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Case Studies by Pierre Hillion

16 case studies

by Publication Date
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

published: 01 Jul 2005

  • Industry: Technology, Semiconductor
  • Region: Asia

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Abstract:
This case describes the rights offering by CSM in 2002 which was largely judged to be a failure despite the company receiving the full planned proceeds. The case takes the reader through the rights offering process, and details the "hiccups" arising from adverse market conditions as well as process mismanagement. It also allows the reader to use actual data provided by several top broker research analysts to conduct a valuation exercise. Other questions addressed include: Does price matter in a rights offering? Are investors rational? How does one gauge the value of a project?

Pedagogical Objectives:
Objectives include understanding the rights offering process and the rationale behind such a decision, including how to price a rights offering; recognising negative NPV projects and the fact that the markets are usually rational when valuing these projects; learning the role of investment banks and underwriters in fund raising exercises; and gaining an understanding of how

Keywords:
Rights Offering, Investor Relations, Corporate Governance, Company Valuation, Securities Underwriting, Project Funding

published: 09 Jan 2005

  • Topic: Economics & Finance
  • Industry: Oil/ Commodities
  • Region: Asia

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Abstract:
A description of the events leading to the collapse of China Aviation Oil under US$550m of derivative trading losses and subsequent attempts to identify the causes and save the company from liquidation via a debt restructuring scheme of arrangement.

Pedagogical Objectives:
Identify corporate governance and risk management measures necessary for smooth running of a company, as well as the dangers of derivative trades in the hands of those either ignorant or reckless of the risks.

Keywords:
Corporate Governance, Risk Management, Derivative Trading, Debt Restructuring, Corporate Governance, Investors, Stakeholders and Accountability

published: 15 Apr 2002

  • Topic: Economics & Finance
  • Industry: Technology-Internet
  • Region: North America

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Abstract:
This case discusses the potential benefits and costs of issuing floating-priced convertibles, also referred to as "death spirals". These are convertibles where the conversion price is a discount from the market price in a look-back period. The management of Log on America is blaming investment banks and convertible investors for the stock price collapse after the convertible was issued.

Pedagogical Objectives:
Comparing costs and benefits of floating priced convertibles with other methods of financing such as debt, equity and convertibles with a fixed conversion price. Acting as an "expert witness" in the lawsuit between LOA and CSFB: what is the cause of the stock price decline? Valuing floating-priced convertibles under different assumptions about contract design.

Keywords:
Floating Priced Convertible, Death Spiral Convertible, Capital Structure, Pipe, Option Pricing, Financial Innovation

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