The event will take place THIS THURSDAY in:

Aula Magna, Maria de Molina 13, Thursday, 3rd of July, from 5.00 pm to 8.00 pm.

There will be limited seats (164 PLACES)- served on a first register first serve basis (see below).

The session will be held in English.

According to our Club statements, this new event is another chance for IE students and alumni to gain a deep understanding of the different alternative careers in Banking after their Programs or once decision is made to change a career path.

PE is in a very special moment as the firms have a lot of investment opportunities but they have to search really hard for financing, as all the banks are short of liquidity, would this mean that they will have to finance the operations with more equity?...Come and find out the solution!!!

The program, issues and speakers will be:

5.00 p.m. INTRODUCTION

5.10 - 6.00 p.m. AN OVERVIEW OF THE PE PROCESS

• Implementing strategy
• Follow up

3). Third Block: Leopoldo Reaño. GALA CAPITAL

·         Day-to-day management.

·         Exit strategies.

·         Specific case/deal of a failure.

6.00-6.30 p.m. BREAK

6.30 p.m. INTRODUCTION OVER THE 3 TOPICS TO BE TREATED

 6.40 - 8.00 p.m.  TOPICS

Q&A

The event will be led by [moderator pending to be appointed].

Who should attend? All those students regarding the possibility of working in PE, all those interested in the area and any of them who want to learn more about PE as a general finance background. Students from any program are welcome.

El 26 de Mayo de 2008, el banco UBS dio una charla en el IE Business School sobre análisis y predicción de mercados, pero en este caso en vez de mercados, sobre la actual Eurocopa 2008 de Suiza y Austria.

En el evento tomaron parte: por parte de UBS, D.  Roberto L. Ruiz Scholtes, que se encargo de dar a conocer el proceso de análisis y predicción que luego UBS aplicó al mundo del futbol y por parte de IE Business School, el profesor D. Eduardo Fernandez-Cantelli, profesor de Marketing de IE Business School.

On the 16^th of April 2008 D. Ignacio Dolz de Espejo, Manager of the Morgan Stanley SR Fund, came to IE Business School invited by the IE Finance Club to talk about how social investments can be an option in the financial world, and that people who care about this issue have an opportunity to invest outside of the traditional investing world.

Mr. Ignacio Dolz has worked for several years in Morgan Stanley. Now, MS bank has been sold to Grupo LaCaixa, and therefore the fund will probably change the name in the short-term.

Mr. Dolz started talking about the creation of the fund and its history. The fund was created by Intermon Oxfam (ONG) and AB Asesores (small boutique bought by MS), and with the help of an ethic committee they launched it in March 1999.

The fund was created with an objective: "to promote the companies' social responsibility as well as to obtain capital growth...."

Part of its management fee goes to ONGs, the client can choose which one. (Intermón Oxfam, Cáritas Española, Cruz Roja, Médicos Sin Fronteras, Entreculturas, Alboan and the Fundación para la Lucha contra la Esclerosis Múltiple.)

The fund selects the companies based on three criteria:

1.     The Ethical and SR investment policies of the companies.

2.     The Ethical Committee pre-selects the investment universe.

3.     Company investigation tools. (External and Internal).

To do these studies they use instruments like EIRIS (Ethical Investment Research Services). EIRIS uses 350 ethic and environmental indicators in 40 subsectors to classify the companies.

The fund searches for companies that protect human rights, follow the pharmaceutical deontological code, the Children's milk International Code, and are against armament, nuclear and tobacco.

The fund also uses evaluating criteria: the committee assigns valuation to aspects as: Corporate Governance, environmental policies, human rights and stakeholder issues.

After having passed all this filters the Strategic Committee decides which stocks will form part of the fund and the specific weight inside the portfolio. Here they use only the company´s financial results, ratios and any financial instrument that helps them to decide between two companies of the same sector.

The fund was created with a weight of 25% Equity and 75% in fixed income. The variation of the equity was not very high as before (1999) the law did not allow many changes in the structure of the fund. Now a day Mr. Dolz said, it is better to have a 100% Equity Fund, as all the (developed) country debt is supposed to be ethical and also because funds can now a day´s change the percentage of equity and fixed income.

The investment of the Equity part is invested in companies from all over the world. (Vodafone, Enagas, Saipem...etc)

Compared with other funds like private equity or hedge funds or pure equity funds or even pension plans, this SRI Fund manages a very small quantity of money, but it is the start of a new option for investors. The team that work at this fund have demonstrated that ethical profits are possible and that people are thinking more on this issue.

From the IE Finance Club would like to thank Mr. Ignacio Dolz for his seminar and hope him great success in the future development of the SRI Fund.

Let´s briefly cover the circumstances surrounding the current financial situation, particularly the lack of control in the financial market. Hyman P. Minsky, a Wall Street economist developed a theory in the 60´s that was launched by him in the 80s when the markets were deregulated and the state encouraged investors to take greater risks in hopes of spurring innovation. Minsky believed that Wall Street encouraged businesses and individuals to take on too much risk,, generating ruinous boom-and-bust cycles. The only way to break this pattern was for the government to step in and regulate the lending practices. A few months ago, at the beginning of the crisis, we could see a similar lack of control in financial markets and how the US government announced the creation of new regulatory measures. This included giving more authority to the Federal Reserve, as Minsky's theory recommended.

We also need to know what a Credit Default Swap is. A simple explanation: passing the debt to a third party. In the case of firms or banks, the debt holders sell loans from their customers to an outside investor. A public debate ensued between two famous figures, one in favour and the other against the wisdom of such a policy. Alan Greenspan believed it was good for the economy as the risks were diversified between more people and more countries. On the other hand, Warren Buffet opposed it because it generated overly risky decision-making.

How does it work?

A person in (e.g) Tulsa, Oklahoma, without a job or future expectations of income wants to buy a house. The real estate agencies have two types of clients: Prime and No-Prime (subprime), this person would be SUBPRIME. When agencies have too many subprime mortgages, they make a pooled instrument known as a structured investment vehicle (SIV) and sell it to banks or other entities, so it is the new owner who has the right to collect the debt from clients.

Banks securitize the mortgage packages and create a bond with three ratings:

1)     Good. AAA rating.

2)     Medium.

3)     Bad. This one will have a 3% default. S&P will give them AAA rating.

As a result, an unemployed mortgage holder at high risk of default is inadvertently folded into the AAA rating category. In fact, SIV buyers oftentimes had no means of properly assessing solvency or liquidity risks underlying such debt.

When the credit crisis began to explode, banks and other entities did not have the possibility to recover the debt and suffered from major losses. These unrecoverable holes were as big as $7 billion at Merrill-Lynch, and $8 billion at UBS, and led to a series of announcements that banks would write down large amounts of assets from their balance sheets.

As the banks could not recover their money, lost liquidity, and could not continue lending. This impacted the overall credit market when consumers who had to pay down debts (e.g. a car purchase) could not obtain additional credit lines from banks.

The banks will have to wait until they recover some cash before they resume lending, which will eventually help jumpstart the economy again. But the question is: How much time will it take to recover from such big write downs?

This liquidity crisis also affects the inter-bank lending markets. Previously, banks with more liquidity would loan money to others at a small premium. Now, however, banks are reluctant to or cannot lend, and no lending means no income to expand the credit market. A vicious cycle results.

In summary, the economy must wait until banks recover sufficient liquidity to restart lending (more safely). This should fuel real economic growth once again.

To this we have to add the impact of much higher crude oil prices, which makes all goods much more expensive at a moment when families are already struggling with mortgage interest payments. These two factors will lower consumption and may cause the economy to stagnate or even contract for several terms.

In Spain, the subprime crisis did not affect the banks as much as in other countries due to the limits established by regulators that mandated that the amount of subprime lending could not pass a specified limit.

On behalf of the IE Finance Club we would like to thank Mr. De la Torre for his excellent seminar on the reasons behind the crisis and we hope to count on him again in the future for another outstanding seminar.

Off-balance Sheet financing: 7 techniques to hide debt!

The event will take place in:

Tuesday April 29th, Classroom P-211 in C/ Pinar nº 18. From 19.00 to 20.00h.

There will be limited seats - first-come, first-served basis (see below).

The session will be in English.

Financial Accounting is the foundation for all the deals in the business world but nowadays we see complicated operations that demand a higher knowledge of this topic. In order to learn more about financial accounting and see practical examples, the Finance Club encourages you to come to this conference.

The event will be held by Mr. Jesús Pinelo, ex-student of the IE Business School and currently responsible for the accounting department in Union Fenosa Group, a listed Spanish energy company.

Organized by IE Net Impact Chapter and IE Finance Club, with Morgan Stanley Ethic Fund

The event will take place in:
Classroom S-101 in Serrano 99, on Wednesday 16th of April from 6:00 p.m. to 7:00 p.m.
There are 64 places available - served on a first register first serve basis (see below).
The conference will be in English.

Fund management is nowadays a hot topic for many people because of the results that fund managers have been achieving for the last year. In order to know a little more about how they work we have invited Mr. Ignacio Dolz de Espejo, Morgan Stanley Ethic Fund Manager to talk about this issue, and in order to make it more interesting he will talk about social responsible investments in the fund universe, with the example of the Morgan Stanley Ethic Fund.

Who should attend? Anyone interested in fund management and/or social responsible investments.

Last week, on March 5th, IE Women in Business Club (IE WIB) organized, in collaboration with IE Finance Club, IE Net Impact Chapter and Club de Emprendedores Colombianos, a conference on Microfinance.

The conference started with a financial course on microfinance institutions, their target (self-employed poor, especially women, who have little or no access to formal credit), risks, assets and empowerment, conducted by Prof. Gutiérrez.

Marcela Torres Córdoba, IMBA08, Vice-President of IE Net Impact Chapter and of Club de Emprendedores Colombianos, illustrated the key concepts with her own microcredits project in Colombia.

Please, visit IE WIB Blog to read the article on this event and post any comments.

Written by Julia Emilia Sanchez, IMBA08 and member of IE Finance Club

On Monday, February 25th 2008, the IE Finance Club hosted an Education Day to provide students and alumni with an overview of career opportunities within the finance field. The panel consisted of five executives from reputable firms that operate within the Spanish marketplace: Deloitte, RBS, Merrill Lynch, Gala Capital and GBS Finanzas. Each speaker gave a transparent description of the responsibilities they face on a daily basis. IE Professor, Tomás Gutiérrez, presided over the panel offering reflective insights on the overall finance industry.

This first event was organized by Tomás Gutiérrez, along with Ildefonso Bertrand Figar and Felipe Rojas, both IMBA08, respectively President and Vice-President of the Club.

Speaker 1: Carlos Robles, CFA and Vice President for Investment Banking at Merrill Lynch.

Investment Banking Structure: Carlos provided a helpful overview of the traditional investment banking structure. He explained that Merrill Lynch, like many other investment banks, has 3 primary groups: 1) Private Client Group, catering to wealthy individuals that invest upwards of 5mm. 2) Investment Manager- Blackrock, compiles pools of money for investment from different sources, both private client and retail. 3) Global Markets and Investment Banking, consisting of 3 arms: Investment Banking, Debt and Equity. The Investment Banking arm employs 2000 bankers worldwide, 600 of which are focused in Europe. Bankers are allocated across three categories: 1) Country 2) Industry 3) Product. Often times, depending on the transaction, bankers collaborate across these categories.

Investment Banking practices: Investment bankers provide strategic and financial advisory for Mergers and Acquisitions (M&A) and Capital Structure Situations. Bankers work with the top management (Chairman, CEO, CFO) of large corporate and financial institutions. They advise companies on acquisitions by providing them with strategies on how to close deals and help to value companies. Inversely, they also work in hostile situations on behalf of a company that is being acquired in order to help management strategize on the prices they should demand. Day to day, investment bankers engage in both pitching and execution. Junior level executives tend to focus on valuation analysis whereas upper management consider potential transactions and devise pitches accordingly.
Investment Banking Career path: He eloquently defined an investment banking career as ...

a very clear path in which “the rules are well defined". At Merrill Lynch, the career advancement takes place in intervals of 3 years. First, an entry level candidate post-college enters as an analyst. Carlos described this role as “someone that works a lot.” In said capacity, the analyst would perform extensive financial analysis, conduct due diligence and engage in any other necessary tasks delegated by upper management. Three years later, an analyst ideally grows into a Vice President (VP) position in which he/she oversees analysis assigned for various projects and develops client presentations. The next step is a Director position that shares similar responsibilities as the VP role. Moreover, the Director also prepares to build his platform during these three years in order to rise to the Managing Director role. Once achieved, Managing Directors oversee one or two sectors within a particular country and focus on developing relationships with certain clients. In general, the other speakers reiterated similar career advancement structures within their firms.

Speaker 2: Ezequiel Szafir for Deloitte

Ezequiel described Deloitte as a “good place to start and stay". He went on to say that Deloitte is a place where people can “smell and taste corporate finance". Ezequiel runs the Transaction Support Services Group.

In essence when a company acquiring another company does not have a corporate finance department, they hire firms like Deloitte to help them with elaborating the deal from start to finish. Within this process, Ezequiel noted two key steps: pre-deal and post-deal. Pre-deal entails numerous types of due diligences: Financial, Tax, Legal, Operational & Commercial, Information Technology and Synergy Studies. All of these in depth reports comprise the homework required to assess whether or not to proceed with the deal. Ezequiel clearly pointed out that “transactions take a lot of work, a lot of discussion and a lot die along the way.” Deloitte has an arm of 800 consultants that the Transaction Support Services Group draws on for expertise in the areas noted above. Once a deal closes, most of the grunt work has passed and the company then shifts gears to track the progress/ensure execution.

Ezequiel highlighted four areas of knowledge that Deloitte values:
1) Accounting & Auditing
2) Treasury and Corporate Finance
3) Valuation
4) Business modeling and operations

Similar to the career timeline Carlos from Merrill Lynch described, Ezequiel pointed out that careers at Deloitte in the Transaction Support Services Group also follow a structured path. Initially, junior level employees engage in extensive analysis using excel, whereas senior level executives focus more on sales.

Speaker 3: Leopoldo Reaño for Gala Capital Partner Advisors SGECRSA

Leopoldo describes Gala Capital as a Spanish Independent Private Firm that targets the middle market transaction in the Iberian Peninsula. He proceeded to explain that 3 levers exist when trying to pursue deals in Private Equity: 1) Look for companies with a low multiple, although in Leopoldo’s opinion, this approach gained too much popularity and therefore does not work as effectively as it used to. 2) De-leverage, which means identifying large companies that can generate enough cash to support large amounts of debt. 3) The method Gala Capital employs: look at companies where there is an opportunity to double, triple them in size organically, geographically, or via acquisition.

Ideally, Gala Capital seeks to double their investment in 3 years and triple in 5 years. Leopoldo summed this practice up by saying, “D-Day is the day we sell the company, not the day we buy it.”
In order to provide a more tangible example of Private Equity practices, Leopoldo walked the audience through the four phases of an investment cycle: 1) Investment Sourcing, establishing relationships with banks, M&A houses, lawyers, consultants, owners and managers to seek out potential deals. 2) Deal Execution entails thorough due diligence/analysis, negotiations and financing of a deal. 3) Portfolio Management & Exit, means participating in Board of Directors & Executive Committees, add-on acquisitions if needed and management coaching. 4) Firm Management, producing quarterly investment reports and overseeing investor relations.

Leopoldo emphasized that his firm is very focused on meeting certain criteria when looking at investments. Last year, they looked at 150 deals, did work on 20 deals and only ended up investing a fraction of these.

In terms of recruitment practices, Leopoldo said that many associates come from backgrounds in investment banking, consulting and now they also consider candidates with line experience in relevant industries.

Speaker 4: Álvaro Camarero with RBS

Alvaro works in the Project Finance Sector and spoke enthusiastically about his experience in the field. Álvaro, a former engineer, explained that project finance can be a great way for engineers to penetrate the finance field. The entity that Álvaro works for, RBS is a lending organization that operates in both retail banking and the global banking/markets area. Project finance falls into the second category. Álvaro forms part of a team of 12 individuals that focus on the energy and construction sector. Álvaro´s role in project finance is two-fold, first he and his colleagues lend money to develop projects and secondly, they optimize risk allocation among different parties involved in the project. Like the other speakers, Alvaro reiterated the importance of conducting due diligence before entering into a project. RBS also turns to consultants such as Deloitte to help compile all the necessary data on these projects before making a decision.

Álvaro discussed the market for project finance and noted that substantial projects are developing everywhere, an encouraging point for individuals that wish to work in this field. Several Spanish companies such as Acciona, Iberdrola, etc are leaders in the world thereby generating job opportunities. Furthermore, Álvaro stressed that project finance does not succumb to volatility relative to other fields since demand for roads, infrastructure, etc. always exists.

On a closing note, Álvaro gave the audience a very comprehensive list of why he enjoys his job in project finance:
-Exposure to multi-disciplinary tasks.
-Ability to develop knowledge on legal aspects.
-Negotiation with clients.
-Originating deals.
-Modeling.
-Tangibility of projects (ability to see evolution and completion of projects the firm has financed).

Speaker 5: Juan Santodomingo from GBS:

Juan described his firm GBS as a Middle Market I-Banking institution. Alike larger institutions such as Merrill Lynch, they invest money in equity and debt instruments. The only main difference is that GBS does not hold a banking license. Juan clearly explained the 3 main divisions that fall under corporate finance category within his firm: 1) Mergers and Acquisitions (M&A) 2) Corporate Strategy 3) Debt Advisory.

Within GBS, the operations take place in 3 phases: 1) Deal origination 2) Execution that entails valuation, investment roadshows and conducting due diligence. 3) Closing: negotiation and contracts.

Aligned with the comments from the rest of the panel, he too affirmed that many hours are dedicated to research (origination) within his organization. Juan said that, “In 90% of the cases, you will get nothing…but when you do, it’s pretty good.”

In order to help the audience understand the demands of corporate finance, Juan ended his presentation with a few characteristics that he looks for in potential candidates. Foremost, previous experience in investment banking, corporate finance, private equity, corporate banking and strategic consultancy definitely gives candidates a competitive edge. In addition, GBS looks for financial modeling expertise, accounting & finance knowledge, and fluency in English.

Closing comments:
Overall, the presentation provided the audience with a great overview of different career paths within the finance industry. The speake