Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts

Saturday, September 7, 2013

Crowdfunding


The crowdfunding is a practice that is becoming increasingly important in all sectors. The "Crowdfunding" means "crowd funding" is to highlight key projects on an online platform and collect donations from users to realize the project. To date, there are several online platforms that do crowdfunding. This device allows individuals to find projects that match their taste, nearby or across the world, in all areas that are, and contribute directly to their construction, thanks to their savings in the form of committed gift, loan, or capital. The problem is that more and more participatory sites come onto the market, and each has a different mode of operation. According to the funding model on which they are based, the consequences for individual investors are not the same.

Mymajorcompany is a crowdfunding online in 2007 platform provides an opportunity for people who want to fund a project to place their gifts on a project of an artistic nature of a fixed term of six months. The project manager makes his case online retailer counterparties repay it intends to users. At the end of the operation, if the project has raised enough money to see the date, individual donors perceive generally a share of profits from the commercialization of the project, "if it generates." This model then gives a close to a "micro business angel" to users who invest in the sustainability of the project status. Other platforms offer gifts to reward individuals who contribute to the financing of projects. If the amount set is reached, the project is funded and users receive a symbolic reward for their participation. The counterparty may be a book autographed a copy of the disc, a card or just a letter / email of thanks. The business model here is closer to the hardcore gift. It keeps the character "philanthropist" to donate to help and not to return on investment. The most popular sites are KissKissBankBank, Babeldoor are the few crowdfunding platforms works by financing through a loan. The user advances some funds to the project of their choice. Once the project is completed, the user is reimbursed up to his contribution. In this area, the most famous platform Babyloan.org lends without interest.

 There is currently no legislation governing trade and financial flows on crowdfunding platforms. The reason is that the amounts are not large enough to be controlled by law. However, crowdfunding involves several "soft" areas. In the case of a system based on micro-credit model, the platform must have approval by Authority, which is rarely the case. Then, any financial contribution by an individual to a project gives it the status of "associate" because its contribution is legally speaking a capital contribution to the project, which is never the case. Crowdfunding is basically a system that works through donations. The payments are considered donations, must be reported to the tax and to be taxed. The majority of individuals skip this step. If these sites are regularly used to give large sums of money, it is likely that the IRS is involved.

Sunday, May 26, 2013

The need of better integration in environmental criteria in investment!


Banks have become essential in the transition to a greener and more sustainable economy. If their role in financing green infrastructure and renewable energy is identified, their efforts should also focus on the integration of environmental criteria in their funding decisions and investment, primarily in sensitive areas and eventually in all sectors. The 2008 crisis revealed the considerable power to influence of banks on the economy. Respondents even criticized, they undergo a double injunction to continue to finance the economy in all its complexity while being more transparent. Their indirect responsibility is increasingly sought: external stakeholders like customers, shareholders, institutional investors and NGOs), the challenge of repeatedly on the assets they finance and the behavior of large customers they accompany their development. Beyond all controversy, it has become imperative for them to be able to explain their decisions to finance and investment. How can banks now tackle the challenge of meeting the ever increasing global needs while encouraging the development of a production of "sustainable"? To meet this dual standby, banks must gradually integrate Environmental, Social and Governance (ESG) in all funding decisions and investment. The goal is to better understand the potential risks to better identify projects for funding, companies in which to invest, and the most sensitive regions. Their inclusion will progressively as they are both away from the heart of business of the bank (financial risk analysis), long-term and with a low probability of occurrence but maximum impact if realized. The most sensitive to environmental or social terms economic sectors must be supervised by funding policies and responsible investment that apply to all products and services, including asset management. In a little over a year, our group has worked on the areas of palm oil, nuclear, agricultural raw materials essential to the pulp and paper and finally the electricity produced from Coal. These are very heavy projects: each policy requires six months of work on average. All stakeholders are consulted to help position the criteria ambitious enough to have a real impact on the environment and society, but also to ensure realistic level their implementation. Finally, these policies should identify the most critical links in the production chain. Of course, all companies must comply with the existing laws in the field of the environment, but they must also be transparent by providing certain information, to assess the management of their risks on this subject. A thorough analysis of the specific risks of each sector is then used to define performance criteria that companies and / or Projects must meet. These policies approved by the Executive Committee, have been widely disseminated to all trades. If they respond to a pending trade and managers have accurate prior to any decision making instructions, they nevertheless induce profound changes: it is necessary to train and support unfamiliar teams sometimes certain criteria 'very technical evaluation. They also assume a new type of dialogue with customers or companies in whom we want to invest: beyond financial performance criteria, it is now necessary to address much broader issues. Our philosophy is not to exclude a sector as a whole (except those that are subject to legal prohibitions) but we do not forbid, as a last resort, to exclude companies that do not wish evolve and take into account our policies. The approach taken must and will therefore continue in both applying to other sectors, if necessary by revising existing policies (e.g., nuclear policy could evolve following the stress tests carried out in European level) but also in the declining in specific sectors.

Friday, December 14, 2012

Sovereign Wealth Funds And Global Finance

Since the early 2000s, SWFs from emerging countries like Kuwait, Abu Dhabi, Singapore, China have stopped communicating with the financial sector and the general public with the aim to build an good image among investor and be reliable. Indeed, their rise was alternately seen as a form of threat to the national sovereignty of the host country, due to the lack of transparency and their alleged ambitions to invest in strategic sectors, and as a favorable element international financial stability and an important financing industrialized economies. In total, a consensus seemed to exist to recognize the positive role of these funds.

Until recently when an unexpected event came to trouble: the fund of Abu Dhabi International Petroleum Investment Company (IPIC) has withdrawn capital Barclays Bank selling on June 2 about 11% of the capital of the 16.3% stake. This operation was a surprising, since it was only made seven months before and the fund became the largest shareholder of the British bank, has allowed him to realize a profit of 1.7 billion Euros. At the same time, the action Barclays lost up to 16% during the session. Trying to get some height and to understand the implication of this new element of sovereign wealth funds and global finance as a whole. Few years back. Before the start of the subprime crisis, SWFs have managed to forge an image of stable investors, favoring a long-term horizon and supports conventional investments such as stocks, bonds or hybrid (i.e. convertible bonds). They also seemed to have no requirement to return excess capital.


Traditionally, they carefully avoided all equity investors and majority remained "passive", i.e. the investor not claiming a seat on the board and do not exercise their voting rights. Their public mandate was simply to pay the financial markets of resources from surplus reserves of oil and gas revenues, and even fiscal surpluses. Their assets under management in 2007 were estimated at more than 3000 billion, which are double the financial assets held by hedge funds or hedge funds. The combination of this long-term horizon, these financial ambitions measured, and the passivity of this important financial capacity tended to SWFs investors 'ideal' for the proper functioning of the financial sector. With the onset of the financial crisis, SWFs action took on a new dimension. Their stakes in Western banks have been hailed as rescue actions the global financial system, allowing some observers assert that "sovereign wealth funds play a fundamentally stabilizer in the international financial system and this fact is clearly verified in the current liquidity crisis ".

In total, between summer 2007 and end of 2008, the amount of equity in banks was about a hundred billion. For comparison, the amounts incurred by SWFs in Western financial institutions were valued at about two billion dollars in 2006. It was so relevant and legitimate to ask whether these new commitments, which differed widely patterns found previously, were more an expression of opportunistic strategies that will contribute to saving the international banking system. The episode Barclays has given a strong argument to critics of SWFs. Should this mean to generalize and draw a vitriolic portrait of all these funds, whatever they are? It is simply to make the obvious, funds, sovereign or not, is first of all investors. And like many traditional investors in times of crisis, some have high risks in search of high returns in the short term. Note, however, that the investments of SWFs, like the pronouncements of Warren Buffet or Albert Frère, are perceived as a buy signal from the other operators on the market, automatically assigning goodwill significant target values. By these new practices, SWFs could encourage other players in the market looking for a short-term profitability to do the same and thus unwittingly contribute to the volatility of stock prices.


Since the early 2000s, SWFs from emerging countries like Kuwait, Abu Dhabi, Singapore, China have stopped communicating with the financial sector and the general public with the aim to build an good image among investor and  be reliable.

Indeed, their rise was alternately seen as a form of threat to the national sovereignty of the host country, due to the lack of transparency and their alleged ambitions to invest in strategic sectors, and as a favorable element international financial stability and an important financing industrialized economies. In total, a consensus seemed to exist to recognize the positive role of these funds ... Until recently when an unexpected event came to trouble: the fund of Abu Dhabi International Petroleum Investment Company (IPIC) has withdrawn capital Barclays Bank selling on June 2 about 11% of the capital of the 16.3% stake. This operation was a surprising, since it was only made seven months before and the fund became the largest shareholder of the British bank, has allowed him to realize a profit of 1.7 billion Euros. At the same time, the action Barclays lost up to 16% during the session. Trying to get some height and to understand the implication of this new element of sovereign wealth funds and global finance as a whole.

Few years back. Before the start of the subprime crisis, SWFs have managed to forge an image of stable investors, favoring a long-term horizon and supports conventional investments such as stocks, bonds or hybrid (i.e. convertible bonds). They also seemed to have no requirement to return excess capital. Traditionally, they carefully avoided all equity investors and majority remained "passive", i.e. the investor not claiming a seat on the board and do not exercise their voting rights. Their public mandate was simply to pay the financial markets of resources from surplus reserves of oil and gas revenues, and even fiscal surpluses. Their assets under management in 2007 were estimated at more than 3000 billion, which are double the financial assets held by hedge funds or hedge funds. The combination of this long-term horizon, these financial ambitions measured, and the passivity of this important financial capacity tended to SWFs investors 'ideal' for the proper functioning of the financial sector.

With the onset of the financial crisis, SWFs action took on a new dimension. Their stakes in Western banks have been hailed as rescue actions the global financial system, allowing some observers assert that "sovereign wealth funds play a fundamentally stabilizer in the international financial system and this fact is clearly verified in the current liquidity crisis ". In total, between summer 2007 and end of 2008, the amount of equity in banks was about a hundred billion. For comparison, the amounts incurred by SWFs in Western financial institutions were valued at about two billion dollars in 2006.
It was so relevant and legitimate to ask whether these new commitments, which differed widely patterns found previously, were more an expression of opportunistic strategies that will contribute to saving the international banking system.

The episode Barclays has given a strong argument to critics of SWFs. Should this mean to generalize and draw a vitriolic portrait of all these funds, whatever they are? It is simply to make the obvious, funds, sovereign or not, is first of all investors. And like many traditional investors in times of crisis, some have high risks in search of high returns in the short term.
Note, however, that the investments of SWFs, like the pronouncements of Warren Buffet or Albert Frère, are perceived as a buy signal from the other operators on the market, automatically assigning goodwill significant target values. By these new practices, SWFs could encourage other players in the market looking for a short-term profitability to do the same and thus unwittingly contribute to the volatility of stock prices.

Monday, May 30, 2011

Investment Safety Net




Where is the safety net in the financial system? In fact, every bank has, more or less formal, more or less explicit. A bank is not actually a business like any commercial company: its transformation function of financial flows on the one hand, the leverage of its balance sheet on the other hand, make a bank failure involves systemic risk significant. The existence of the safety net is in itself an element of risk, since it can reduce the sense of risk among investors as among bank customers. And when risk aversion raises abruptly loud reaffirmation of the existence of safety net policies and the monetary authorities do not help to restore confidence. This question is not new: Alan Greenspan had raised the subject in May 2001.
Currently, the market requires less risk, which is materialized by the requirement for reduction of bank leverage: decrease in assets, so credit crunch, increasing equity, so severe dilution of existing shareholders, and the final stage being nationalized with an elimination of shareholders earlier.
Strengthen regulation is a double edged up capital ratios exacerbates the credit crunch. We can see the confusion that exists between minimum standards and the assessment in the market. The crisis is not over, and the political and monetary authorities are preparing a few more to rescue financial institutions, illiquid and / or insolvent.