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“ The Making of a CFO”. Sources of Finances. October 11th, 2013 Mumbai. Role of a CFO. Primarily responsible for financial planning, record keeping and financial reporting Ensure all financial reports are accurate and completed in time

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slide1

“ The Making of a CFO”

Sources of Finances

October 11th, 2013

Mumbai

slide2

Role of a CFO

  • Primarily responsible for financial planning, record keeping and financial reporting
  • Ensure all financial reports are accurate and completed in time
  • Significant role in the strategic business decisions to be taken by assisting the CEO
  • Overseeing operations, many times directly handling procurement
  • Manage and materially support information technology, investor relations, lenders relations and joint venture managements
  • Responsible for managing the financial risks, cost controls, and maintaining liquidity
  • In the Course of Financial Management, undertakes a lead role in resourcing funds
slide3

Source of Financing

  • EQUITY
  • Mezzanine Debt / Quasi Equity
  • DEDT
slide4

Source of Financing in a PPP

  • EQUITY (including quasi)
  • GRANT
  • DEDT (including mezzanine)
slide5

Parameters for mix and raising

  • DEBT : EQUITY – 2 : 1
  • Period of funds
  • Cost of funds
  • Marketability of instruments
  • Ratings –
    • Rating of the debt
    • Rating of equity
slide6

Equity Financing

  • Proprietary Funds
    • As Solitary investments or in Partnerships
  • Public Funds
    • As listed companies on SEs,
    • As trusts – Charitable or Business
  • Private Equity Funds
slide7

Public Funds

  • Listing
      • Could be done at various exchanges like BSE, NSE, AIMS, International Stock Exchanges in forms like GDRs / FCCBs
    • Charitable
      • By building corpus by way of donations and grants
    • Business Trusts
  • Private Equity Funds
slide8

Listings

  • IPOs and FPOs
    • Appointment of Merchant Bankers
    • Preparation of the Red Herring Prospectus
    • Identifying anchor investors
    • Issue opening
    • Periodical compliance with SEBI and the Exchanges
slide9

Business Trusts

  • Significantly gaining popularity
  • Presently destination is Singapore
  • Debt and equity funds are replaced by Trust Funds
  • Contributors to the fund are long term investors with expectation of fixed yield
slide10

Business Trusts

  • Business Trust (BT) offers investors an option to invest in cash-generating assets (including infrastructure assets, real estate, transportation assets, etc.)
  • The main parties involved in a BT structure are the BT, unit holders and Trustee-manager (TM)
  • TM is both the trustee and the business manager.
  • BT is a “pure” cash flow structure
    • Certainty on distributing cash flows
    • A yield play valued by cash flows plus growth
    • Unlike a company, accounting profits are not required to make distributions to unit holders
  • Established BT regime - There are numerous listed BTs on SGX in various sectors (including Property Trusts, Shipping Trusts, & Infrastructure /Port Trusts)

Sponsor

Investors

>=26%

<=74%

Investment in units of BT

Distributions

Management fees

Trustee Manager

BT

Management Service

Ownership of assets (vested in Trustees)

Cash flow repatriation

Dividend/ interest/ etc

100%

SPVs

Fees

Sponsor

Asset management

Revenues generated from asset

Asset

slide11

Private Equity

  • Private equity is a collective investment scheme which are typically limited partnership funds with a general horizon of 10 years
  • Looking for a return of 15% - 22%
  • Exit options
  • Appointment of Merchant bankers
  • Process of Valuation
  • Term Sheet
  • Appointment of Diligence teams
  • Appointment of Lawyers
  • Signing of Share Holders Agreement
  • Compliances of Conditions precedent
slide12

Debt

  • Short Term
    • Working Capital Loans
    • Commercial Papers
  • Long Term
    • Term Loans
    • Mezzanine Term Loans
    • ECBs / FCCBs
    • Debentures
    • Bonds
    • Take out finance
    • Credit Enhancement Schemes
slide13

Rule of the Game

  • Promise Less
  • Deliver More
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