Showing posts with label alternative investments. Show all posts
Showing posts with label alternative investments. Show all posts

Thursday, September 12, 2013

Know more about Crowd funding!

Crowd funding is a technical project finance business start using the internet as a channel of linkage between project managers and those wishing to invest in these projects. Of course it is an ancient practice but currently it is the subject of a wide popularity due to its simplicity of operation and the difficulties faced by some designers to find financing for their small projects.

 How it works?

The investor who wants to invest some money in a good project at one end and the holder of a project who starts business but does not have the funds needed to start his business and does not want to call the bank credit at the other end. The both meet on the Internet via a dedicated platform. The projects are presented by their holders and investors choose to fund one that they like to live up to what they want to invest. The simple operation of this form of financing also has the advantage of transparency for the investor. Both knows what is funds and by which choice and by its values. Crowd funding is associated with all kinds of projects. Generally, cultural, digital projects, social, environmental, innovative are the few worth mention.

 Three types of inputs are available to investors:

The first type of investment is a small gift or donation that is given to the project but the remuneration of the investor has no financial consideration. The second type of investment is a participation in the equity of the company created. The remuneration of the investor is then by dividends or the gain realized on the sale of securities. The third type of a investment is a loan. Pouring loan interest may only be offered by credit institutions authorized by the Banks. Fundraising to make lending is strictly prohibited. Only collecting interest free loans is open to individuals. The money invested can be few dollars to several hundred. Banking and tax regulations is a source of significant stress for structures offering financing platforms that obey different rules : The detailed identification of the investor ( proof of identity and residence) is needed to controls against money laundering , anti- terrorism, etc.


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.

Tuesday, June 14, 2011

Adoption of the Directive ISA, Was it a compromise? Part.IV

The burden of proof is reversed, the depositary and will be responsible for loss of assets under custody unless he can prove that the loss is the result of an external event, beyond its reasonable control and the inevitable consequences. The proposal adopted, which evokes a "reasonable control" of custodian, is less severe than the original text. The depository will retain the option of using the sub-delegation, initially excluded, to transfer its contractual responsibilities, which will be accompanied by due diligence work and reporting to the authorities further.

The lobbying industry seems to have paid to alleviate the new obligations. The profession can still expect some changes coming about the chain of responsibility, because it seems that the Commission expected the adoption of the Directive before opening the ISA site clarifying the responsibilities of the holders of UCITS, and this is likely to make changes at least as demanding.

The vote by the European Parliament Directive ISA shows how the negotiations were laboring among the proponents of a regulatory status quo and those seeking tighter control of the financial industry. As usual all the European players have found a compromise of the confession of all is a "lesser evil". But unlike the UCITS IV Directive which was carried by the entire profession, this directive was made reluctantly ISA and its scope is thereby limited. While hedge funds are going to have a regulatory framework in Europe but it is relatively flexible. Nevertheless, the establishment of ESMA is a breakthrough that will require the supervisor to give the EU means to realize its ambitions to acquire a globally recognized authority. The problematic status of depositories is idle and this will invite themselves to the agenda of the future Directive UCITS V. The vote of the Directive ISA is a first step and the path is far from complete.

Monday, June 13, 2011

Adoption of the Directive ISA, Was it a compromise? Part.III

The agreement on the principle of supervision by ESMA passport allows France to take the chairmanship of the G20 in a strong position on the progress of work relating to the supervision of European financial markets.

Directive ISA ruled on the delegation of function of management companies and hedge funds of their depositors. Overall it adds considerably to its terms.

The delegation function is to use a third party to perform the tasks for which an actor is originally mandated. At the management company of AIF, the delegation of two types of functions, portfolio management and risk management, will now be regulated by the Directive. A management company will want to use will now justify an objective reason to use it in order to increase efficiency in the conduct of its business. But it should also be noted that the legislative framework has eased since the adopted version includes the possibility of using the sub-delegation, the possibility of missing the European Commission proposal of April 2009. However, the reporting requirements are considerably increased and the Directive specifies that the management company may delegate to the verge of becoming a "mailbox company", a term already used in the UCITS Directive.

At the depository, the Directive makes a significant change in its area of responsibility by delegating its functions. It is imposed an obligation of result as it was until now under an obligation of means (having led the due diligence necessary to meet the quality standards expected). Although Made off has already dramatically changed the spirit of the obligations to be met by depositories, with the conviction in France of two players to repay funds whose assets were delegates at Lehman Brother, nothing was previously written in this form. The consultation on UCITS depositaries, led by the European Commission during the summer of 2009, had already identified a need for clarification of the responsibilities of trustees. It seems that the message was taken up for hedge funds.

Sunday, June 12, 2011

Adoption of the Directive ISA, Was it a compromise? Part.II

The main idea of the Directive is to oversee the marketing within the EU funds alternative:

* Non-European societies and non-domiciled in Europe;
* European societies but not domiciled in Europe;

through the award of a European passport attached to the funds must undergo an enhanced transparency, the image of what the UCITS IV Directive (Undertakings for Collective Investment in Transferable Securities) is doing for European UCITS funds.

Few countries has long opposed a plea in the European passport, claiming that only a passive marketing of these funds along with the status of private placement is appropriate, given their investment strategy and level of risk. The main risk cited to support this position was to see a licensing procedure more or less flexible according to each European country. Some might be tempted to offer a more flexible regulatory framework to capture the domiciliation of funds at the expense of other countries, with the consequence of pulling down the quality of the passport. In the final stages of negotiations, France has finally decided on the European passport, provided that it is more strict, that is to say, supervised by the future European authority market supervision (ESMA) who will take office on 1 January 2011 (and not only by the public authorities of member countries). The passport will be introduced from 1 January 2013 to cohabit with the national authorities until 2016 to allow time for ESMA to adjust its standards. ESMA will ensure that non-European countries, host of hedge funds, comply with the principles of the regulations in force within the EU. It is also anticipated that in 2015 the Commission makes an assessment of the implementation of the directive and to pronounce on a possible extension of the powers of ESMA.

Adoption of the Directive ISA, Was it a compromise? Part.I

Proposed by the European Commission in April 2009, Directive ISA on hedge funds (Alternative Investment Fund Managers) was passed overwhelmingly by Parliament 11 November 2010.

The draft Directive is that born of the political will to increase the transparency and regulation of the financial sector following the 2008 crisis.

In this general hedge funds have been pilloried particularly because of their opacity and systemic risks they might pose to financial markets and on whole sectors of the economy. Designated block, the funds "alternative" yet includes wide range of industries: venture capital, buyout capital, real estate funds and hedge funds, which had all the complicated drafting of common rules in these sectors. The main projects of the Directive focused on reducing systemic risk, on increasing the power of supervisory authorities on the improvement of investor protection on earnings and on the development of a European regulated alternative management.

Lengthy discussions on this Directive have been intense lobbying by supporters of the status quo countries (UK, Ireland ...) and those advocating stronger regulation of the financial system (France, Germany, ...). Michel Barnier, European Commissioner for Internal Market and Services, has spent all his diplomacy to bring together the viewpoints around a unifying text; But at what price?

The treatment of third countries was one of the blocking points of discussion in the Council of the European Union given its potential impact in London, second in from hedge funds, representing one trillion Euros of Assets under management at end 2008.

Time mentioned, a simple refusal of the marketing of hedge funds not registered in Europe would have a major impact on the industry with approximately 60% of hedge funds are domiciled in countries offshore cons less than 5% in Europe.