in microfinance at Credit Suisse reached $1 billion by 2009, and untapped demand is estimated at $300 billion. The firm has positioned itself as a link between the TOP of the wealth pyramid (its clients) and the BOP (base of the pyramid, the poor), but as microfinance comes under fierce criticism for over-indebting the poor, and with a decline in growth, performance and portfolio quality, Credit Suisse must consider its future engagement in this sector of the emerging markets.

Pedagogical Objectives:
(1) To understand the concept and challenges of investing in an alternative asset class like microfinance; (2) To analyse the benefits and risks for a global financial institution like Credit Suisse to be involved in microfinance in a context of a booming, but increasingly uncertain industry; and (3) To decide whether and how Credit Suisse should extend its involvement in an uncertain field in a number of emerging markets.

Keywords:
Microfinance, Banking, Socially Responsible Investment (sri), Microfinance Fund, Financial Crisis, Portfolio Diversification, Development, Social Responsibility and Ethics, Poor People, Sustainability, Credit Suisse, Investor, Risk Management, Global Financial Crisis, Emerging Market, Social Entrepreneurship

published: 22 Feb 2010

  • Topic: Economics & Finance
  • Industry: Financial institutions: Hedge funds
  • Region: Asia

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Abstract:
Activist hedge fund Steel Partners entered Japan to take major stakes in underperforming companies and actively press for corporate changes. But seven years later its takeover attempts remain unsuccessful, thwarted by poison-pill defences and cross-shareholdings. Whether corporate governance as a strategy could work in Japan looks increasingly questionable.

Pedagogical Objectives:
The case can be used to discuss how hedge funds use corporate governance as a strategy, the state of corporate governance in Japan, the defences used by companies against takeovers, associated agency problems, and the cost to shareholders.

Keywords:
Corporate Governance, Hedge Funds, Shareholder Activism, Investment Strategy, Information Asymmetries, Poison Pill, Takeover Defenses, Corporate Governance, Investors, Stakeholders and Accountability

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