“ The Making of  a CFO”
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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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The making of a cfo

“ The Making of a CFO”

Sources of Finances

October 11th, 2013

Mumbai


The making of a cfo

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


The making of a cfo

Source of Financing

  • EQUITY

  • Mezzanine Debt / Quasi Equity

  • DEDT


The making of a cfo

Source of Financing in a PPP

  • EQUITY (including quasi)

  • GRANT

  • DEDT (including mezzanine)


The making of a cfo

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


The making of a cfo

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


The making of a cfo

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


  • The making of a cfo

    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


    The making of a cfo

    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


    The making of a cfo

    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


    The making of a cfo

    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


    The making of a cfo

    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


    The making of a cfo

    Rule of the Game

    • Promise Less

    • Deliver More


    The making of a cfo

    THANK YOU


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