Wealth & Finance International | February 2016
Voice of Reason
Clive Lewis OBE DL explains how to Master Employment and Workplace Mediation. Lebanon: An Economy of Resilience We speak to Jammal Trust Bank SAL (JTB).
CEO of the Month
President and Chief Executive Officer of Norwegian American Hospital provides insight into his role, his previous career experience and the challenges of providing healthcare in his region.
Fraud Investigator 2015
We speak to Edmond J. Martin of Sage Investigations, LLC, a company that provides fraud investigative services to six distinct markets: Tax Attorneys, Business and Corporate Attorneys, Estate and Probate Attorneys, CPAs, and Individuals.
Real Estate Fund Manager of the Year - USA – 2015
We had a chance to speak with American Private Equity Group and hear more what makes their strategy and focus cutting-edge.
CFO of the Month
W&f
We spoke to William B. Baldwin, CFO of Kepner-Tregoe a world renowned multinational management consulting and capability development company.
Forming Funds in 2016
An article written by Chris Odysseos and Maria Athienitou of PwC Cyprus, one of the main market players in the provision of professional services to Funds & Fund Managers.
Arbitrator of the Month
We had the chance to hear from Jean-Georges Betto at Betto Seraglini to find out how they have filled the gap in the market that clients were calling out for in the world of international dispute resolution.
International
The City of Bellevue, Nebraska – Opportunities for All
We invited Larry Burks, Bellevue’s Assistant City Administrator and economic development point of contact, to provide us with an insight into this growing city and the developments which are making it an increasingly attractive investment opportunity.
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Cyber Security Risks to Fund Managers
We speak to Chris Coleman (right) at LookingGlass, a threat-centric security company that provides the most comprehensive threat intelligence portfolio in the industry.
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Welcome to the February Issue of Wealth & Finance. This month’s Wealth & Finance INTL brings you all the latest news from the financial world, including a piece from Jammal Trust Bank SAL (JTB), a rapidly growing medium sized retail Bank in Lebanon. Our reach then extends throughout the financial landscape, from a profiles of fraud investigative services company Sage Investigations, and PwC Cyprus, one of the main market players in the provision of professional services to Funds and Fund Managers, to an interview with Bamboo Finance, a specialised private equity firm investing in creating access to financial services, renewable energy, healthcare and agriculture in emerging economies with offices in Luxembourg, Geneva, Bogota, Nairobi and Singapore. Legal services is a popular topic this month, and we feature an article from our James Berry & Associates, one of the longest established legal practices in Dubai, on setting up a Business in the UAE. In addition, CEO of the Month is awarded to José R. Sánchez of the Norwegian American Hospital who discusses the challenges of the organisation to keep the population healthy, and creating programs that reflect the needs of the community. We hope you enjoy the issue.
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Contents 4. News
8. Cyber Security Risks to Fund Managers - LookingGlass Cyber Solutions 11. Trading Advisor of the Month - 3D Capital Management- Eric Dugan 11. Atlantic Subsea 12. Real Estate Fund Manager of the Year - USA – 2015 - American Private Equity Group 16. Hedge Fund Manager of the Year 2015 - Absolute Value Capital Management 20. CEO of the Month - Norwegian American Hospital 22. Mediator of the Month - Globis 26. Fraud Investigator 2015 - Deloitte 28. Hedge Fund Manager of the Year 2015 - Alkimis SGR 30. Arbitrator of the Month - Betto seraglini 32. The City of Bellevue - Opportunities For All 36. Fraud Investigator 2015 - Sage Investigations, LLC 38. Setting up a Business in the UAE - James Berry & Associates 40. Hedge Fund Manager of the Year Mauritius - Barak Fund Management 42. Hedge Fund Manager of the Year - Best Long/Short Equity Fund Manager - Chilton Investment Company, LLC 44. Bamboo Finance 48. Asset Manager of the Year - France - Eiffel Investment Group 50. Infrastructure Fund Manager of the Year - 2015 - Golding Capital Partners 52. Forming Funds in 2016 - PwC 54. CFO of the Month Kepner-Tregoe - William B. Baldwin 58. Real Estate Investment Manager of the Year C-III Capital Partners 60. CEO of the Month - Ermanno Santilli 64. Hedge Fund Manager of the Year Europe - QW Capital 66. Lebanon: An Economy of Resilience 68. Infrastructure Fund Manager of the Year 2015 - Germany - Deutsche Finance Group
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Wealth & Finance International | February 2016 News
The New State Pension The introduction of the new State Pension in April will make millions of people better off, according to new figures released today in January.
The data shows the long-term impact of the new State Pension on people’s pensions, with 75% of people set to gain in the first 15 years. The move to the new system will provide a boost to the State Pension for many women, with over 3 million women receiving an average of £11 more per week by 2030 as a result of the changes – helping to address the gender inequalities that have persisted under the old scheme.
Women reaching State Pension age over the next 5 years will receive, on average, approximately £190,000 of State Pension over the course of their retirement. The equivalent figure for men is approximately £170,000. Background on the new State Pension At the heart of the new State Pension is the concept of a clearer, single payment for the future. The full rate will be above the basic means-test in Pension Credit, but the system will remain contributory in nature.
Minister for Pensions, Baroness Altmann said: Huge efforts have been put into reforming the mind-blowingly complicated State Pension system that exists today into something that, over time, will be clearer for everybody.
Many of the complexities which have built up over decades will be swept away and, after April, there will be a much more straightforward system. People making NI contributions for the first time from April who have 35 qualifying years of NI contributions will receive the full rate, which will be set above the basic level of means-tested support (currently £155.65 a week, that is over £8,000 a year).
Millions stand to gain from the changes to the new State Pension, including women and the self-employed, who so often lost out in the past. These figures also show that over 70% of people who have been contracted-out during their working lives stand to gain from the new State Pension.
The system will still recognise the NI contributions made by those who have spent some of their working life in the old system. This will involve the DWP calculating a “starting amount” for the new State Pension taking into account a person’s record up to April 2016. The starting amount will be the higher of the State Pension built up under the old rules or the amount each person could have built up if the new system had been in place in the past.
The figures reveal that 90% of people who will pay National Insurance (NI) at the standard rate from April, due to the end of contracting out, will receive enough extra State Pension over their retirement to offset the increase in these NI contributions. Anyone aged 55 or over can apply for a personalised State Pension Statement, which will give them an estimate of what they will get under the new system. This will be based on their work history and NI contributions to date, including information on their past contracting out record.
Starting amounts for the new State Pension will take into account whether someone has been contracted-out in the past as well as their past earnings and overall NI contribution record. In future, the option for people to “contract out” of the Additional State Pension (and pay NI contributions at a reduced rate) will be removed, and there will be only one NI rate for employees.
More information The statistics can be found here: New State Pension: impact on an individual’s pension entitlement – longer term effects
As a proportion of GDP, projected expenditure on pensions and pensioner benefits is broadly the same as under the current system until the 2040s.
The statistics also show that over 75% of women and over 70% of men will gain in the first 15 years of the new State Pension.
More information about the new State Pension is available at www.gov.uk/yourstatepension
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Wealth & Finance International | February 2016 News
Rental Growth Drives London Property Forward MSCI, a leading provider of investment decision support tools worldwide, including indexes, portfolio risk and performance analytics and ESG research, alongside Levy Real Estate, announced on February 24th, 2016 that a growth in commercial property rents across London fuelled an average total return of 18.1% from investments in the capital during 2015.
The London Markets Analysis report by Levy Real Estate and MSCI analyses more than £30bn of assets across 20 key submarkets. It shows that the pace of rental growth increased year-on-year from 7.8% in 2014 to an average uplift of 8.5% last year.
“This has resulted in rental growth taking over as the main performance driver, as confident, and expansionary, businesses compete for space.” The London Markets Analysis is the definitive study into the capital’s commercial property sector and tracks the comparative performance of more than 1,000 assets. It looks at the fundamental drivers of the market and what is contributing to returns, rental growth and yield shift.
The strongest rental growth was registered by the Camden/King’s Cross submarket where the continued success of the King’s Cross Central development saw the prevailing level of rents grow on average by 17%. High occupier demand and a lack of space in other submarkets is also driving rents: Mayfair – where the continued conversion of office property to residential has limited the supply of new space – saw rental growth of 11.9% last year.
Retail sales Growth Slows and set to ease Further – CBI Survey Retail sales dropped slightly below normal, but orders remained above expectations, according to the CBI’s latest quarterly Distributive Trades Survey.
Levy Real Estate Investment Partner, Simon Heilpern, commented: “The latest research shows a market which still has significant momentum. Returns are now increasingly being driven by a growth in rents and this suggests that London’s commercial property investment sector can expect further sustainable growth in values.”
The survey of 124 firms consisting of 68 retailers showed that retail sales growth slowed slightly in the year to February, in line with expectations and was a little below average for the time of year. Meanwhile, orders placed on suppliers were unchanged, better than expectations. However, expectations for March are the weakest since 2013, with sales expected to be flat on the year.
The progressive rents in and around King’s Cross also meant that the Camden/King’s Cross showed the highest total return for a single submarket of 27.3%. It was followed in the total return rankings by the Eastern Fringe (24.7%) and Marylebone & Euston (23.1%).
Respondents expect a decent improvement in business conditions (which considers recent trends in sales, orders and profitability) over the next three months. Average selling prices crept up for the first time in three quarters, easing pressure on retailing margins. And although recruitment growth slowed, it remained well above average rates with a similar rise expected next month.
Mayfair retained its position as the submarket with the most keenly valued property: the average equivalent yield for its property was just 3.7%. The area has also seen a continued conversion of office property to residential which has contributed to an upward shift in rents
But retailers now plan to slightly scale back investment spending in the year ahead, following two quarters when firms expected to raise capital spending.
The biggest inward yield shift during 2015 was in the Western Fringe locations of Clerkenwell, Smithfield and Farringdon where average equivalent yields moved in 80 basis points to 5.2%. However, the general picture is a slowing down in yield shift which illustrates the growing importance of rental growth.
Meanwhile, grocers’ expectations for growth for the month ahead fell to their weakest in nearly three years, as tough trading conditions continue to exert pressure on the sector.
Colm Lauder, Vice President, MSCI commented: “The London investment market had another good year in 2015, with strong returns on the back of healthy rental value growth across the commercial property market. As in 2014, fringe markets outperformed last year with locations such as Camden/King’s Cross and the Eastern Fringe remaining attractive to both occupiers and investors.
Rain Newton-Smith, CBI Director of Economics said: “Overall, conditions remain challenging for retailers. Although sales have continued to grow and optimism has risen, expectations for sales growth are lacklustre and retailers are still wary of investing. And unreformed business rates are making it tougher for retailers to open up new shops on the high street.
“Pricing in the London market also strengthened further during the course of 2015, but the rate of yield compression has slowed as key market locations begin to reach record yield levels which question price fundamentals.
“But retailers still stand to benefit from the low level of inflation and strong job creation across the economy, which should continue to support household spending.”
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Retailers Key findings: • The volume of internet sales (+29%) remained far below its long-run average (+50% - since August 2009); • 38% of respondents reported that sales volumes were up on a year ago, while 28% said they were down, giving a balance of +10%, matching expectations (+10%); • Retailers expect sales volumes growth to dip next month (+2%), the lowest for almost three years (-6% in May 2013), with 25% expecting them to rise and 23% to fall; • Volumes of sales for the time of year in November were marginally below seasonal norms (-4%); • Some sub-sectors recorded sales volumes falling over the year to February, such as footwear and leather (-43%) and furniture and carpets (-20%); • The volume of orders placed upon suppliers was broadly flat (-2%), with 26% of survey respondents reporting a rise and 28% reporting a fall. Firms anticipate a fall next month (-12%), with 18% expecting an increase and 30% a decrease; • Stocks relative to expected demand ticked higher (+15%), returning towards its long run average (+17%); • Retailers expect their overall business situation to continue to improve over the next three months (+12%), at roughly the same pace as the previous quarter (+11%); • Investment intentions for the next year compared to the previous twelve months were negative (-4%), following two consecutive quarters of positive growth (+5% in the three months to November, +17% in the three months to August); • Average selling prices rose in the year to February (+10% from -7% in the year to November) Wholesalers 42% of wholesalers reported sales volumes to be up on last year and 26% said they were down, giving a balance of +16% - an improvement on the previous month (+8%). Motor traders 62% of motor traders reported sales volumes to be up on last year and 5% said they were down, giving a rounded balance of +58%.
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Wealth & Finance International | February 2016
Cyber Security Risks to Fund Managers
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LookingGlass can assist by providing intelligence across the fund and its portfolio companies to provide proper guidance on risks and threats that may be impacting the business or future portfolio companies. This could include brand sentiment, phishing, social media impersonation, executive risk, physical security issues or malware and botnet infections. This information can be used to inform investment decisions, but also help protect the company, its brand, its partners and its overall security posture.
LookingGlass is a threat intelligence-driven security company that provides the most comprehensive solution portfolio in the industry. In an age of doxxing, merged operations and convergence, cyber is not just an attack medium, but also an intelligence source for a wide range of threats.
to phishing alerts, indicators of compromise and cyber risks associated with its current and future investments. This intelligence is collected both from open and closed sources and can be leveraged in human readable format to automated dissemination as machine readable. With increasing volume and sophistication of cyber security threats, targeting phishing scams, data theft, and other online vulnerabilities, it is everyone’s responsibility to take securing their systems and information seriously.
As a result, multiple functional areas across companies and governments can benefit from threat intelligence information to properly protect the organization in its entirety. This requires information, expertise and capabilities that help protect brand, ensure compliance, identify information leaks and abuse, manage the overall deluge of threat intelligence and efficiently operationalize that information into the IT security infrastructure. The LookingGlass portfolio of threat intelligence services, machine readable threat intelligence, threat intelligence management and network mitigation capabilities enable our threat centric approach to be proactively leveraged by our clients unlike any other company in the industry.
It has been proven time and time again that the human is the weakest link in the security chain. If our jobs are our livelihood, then protecting our livelihood, organizations and investments through being wary of suspicious phone calls, emails and how you share the company relevant information is critical. Cyber security – who does it affect? We live in a connected world. We have gone from a network centric environment to a network dependent environment. Our systems, our partners’ systems, our personal systems and accounts are all interrelated at some point. They are all a targets and can be used to daisy chain access. The Internet of Things, electronic currencies and other modern innovations are all potential targets and while you might have a bullet-proof security posture, if your physical asset controls for example are not secure then it can provide another means by which a determined adversary could impact your operations.
How LookingGlass can help fund managers that have been victims of cyber attacks It’s important to understand why fund managers and their company could be targeted. There are a few drivers that would put a fund manager and their company on a target list. The most basic is simply credential harvesting and stealing. Next there is activism that might target the company and its employees for social reasons. For example, the fund invests in a controversial company. This could lead to attacks on brand and the funds executives. There could also be protests that impact the place of operations for the fund. Then there is financial incentive. I see the financial incentive motive to be two pronged. First is the simple aspect of stealing money through account access.
Advice for fund managers and investors Be vigilant and operate with a healthy degree of paranoia. Understand that while a company may look like a great investment, if their cyber hygiene is poor, their brand is being tarnished on social media, and their account credentials are for sale on the underground, then the company’s potential may already be compromised. Leveraging Intelligence helps organization’s better understand and manage their overall risk posture within an ever evolving threat landscape.
The next is a bit more lucrative and less obvious. An actor may target gaining access to future investments that the fund will be making to buy into a stock ahead of the fund’s investment. Obviously that type of access and the amount of money invested by most funds is traditionally significant enough to drive a stock price, even if short lived. The last one that is important to mention is the potential security risk that a target investment might be exposed. Should a company already have an ongoing but not a published breach, an investment could turn for the worse because of the lack of knowledge of that pre-existing compromise.
Company: LookingGlass Cyber Solutions Name: Chris Coleman Web Address: www.lgscout.com Address: 11091 Sunset Hills Road Suite 210 Reston, VA 20190 Telephone: 001 703 351 1000
Addressing the full cyber intelligence lifecycle LookingGlass solutions enable effective security decisions and efficient security operations at every stage of the threat lifecycle. We can provide very customer specific collections regarding the company, from its locations, its executives, and potential impacts to the physical assets
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INDEPENDENT
| INNOVATIVE | INTERNATIONAL
OUR INDEPENDENCE
OUR PEOPLE
NAV is not affiliated with any bank, broker, or other services provider. Being 100% privately owned for our entire history has meant one thing above all: we are not bound by the need for short-term investor results. We have always been free to make our priority a long-term view with continuous investments into our infrastructure, our people, and our technology. NAV’s wholly-owned, proprietary technology, also eliminates any dependence on licensing technology from competitors or other third parties. NAV’s pledge is not to become involved in the industry’s M&A activity and consolidation.
NAV’s team brings a wealth of knowledge to each client engagement. We are proud to have remarkably low staff turnover. NAV’s commitment has always been to seek out the best educated and most seasoned industry professionals. Our capable people are prepared, responsive, and led by a veteran management team to provide the highest quality of service and support to our clients. Account Managers are highly qualified with a minimum of 8 years experience.
OUR IT AND INFRASTRUCTURE
OUR RESOURCES
We are a forward-looking firm and we innovate, enhance, and advance our infrastructure and systems every day. We pay attention to the details of programming, accounting, data integrity, cyber security, and disaster preparedness. We are constantly optimizing our control environment and core software with upgrades to our processes. We focus on using the most advanced technology and creating a culture of rapid, effective improvement.
NAV is a financially strong, debt-free business with offices in Chicago, Jaipur, and the Cayman Islands, including a 100,000 sq. ft. of state-of-the-art Backoffice Operations Center. NAV uses the latest core hardware technology, advanced software and web-based resources to ensure both our staff and our clients have access to the best products and applications for portfolio accounting, investor and compliance reports, and create efficient and customizable reporting and communications.
NAV Consulting Inc.: Registered Transfer Agent with the Securities and Exchange Commission of the United States. NAV Fund Services (Cayman) Ltd.: Licensed Mutual Fund Administrator with CIMA. ISAE 3402 ( Type 2) Certified This statement is not intended to represent or imply in any manner whatsoever that NAV Consulting, Inc. has been sponsored, recommended, or approved, or that its abilities or qualifications have in any respect been passed upon by the United States or any agency or any officer thereof.
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Trading Advisor Atlantic Subsea of the Month
Atlantic Subsea is a premier marine infrastructure firm providing a broad spectrum of services to range of markets. Historically the target market has been defense, energy, ports and waterways.
Through the extensive global-macro trading experience of its principal Eric Dugan, 3D Capital Management LLC (“3D”) has developed a comprehensive and systematic global-macro approach of monitoring and analyzing global markets. We got in touch with Dugan to find out how he looks across markets in unexpected ways and develops a global opinion about factors that move markets.
Mr. Vinod Menezes has led Atlantic Subsea with a steady hand at the helm for over 20 years. As the CEO, Mr. Menezes has maximized growth year after year, while maintaining exceptional value to clients. He has been instrumental in providing critical tools to key managers to build great teams within the company. The company’s success is a well balanced symphony of many parts. Long term relationships built through the years on trust, values and ethics have been key. The company has earned a reputation premium by rendering consistent delivery of honest and quality services to clients, while expecting the same from suppliers.
It was over half a decade ago when Dugan formed 3D Capital Management and registered as a commodity trading advisor. He created a company that specializes in investment programs that seek to generate absolute uncorrelated returns and to consistently outperform the SP 500 in a down market, as well as seeking to preserve and accumulate wealth for their clients through all market cycles.
The company serves a variety of markets ranging from defense, which relies on governmental spending to energy and ports. As some components of the revenue stream are driven by public equity market whims, there is a sense of self hedging between governmental spending and the market environment. Hence at any given time, opportunities for growth are very prevalent.
Prior to founding this company, Dugan was an accomplished investment industry professional with years of portfolio management experience involving the research and development of systematic SP 500 programs. This experience also includes the development and trading of global short-term systematic trading strategies, managing trading operations, traders, and global-macro multi-strategy trading systems.
Atlantic Subsea is currently in its 23rd year of business. Even though the company has matured, delivering constant and consistent growth does generate its own set of challenges. Success comes through synergies of corporate team members like key suppliers, bank executives, insurance and surety bond providers. It is critical that all key players are in equitable stride with the company to maintain the equilibrium. Mr. Menezes strives to maintain this balance.
A pivotal part of 3D Capital Management’s philosophy is the dedication they devote to their clients. As a result, Dugan is regularly engaged with his customers and believes that keeping a high level of communication is paramount to his company’s success. “First and foremost our priority is the client,” says Dugan. “Furthermore, we convey the importance of transparency and liquidity throughout the entire firm. As such, we welcome visits to our office and offer separately managed accounts that are held at the Futures Commission Merchant (FCM) of the client’s choice. We also emphasize that we have no lock up period and can provide live daily position and PnL reporting. Compilation reports, daily and monthly statements along with due diligence packages can also be provided.”
Mr. Menezes emphasizes - “Just as the external corporate team is critical to the growth challenges, talent building and people management is the core of our beliefs. Caring and trusting people are paramount qualities to a value driven company like ours. Well being of our employees, their safety and future are interwoven with our success goals. Every aspect of or service is driven through the psyche of quality, honesty and a quest for improvement. Only when there is a strong consensus within our people of the corporate vision, then only we see an easier path to long term success”.
3D take great pride in their work, and there consistently positive results are a testament to the standards of service that they deliver. As Dugan explains: “We are particularly pleased with our Intraday trading programs,” says Dugan. “We understand the importance of adapting and evolving and since we started trading in 2008 we have gone from offering one program to now offering four programs. Our Intraday programs are generating the most interest because of the low draw-downs and no overnight risk.”
“Currently, the macroeconomic conditions in the US are favorable. The economy has improved and the market sentiment has been positive. Intermediate term GDP growth stability has been predicted through reliable economic predictors. This sentiment has triggered a positive disposition within the company management”.
Looking to the future, Dugan is confident that his company will continue to grow and succeed. “We plan on building our business even further and because the SP 500 is one of the most liquid markets in the world, we don’t anticipate any liquidity constraints that will inhibit our growth and scalability in the SP and other global markets.”
Through a span of 2 decades, the company has weathered quite a few storms. It has overcome 3 cycles of economic downturn, only to maintain a steady growth through the years. “If we manage to maintain a balance between all the key components of the business, we should be assured guaranteed success through the long term. There should be no compromise on rendering quality service and maintaining strong values”
Company: 3D Capital Management Name: Eric Dugan Email: eric@3dcapitalmanagement.com Web Address: www.3dcapitalmanagement.com Address: Stone Ridge NY Telephone: 609 947 0405
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Wealth & Finance International | February 2016
Real Estate Fund Manager of the Year - USA – 2015 Investing exclusively in apartment properties in the U.S. with laser focus, American Private Equity Group has consistently outperformed with its risk-adjusted returns. American’s Senior Principals are nationally recognized as the ‘father of the apartment industry in the U.S.’ with innovations vastly increasing the quality of life for residents throughout the U.S. We had a chance to speak with the firm and hear more what makes their strategy and focus cutting-edge.
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Generating wealth preservation, along with superior risk adjusted returns, is American’s strategy. American invests in Core, Core Plus, and Value Add apartment properties. American’s Senior Partners are experienced fiduciaries having owned and managed over $4.5 billion in apartment properties over the past 40 years.
ally, the U.S. Census projects that homeownership will decline 6-8% in the coming decade, leading to a 6.6-8.8 million new renter households. Over the past decade, the construction of apartment properties declined. New construction is aimed primarily at the urban centres of large primary market cities, and nationally is projected to meet only a small fraction of new demand for apartments. This supply constraint creates strong fundamentals for the asset class, over and above its already strong fundamentals.
Ann McSheehy, Senior Principal at American, says, “It’s about how well you did in keeping risk low and generating outsized returns, how well you did in improving people’s lives and neighbourhoods, how successful you were in bringing solid alpha to co-investors, and, across all parts of the economic cycle. This is where we are differentiated, is in the quality of work that we do – we are stable and focused on wealth preservation, while we generate higher alpha for co-investors through our market expertise in deal sourcing and targeted renovations; we keep the investment stable across all economic cycles; and we make a huge positive impact on the lives of residents and neighborhoods – which allows us to bring great returns, even with an investment which has the risk profile of a bond.”
Wealth Preservation “The investment world all agrees that apartment properties are the ultimate in Wealth Preservation,” says McSheehy. Insurance companies and other institutional investors price out the risk in apartment property investment, as having the risk of a bond. But the distinction is that, it also brings good returns. “Housing is a core human need, becoming even more of a need in bad economic times when people cannot buy and must rent.”
“For several generations, my family has owned and managed apartment properties, with a strong focus on strategic value add,” says Ms. McSheehy. “Through the generations, we have cleaned up and turned around neighbourhoods which were once threatening to fall to crime, but which are now leading communities in the U.S.”
Triple Bottom Line – Virtue and Returns American invests with an eye on a triple bottom line: adding value to the lives of residents; adding value the lives of individuals in the neighbourhood around the property; and adding value to co-investors. These three goals and objectives strengthen and reinforce each other, in a circle.
Apartment Properties – the Gold Standard Apartment properties are the gold standard of the investment world, performing well in every economic environment. McSheehy explains, “Once in a while over the years, people will ask me, are we in a bubble, and I explain to them that Apartment Properties (Multifamily) is the gold standard of an investment that performs well in every economic environment. Even in the worst or recessions or depressions, when traditional stocks and bonds perform poorly, and even private equity performs poorly, and even when just about all of the other asset classes in real estate perform badly, Apartment Properties do well.”
“Neighborhoods are always in a state of change, a state of flux. Nothing in life ever stands still,” says McSheehy. “Neighborhoods are either improving or getting worse. A lot of other groups just suck cash out of properties, which essentially means that they are sucking cash out of neighborhoods, and when they do so, a large anchor property has a huge effect on making the neighborhood around it a much worse place to live.” American, in the Value Add work that it does, differentiates itself by investing capital to positively transform neighborhoods and properties, which results in jobs returning to the neighborhood, and far increased quality of life for the individuals living in these neighborhoods. It also leads to higher returns for the co-investors who have invested in these Apartment Properties. McSheehy explains, “It is not Value Added by just buying at a low price or using unnecessary risk – rather, it is actual real, physical value which is added to the lives of residents and to the neighbourhood. This is more work than other groups care to do. But it is how we are able to generate significant returns while maintaining the bond-like, Wealth Preservation risk profile of the investment.”
Over the past 30 years, investment in real estate has yielded a greater return than the S&P 500, the Dow Jones, the NASDAQ, or the Russell indices. Returns on private real estate investments in each of these periods, were higher than for publicly traded real estate, and had lower volatility, as measured by the National Council of Real Estate Investment Fiduciaries’ NCREIF National Property Index. (FTSE NAREIT U.S. Real Estate Index Returns, National Association of Real Estate Investment Trusts, S&P 500, Russell, Dow Jones, Nasdaq, FTSE NAREIT equity REIT index.)
“To put it in perspective: we do Core, Core Plus, and Value Add. This applies just to our active Value Add: for some of our work, we look for properties where we can turn the property around and turn the community around. Generally, we see properties that fall into disrepair, and some crime, and it obviously has a huge destabilizing effect on the entire neighbourhood around it. The ownership there had been sucking cash out of the property and not investing into the property. They haven’t been doing background or crime checks on their residents. They let in some bad apples. Then all the good people live in fear, which is most of the people. And the property looks bad as well. What we do for our Value Add, is, we buy properties like this, generally 100 apartments to about 500 apartments, and we clean them up. We put in place a top quality property management company. We put in a renovations budget, we clean up the property, we make it a beautiful place to live, a place where the residents are proud to live.
Why is that? “In a recession or a depression, companies do badly, stocks generally do badly and people lose huge percentages of their wealth in stocks and other investments as happens in every cycle; companies lay people off. Then, companies rent less office space and retail space, so those asset classes in real estate do terribly. And, far fewer numbers of people are able to afford a single family home, so those do terribly, too – they are not buying – they are renting. All of those buyers are forced to become renters – and so especially in the worst times, renter demand is robust and grows, and apartment properties perform well.” American’s principals have owned and managed apartment properties with consistent results throughout all market cycles. Strong Tailwind Demographics The ‘prime renting age’ in the U.S. is approximately 18-35 years old. Over the coming 10 years , the number of people “ageing out of” prime renting age is far smaller than the number of people “ageing into” this age. The net increase in individuals in prime renting age is set to increase from about 71 million people to about 86 million people. Addition-
“That is just one example, we do all types of value add.” Significant Value Add Leadership in the Industry American and American’s partners have consistently delivered IRRs above those of the industry. McSheehy explains that it is due to the far 13
Wealth & Finance International | February 2016
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higher amount of time, focus, and hard work that the group puts into each property value add renovation.
The difference in the product and in the Alpha is immense,” he explains. She has studied at the number one ranking best universities and graduate schools around the world, Oxford, Georgetown, London Business School, Sorbonne, she has done Private Equity around the world and in the U.S., and she is also a cultural and style genius, the likes of which have never been seen in the U.S., Europe, London, or the rest of the world. “I remember the story about how, when she was young in the previous generation of the business, she wanted to prove a point. There was an apartment property in the Chicago area that her family had renovated and already exceeded expectations on rent increases following a renovation a few years before. She made a few inexpensive changes and increased rents by the same amount again, as they had done in the original renovation – which had already exceeded expectations. She has always had this tremendous ‘feel’ for what makes renters want to live in a place, and love to live in a place. It is far more and far different than a design perspective; it is a unique understanding of human perception and feeling and what people visually and emotionally want in a home.”
“This is something that other groups are not able to do, even if they wanted to do, which they don’t want to,” McSheehy says. “We spend months negotiating materials prices down. We pay far less than market prices for materials, whereas the rest of the industry pays about 120% of the market prices for materials in their renovations because of markups from contractors.” American does not tie construction management fees to the cost of the renovation, as the rest of the industry does. “We are IRR driven, and when we invest with co-investors, we are compensated from the IRRs and from our portion of the good returns results for co-investors. This is a clear and transparent alignment of interest which is lacking in the rest of the industry. Our construction management fees are minimal and cover part of the staff cost for that renovation, and are not tied to renovation cost, but to how much we are actually able to increase returns for co-investors, and we don’t get paid anything significant until after the investor has received very good returns.”
Bringing Value to Individuals The higher returns American has, compared to its industry peers, are because “we give residents the opportunity to live in an apartment of a far higher quality than they can get in other apartment properties in the area.
Ms. McSheehy explains how renovations influence the IRR of a property. “When you run a sensitivity analysis, you see that some things do not affect the IRRs very much – actually most things don’t. However, the things that affect the IRRs substantially are, first, the amount spent on that renovation and how far those dollars go – the selection of where those dollars go, and second and most importantly, the rents that residents pay after the renovation.”
“In a way, it fulfils one of the important dreams of people’s lives. We are giving the opportunity to a large number of people, to live in high quality homes that they are proud of. Even if they will one day buy a home, it will never have as high of a design quality as the apartment product that we offer.” Robust Pipeline Able to source the most attractive deals, both on and off market, the company maintains a robust network of relationships throughout the industry, allowing it to have a strong pipeline of deals. “We typically bid on about 2% to 4% of the deals that we see,” says McSheehy. “This allows us to maintain a very high quality of product. We are focusing on key geographic locations which are outperforming in our key metrics. Over the past 40 years, these criteria have been extremely successful at winnowing out which markets will provide robust support for outsized returns relative to the very low risk of apartment properties.”
Throughout the rest of the industry, the real estate group is paid 5% of whatever they spend on a renovation, which is a direct conflict of interest with their investors. “No one will go out and spend an extra 200 hours searching for better or cheaper or higher quality materials for a renovation, or more innovative ways to make a property really beautiful and ‘breathtaking’ for prospective residents, when they are just getting paid more if they spend more,” McSheehy explains. “Even for the groups that would do so, they are directly incentivized to do the exact opposite.” “We operate from a completely different paradigm” Typically, when a real estate group does value add, says McSheehy, “they call and say, ‘Joe, bring in the new cabinets and the sand colored carpets,’ and make a phone call to a designer if necessary for a common area. They get tiny rent increases and they call it a success, and say they are a huge success because they have done a huge volume of apartments – with no quality or high results whatsoever, for the co-investors. Or the residents. We have never had a value add renovation like that – we expect to see higher rent increases which translates directly to IRR, and we do beautiful renovations which we put huge amounts of time into. We do everything so differently. We operate from a completely different paradigm. It comes down to diligence and very hard work. There are no shortcuts.”
“Rocking Chair Test” McSheehy says that the culture of American is different because it focuses on Triple Bottom Line and purpose. “As a company, we say, ‘this is our Purpose,’ ‘this is our mission, this is our impact on the world, and this is what no one else can do the way we can,’ and every day lead every day with that purpose. “Does your work pass the ‘rocking chair’ test? Does your work pass the ‘deathbed’ test? Is what you are doing having a positive impact on peoples’ lives? This is what I believe is one of my missions in life, it is work that I have been trained in doing my entire life. Within the apartment property asset class, we do great Core and Core Plus, and Value Add, and for me, really, with all of the asset classes, and especially regarding the Value Add, it is tremendous to see the effects of our work in cleaning up entire neighborhoods, making them far safer places to live, far more beautiful places to live, places for jobs to return to, neighborhoods that flourish, and the lives of families and individuals are able to flourish. This creates actual physical Value for people in their lives, brings stable returns and stable alpha for our co-investors throughout every economic cycle, thus helping their lives, and doing our part to contributing to making our economy a more stable and healthy one.”
High IRRs and High Rents - Driven by a Deep Understanding of Human Perception Matt Williamson, Senior Principal with American, says, “It also comes down to the fact that we have a significant advantage, and that is the deep lifetime of renovation experience of Ms. McSheehy. The entire industry is run by men, who have a significant disadvantage when it comes to design.” Ms. McSheehy is unique, in that she is a Senior Principal and she also leads the Value Add strategies and details. “She leads from the front, like Alexander the Great, not from a phone call from afar once a year. 15
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Hedge Fund Manager of the Year - 2015 1602MS04 16
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Born in 1967, James Debevec II has obtained both a Bachelor of Business Administration degree with a major in Finance and a Master of Business Administration degree with a double specialization in Finance and International Business from the University of Miami. James is a Chartered Financial Analyst Charterholder, a Chartered Market Technician and has passed six Society of Actuaries tests. James was a junk bond analyst, a risk consultant, and an analyst for a hedge fund. He is the principal of Absolute Value Capital Management, Inc (founded in 2001). James is a member of the CFA Institute, the CFA Society of South Florida, the Market Technician’s Association, the MTA South Florida Chapter and Mensa. He has written for realmoney.com and Minyanville.com.
Congratulations on Absolute Value Capital Management being named Hedge Fund Manager of the Year – 2015 Thank you.
Prior to 1938 the data gets rather dodgy, but it looks like this is the worst gold stock bear since at least 1920. So over 95 years. The junior gold mining stock ETF, GDXJ, has already gone down by over 90%. During the early 2000’s tech crash, an Internet index went down 95% and a telecommunications index dropped by 93%. The Russian stock market went down 93% in less than a year in 1997-98. The internet and telecom indices subsequently rallied 410% and 271% from their bottoms over the next 5 years. The Russian stock market went up by 6,384% in less than ten years!
The U.S. stock market was down a bit last year. Bonds aren’t yielding much these days. How does one achieve triple digit returns in such an environment? Back in early 2011 I saw commodities markets were peaking and being on the verge of a long nasty bear market. I wanted to go on record as predicting the end of the secular bull market in commodities so that when I turned bullish I would have established a bit of credibility. So I started writing articles for a financial news website. Commodity cycles seem to have a pattern. Commodities do not do much for a long time. Then there is a fantastic spike up for nine years. Then there is a crash. Lather, rinse and repeat.
However, before you mortgage the house, be aware the Baltic Dry Index is still down by 97% from its 2008 high as of late January 2016. There are two commodity indices that I follow. The ^CCI is an equal weighed commodity index and the ^CRB has more of a “real world” (i.e. energy) weighing. In January 2016, the ^CRB index hit its lowest level since 1973!
So what you want to look for is a big 9 year spike in commodities. The biggest one was 1613-1622 when commodities went up 254%. That immediately led to a 50 year 78% bear market.
How low can commodities go? Since 1933, we have had bear markets of -36%, -39%, -23%, -45%, -47% and the current one is -48% as of this interview. But if you look at 1622 to 1933, we had commodity bear markets of -78%, -77%, -68%, -79% and -74%.
Number two on the list is 1938-1947 when commodities went up 240%. Commodities went down 16% in 1948, down 19% in 1949, up 58% in 1950 and peaked in January 1951. Then they had a 39% 18-year bear market. Therefore, in the quarter century after the 1947 signal, the upside was 12% (January 1951) and the downside was 32% (August 1968).
Why were the pre-1933 bear markets more draconian in nature? A major reason is FDR took the US off the gold standard in 1933. From 1665 to 1932, the annualized inflation rate in the United States was 0.16%. From 1932 to today it is 3.49%. If you look at charts from the 1200s to 1932, they looked like a sine wave. Post 1932 the charts look like a sine wave tilted up to the right.
Coming in at #3 is 2001-2010. Commodities went up 238%. They peaked in April 2011 and have since declined by 48%. From 1910-1919 commodities went up 202%. They peaked in April 1920 and then went into a 13-year 74% bear market. From 1971-1980, commodities went up 198%. Commodities immediately went into a 19-year 45% bear market. Furthermore, over the last century or so, the timing of these commodity cycles has been regular.
So the question is will the current commodity bear act like a typical post-1933 commodity bear? In that case the downside is limited. But if you look at pre-1933 scenarios it can get much worse. In light of this ambiguity, the short side in commodities is not as exciting as it was back in 2011 or even a year ago. But there are a lot of other indicators giving off interesting readings right now. For example, two indicators have given off signals which have led to triple digit gains in one asset each time they have gone off. I am excited about 2016.
The major peaks in commodities were April 1920, January 1951, November 1980 and April 2011. The tops are roughly 30 years apart. So at the end of 2010, you had a situation where, going back to 1259 (the starting point of my data), the maximum historical upside was quite limited. Not only that, but a top was overdue with respect to the 30 year cycle. I am getting the sense you were not bullish on commodities last year. This has been the worst commodity bear market in the last 83 years. The Barron’s Gold Mining Index recently hit the worst bear market in history mark. The inception date of this index is in 1938. The previous bear market record was -82% from 1980-2000. The bear market which started in 2011 is already down 85%.
Company: Absolute Value Capital Management Name: James Debevec Email: james@absolutevaluefund.com Web Address: www.absolutevaluefund.com Telephone: 001 (954) 973-1428
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CEO of the Month 1602MR06 18
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Norwegian American Hospital is a 200 bed mission-driven safety net hospital. Their patient population is primarily Latino with about 75% of revenue coming from Medicaid. Their patients are mainly minorities facing various health issues like diabetes, cancer and substance abuse. The challenge is to keep the population healthy, and we have focused on creating programs that reflect the needs of the community.
When providing a service as vital as healthcare, what steps do you take to ensure that every client receives the best possible care? The recent success of Norwegian American Hospital has been largely driven by a relentless focus on measurable improvements in clinical care and patient safety. Our strategy for improving quality begins with a hospital-wide culture of safety and a fundamental understanding that avoiding patient harm is everyone’s top priority.
Norwegian has more than 350 physicians as part of its network, and services include everything from emergency, acute care, surgery, outpatient clinics and internal medicine to cardiology, respiratory, imaging, behavioral medicine, family medicine and pediatrics, detox and substance abuse, physical therapy and corporate health services. Norwegian American Hospital also has a women’s center of excellence, a GI lab and endoscopy services, and a wound healing center. President and Chief Executive Officer of Norwegian American Hospital provides insight into his role, his previous career experience and the challenges of providing healthcare in his region.
Critical to Norwegian’s success has been our ability to leverage investments in technology to “hard-wire” clinical best practices, reducing human error and supporting our care givers. We have demonstrated our cultural commitment to patient safety through our participation in numerous voluntary quality reporting programs, including Leapfrog, The Joint Commission and Healthgrades, in addition to mandatory state and federal quality programs.
Please can you give us with an insight into your role and responsibilities as a CEO? My role and responsibility is to set the strategic vision for the hospital, to improve quality, financial stability, best practices, human capital development and improve the health of the community, creating a coordinated care environment to support the hospital’ s mission. In addition, leveraging technology as a tool to promote efficiency and to prevent harm to patients has become an important strategic focus.
Our results have been exemplary, setting us apart from our peers for the level of care and safety we provide. Every service line has trackable clinical measures which keep the pulse performance on gaining quality improvements.
What is your previous experience and how do you draw on this in your current role? I am Chicago’s only Latino hospital CEO, a senior health care executive with 30 years’ experience in the operational, strategic and fiscal management of healthcare and multi-hospital systems. I began my career as a clinical social worker before advancing through the ranks of the New York City Health and Hospitals Corporation (HHC), the largest public health system in the nation. I ultimately served as Senior Vice President and Chief Executive of the Generations+/Northern Manhattan Health Network, comprised of three acute care hospitals, three diagnostic and treatment centres, and 20 community based health centres in Manhattan and the Bronx.
How do you balance between the need for profitability and the needs of your patients? Sound financial performance and growth are vital to ensuring our longterm success and ability to meet our mission of service to the community. Fiscal year 2015 was a banner year for NAH with significant growth in operating revenue, cash flow, and operating margin.
What is your overall mission for the hospital? How did you come to decide on this? How do you ensure this mission is upheld? Norwegian American Hospital provides high quality and compassionate health care services by partnering with patients and their families, our employees, physicians and the communities we serve.
What this means for our patients is we have the ability to fund improvements to patient care which have previously not been possible. $3.1 million was invested in development capital in 2015, aimed at space renovation and acquisition of new technologies. These investments included projects for new ultrasound units, ventilator replacements, “smart” medication pumps, EKG and EEG machines, bone densitometry suite, new surgical lights and tables, a modern infant abduction system, 52 new parking lot spaces, campus lighting upgrades, and cardiology growth with a new intraortic balloon pump.
We managed costs effectively and efficiently, implementing a cost reduction plan to offset lower Medicaid payments without reducing staff or eliminating jobs. The hospital saw improvements in our billing and collection processes, reducing insurance denials and ensuring we were appropriately paid for the clinical care we provided.
We recognize that healthcare should not just be addressed within the walls of our hospital. As a steward of our community’s health, it is necessary for Norwegian American Hospital to take our mission to improve the health of our community into the community. We believe that effective leadership in healthcare transformation means inviting and promoting collaboration that will positively influence the overall health and wellbeing of our community. We are focused on major issues such as health disparities, diabetes, congestive heart failure, and high risk pregnancies, as examples.
The financial health of our institution has never been stronger, and will be the foundation for strategic planning and growth in the coming years. These results are significant for our quest toward measurable quality improvements and have helped us gain the confidence of our physicians and our patients.
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When working in an industry that is constantly changing, what does your firm do to ensure that they are at the forefront of any emerging developments? We have made a significant investment in technology and have developed a spirit of creativity and innovation as an important component of our organizational culture. Innovation has become a part of the soul of our hospital, ushering us into an era of excellence and pointing us toward a future of even greater care.
What makes your hospital unique and sets you apart from other healthcare providers? One of the most remarkable aspects of Norwegian American Hospital’s turnaround and expansion is how it defies industry-wide trends. As large healthcare providers consolidate and grow and independents shrink and falter, we have found ways to increase our business and provide more care.
Since 2010 the hospital invested over $7 million in our Electronic Health Record System, and we have made the highest use of our system to protect patients and improve care. We have taken significant measures to ensure the privacy and security of our patient data and health information, an initiative of vital importance in our current environment.
Our cardiology department is now more than three times the size it was in 2011, addressing prevalent heart conditions in the area. Our oncology services have grown by more than 275%, including a biweekly Tumour Board and an Oncology Patient Navigator system that helps guide patients through every stage of cancer care, from breast exams to chemotherapy.
A new video remote interpreting platform has made providing care to patients who require an interpreter, including the deaf, much more patient focused. The service provides immediate two-way video access to certified health care interpreters in a number of languages.
Norwegian’s Surgical Services concluded its first year of providing stateof-the-art general surgery, minimally invasive surgery and surgical oncology services and our Women’s Health Associates and Midwife Health Associates each grew, allowing us to increase access to obstetrics and gynaecology services at the hospital and community locations.
We debuted “smart” medication pumps which promote medication safety by connecting us to standardized drug libraries with information about hard dose limits and a lock function to prevent tampering by unauthorized users. This development puts us on the vanguard of medication safety among acute care hospitals.
Sixty new physicians and allied health professionals were credentialed by our Medical Affairs staff in 2015 in key specialties including Vascular Surgery, Radiation Oncology, Minimally Invasive Surgery, Gastroenterology and Maternal-Fetal Medicine.
Technology has bridged many gaps for NAH. Our nurses, doctors, and other staff can now communicate more quickly and effectively than ever before, and they have greater, more immediate access to the most comprehensive medical data we’ve ever possessed.
What does the future hold for your firm? Do you have any upcoming plans or projects you would be willing to share with us? Norwegian American Hospital is planning to partner with a Federally Qualified Health Centre on the development of an Ambulatory Health and Wellness Centre with comprehensive health and wellness services including: Comprehensive Diabetes Centre; Primary Care; Exercise/ Wellness; Rehab; Day Care; Dental; Nutritional Education/Test Kitchen; Specialty Care; Alternative Medicine; Women’s Health; Pharmacy; and Commercial Space
How have recent changes in the American healthcare system, both in terms of regulation and funding, affected your business? How have you adapted around these changes? Recent changes in the healthcare delivery system have had both a positive and negative impact on NAH. The Affordable Care Act (ACA) has increased access for patients in our community resulting in a higher level of Medicaid coverage versus uncompensated care. This has increased NAH operating revenues by $1.5 million per year. The State of Illinois’ recent shift of the Medicaid population into Managed Care has resulted in additional challenges to providing necessary care to NAH patients. This change has resulted in longer patient wait times for services, higher staffing costs related to meet new insurance requirements and a need to explain to patients what their insurance coverage and benefits are. In addition, the new Medicaid system has reduced NAH’s payments by more than $3.0 million per year.
We have innovative plans in place that will help us continue to grow and solidify our vision for the future. First is the full implementation of the expansion of our emergency department. The renovation includes a dramatic redesign of the facility’s footprint and will ensure that the residents of Humboldt Park have access to expert emergency care close to home. The second initiative we are excited about is the plan for a full campus development, utilizing the resources of the hospital to bring economic prosperity, stability and growth to our community. We will be working with the community on a project that we can all be proud of.
NAH has responded with a redesign of its revenue cycle operations to add front line services and staffing to assist patients gain access to these new benefits. NAH works with each patient to qualify for Medicaid and or other available insurance coverage offered by the State exchange. These changes have produced a 25% increase in cash collections, year over year, and have brought in more than $5.0 million of additional collectible revenues. NAH continues to make changes to its billing and collection systems to maintain and increase the benefits achieved to date.
To improve access to specialty services for our patients and community, our third area of focus is our clinical programs. We will be working toward meeting all requirements for a cancer centre and developing a comprehensive diabetes program to address this major health concern in the community by leveraging our natural resources for economic growth.
NAH is reducing its cost structure by renegotiating many of its supplier contracts and vender relationships. Changes in operating services have been redesigned to place the patient in the right level of care and provide timely service. NAH has implemented labour management systems to ensure the right amount of staffing is available to meet patient care needs. These combined changes have reduced NAH costs by more than $1.2 million to date and will continue to identify opportunities to improve performance.
Company: Norwegian American Hospital Name: José R. Sánchez Email: jrsanchez@nahospital.org Web Address: www.nahospital.org Address: 1044 N. Francisco Ave., Chicago, IL 60622 Telephone: 773-292-8204
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Mediator of the Month - Globis My new book ‘How to Master Employment and Workplace Mediation’, published by Bloomsbury is now available on www.bloomsburyprofessional.com
Workplace and employment mediation is coming of age. More organisations are using it to resolve workplace conflict than ever before, an increase that is due to organisations’ desires to seek more effective, less time-consuming and less costly methods of conflict resolution within the workplace. The reason for this change in approach to conflict resolution, and the increase in conflict resolution methods per se, is the rise in workplace conflict. The causes of this, as we shall see in this book, are both multifaceted and complex, but what is very clear to the outside observer is that the current system of workplace conflict resolution in this country is broken.
As mediation in the workplace matures, there will be a need to learn from our experiences with it and review how the profession develops in practice. Using mediation to resolve conflicts in the workplace is still a relatively new concept (despite mediation first being used by the ancient Greeks), and there is always an opportunity to improve the experience those involved in conflict situations undergo as they find their path to peace and reconciliation. I am very confident however that the future of conflict resolution in the workplace is through flexible practices such as mediation rather than one-dimensional tribunals. Thousands of people have benefitted from being users of mediation services, but unlike employment tribunals they are confidential in nature, meaning that we are unlikely to hear of many successes. A book like this helps draw attention to the positivity of mediation and its advantages for both individual organisations and communities. Like other fields such as art and science, developments in mediation occur as a result of new discoveries, developments which are even more likely as its use grows and diversifies.
The employment tribunal, the mainstay of workplace conflict resolution, has been with us over half a century, and despite reforms along the way it is now recognised by many, myself included, as an analogue process in a digital world. It is too black and white in a world where complex grey areas exist, especially where human beings are at the centre. Workplace conflict is not always about wrong and right, about the innocent and the guilty, and certainly not about who can afford the best lawyer. Too often the ‘resolution’ aspect of conflict resolution is ignored, but this is something that forms the core of mediation. Mediation aims to resolve conflict quickly, fairly and cheaply, something that is of benefit to both the individual and any organisation that values its time, money and reputation.
About the book The book incorporates a number of themes and is split broadly into two parts, exploring a number of themes. First, I felt it important to set the book in some context in terms of the British workplace. To this end I look at the history of the British workplace and discuss how it has changed from the days of the industrial revolution to today’s multicultural, dynamic workplace, paying particular attention to how and why these changes have wrought a rise in workplace conflict.
Most organisations now recognise that conflict is a part of working life, but surprisingly few are equipped to deal with it quickly and effectively or even acknowledge its effect. In my book, Difficult Conversations – 10 Steps to Becoming a Tackler Not a Dodger, I liken difficult conversations to small fires that can burn out of control if not dealt with quickly, and the presence of an effective conflict management policy is similar to this—if conflict is not dealt with swiftly and effectively it can spread across teams and departments, causing damage that can only truly be realised when the fire is finally extinguished. Even then, embers of resentment can burn long afterwards. This is where mediation comes into its own, taking days or even on some occasions only hours to halt a conflict in its tracks and get all the parties concerned back to focusing on their jobs, not the conflict that has arisen because of them.
Next I examine the business case for mediation in dealing with conflict in the workplace compared to the existing forms of conflict resolution. I realise that busy HR professionals and CEOs want evidence of how mediation can benefit their bottom line, and here I offer evidence from various sources to detail how conflict costs businesses more than they realise and why mediation is a sound economic platform on which to build an effective conflict resolution programme.
Conflict can in fact be strategically managed fairly easily, and organisations that recognise this will benefit over organisations that have not, or will not, embrace the concept. We have seen similar developments in other fields, for example coaching, which reached maturity in the UK some years ago and has successfully ironed out issues associated with issues such as accreditation and supervision. It is my belief that mediation is likely to follow a similar path.
Following this I discuss the power of storytelling in mediation. Some of you reading this will already be well aware that storytelling is the premise upon which many a mediation session is based, as everyone involved within them has a story to tell (something that employment tribunals do not generally engage in). The mediation process flushes out many stories of hurt, disbelief, justification and clarification, stories that can be vital to understanding the core reasons behind a conflict and that may have otherwise gone unheard.
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The second part of the book focuses on the practical application of mediation as a method of conflict resolution within a workplace, the different ways to go about implementing it and best practice in regards to running it, drawing on my extensive experience as a mediator. This includes, at the end, a toolkit containing advice, templates and other documents that I use daily within my mediation work, providing you with everything you need to get started with your own in-house mediation strategy. Each chapter is followed by a case study drawn from real life experiences. This is something I believe is very important in getting across both the various turns a mediation session can take and the power inherent within it to not only resolve a conflict but also cleanse and heal emotional wounds, allowing previously combative individuals to work effectively with each other once more. These case studies are, of course, all anonymous, and in them I try to draw a balance between the dynamics of the parties, triggers that caused the conflict and eventually prompt a requirement mediation, the impact the cases had on me as mediator and the learning that can be drawn from those in the mediation industry. There are also a number of brief case studies interspersed throughout the remaining parts of the book to illustrate certain points. In providing these case studies I recognise that I make myself vulnerable as I write openly about my experiences, including my failures and points for learning. I do not suggest for a moment that I have all the knowledge or answers, partly because the thrill of mediation is that when you think you’ve seen everything something comes along that knocks you for six! We are, after all, dealing with human beings. Like others I seek to continue to learn throughout my life, something that applies very strongly to my work in this field. All I can do, as all any mediator can do, is simply reflect on my ten years of mediation experience and use this experience to assist those with a shared interest in this field. If you have read this far I am going to assume that you have at least a passing interest in mediation and its suitability in dealing with workplace conflict. Perhaps you are an independent mediator, organisation, commentator or government official. I have written this book with the intention of making a small contribution to demystify the concept of mediation and highlight its advantage as a commercial, pragmatic tool. If I increase your awareness of mediation within the workplace and leave you viewing it in a more positive light than you had before reading, then I will have achieved my purpose. I hope you enjoy the book. About Clive Lewis is a Business Psychologist, specialising in employee and industrial relations. He is the UK’s most published writer on the topic of mediation in the workplace. He is the founding director of Globis Mediation Group. www.globis.co.uk
Company: Globis Ltd Name: Clive Lewis OBE DL Email: Clive.Lewis@globis.co.uk Web Address: www.globis.co.uk Address: 1 Wheatstone Court, Waterwells Business Park, Quedgeley, Gloucester GL2 2AQ. Telephone: 0330 100 0809
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Fraud Investigator 2015
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With 225,000 employees worldwide, Deloitte is a leading professional services provider on a Spanish and international scale. Deloitte’s wide range of services include audit, consulting, financial advisory, risk management as well as tax and legal services.
As a Forensic Accountant at Deloitte Spain, I work at the Forensic and Dispute Services Department where I deal mainly with investigating economic crimes and financial fraud and reporting as an Expert Witness on economic related issues. I am an experienced Forensic Accountant helping companies react when there is a suspicion or evidence that either an insider or outsider is committing fraud or any misconduct against the company’s own interest. Fraud comprises mainly assets appropriation, accounting manipulation, corruption and conflict of interests. I am deeply honoured and humbled to have been selected for the Fraud Investigator 2015 award and I would like to express my sincere appreciation to Wealth and Finance International Magazine. Fraud and corruption While companies might be good at developing their core business, they do not necessarily know how to react to fraud and corruption. Experience shows that when there is uncertainty, companies might make mistakes that might jeopardize future legal procedures. That is the reason why it is essential for the company to contact its legal advisors and forensic accountants to help them keep information and evidence safe and take action right from the very beginning of the investigation. On discovering fraud, the media effect on listed and big companies is usually more devastating than the fraud itself. So it is paramount that the Executive Board of the company reacts rapidly and carefully and gathers as much information as they can so that fraud can be controlled to a full extent. This is absolutely necessary to take control on the information that might be leaked and save the company’s reputation from being ruined. Investigating suspected fraud The Deloitte Forensic Department is an integrated team of economic, financial and technology professionals work with state of the art IT investigating tools (Analytics, eDiscovery, etc.) to help companies in all sectors and situations in the face of regulatory concerns and actions or investigations into fraud or corporate or personal corruption. The Deloitte Forensic team has a wealth of experience across all industries and have worked on many fraud investigations for many years right from the earliest stage of the investigation up to assisting as an expert witness in a Court to defend a report resulting from the above said investigation. Technical knowledge and wide experience are essential to find a path to a successful resolution.
Company: Deloitte Name: Oscar Hernandez Email: ohernandezhernandez@deloitte.es Web Address: www.deloitte.es Address: Plaza Pablo Ruiz Picasso 1 (Torre Picasso) 28020 Madrid (Spain) Telephone: +34 600567487
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Hedge Fund Manager of the Year 2015 Alkimis SGR is an independent, “boutique” asset management company, specialized in absolute return investing. More recently, the firm has started to offer an additional strategy to its clients, called “Special Values”. This high conviction - long only strategy is designed to provide capital appreciation over the medium term, investing in a limited number (20-25) of international companies selected across all sectors, with attractive shareholder remuneration policies. It was originally implemented as an advisory mandate in Feb 2012, and later (Feb 2014) incorporated into two investment vehicles with identical portfolios.
Alkimis SGR was established in 2008 by Massimo Morchio, backed by several well-known Italian family offices. The firm is regulated by the Italian/European law and supervised by Bank of Italy/Consob. Massimo Morchio was previously CIO at RAS, Italy’s second largest insurer, where he ran over EUR 40 billion in long only assets. He left in the wake of the company’s takeover by Allianz. The firm currently manages Luxembourg Sicavs and Italian mutual funds, all run with the same equity long/short, low volatility strategy. Morchio heads up a team which also worked together at RAS, including Luca Montorfano, former head of European equities and currently Chief Investment Officer of Alkimis.
The strategy is available through the following funds/subfunds: • Alkimis Special Values (DUMSAII LX; LU1008677459), UCITS compliant Luxembourg Sicav. Available on AllFunds Bank. Inception February 2014. • Unicorn Alkimis Dividend Plus (UADPRCE LX; LU0987301925), UCITS compliant Luxembourg Sicav. Incorporated in February 2014.
With regards to products, Alkimis equity L/S strategy is implemented into several investment vehicles:UCITs compliant mutual funds and SICAVs or advisory mandates, managed either directly or as delegated investment manager.
The idea behind the strategy is to select companies that, while still growing the business, have been able to reward their shareholders with stable and growing dividends or/and regular buybacks. With zero or negative rates on corporate and government bonds, investing in companies that provide high and growing dividends year after year, is becoming an increasingly attractive investment proposition for a lot of investors.
This strategy aims to generate absolute returns with moderate volatility. It invests - purchase and short sell - in international equities selected through proprietary fundamental analysis based on cash flow. Long/ short performance is the main driver of the strategy return, not correlated with the direction equity markets. The strategy is declined into 4 investment vehicles with identical portfolios. • Alkimis Capital UCITs (ALKCUTS IM, IT0004550882). Open-end mutual fund established in Italy. Also available as a “coupon fund”). Inception Nov 2009. • Alkimis Capital (ALKCAPC IM, IT0004550783). Hedge fund established in Italy. Winner of the Mondoalternative 2014 prize. Inception Nov 2009. • Duemme Alkimis Absolute (DUEALKI LX, LU0630939048; DUALKCI LX, LU1031506550). UCITs compliant Luxembourg Sicav. Available on AllFunds Bank. Inception July 2011. • Unicorn Alkimis Equity Alpha (UAEARCE LX; LU0987301685; UAEAICE LX, LU0987301842), UCITS compliant Luxembourg Sicav. Inception February 2014. Also available in CHF hedged units.
As well as these unique investment products, the firm also boasts a cohesive and successful team. Prior to founding Alkimis SGR Senior Partners have worked together for nine years as a team at Ras Asset Management (the 2nd largest insurance co. in Italy), applying the same investment methodology and achieving superior long term results. Ras Asset Manangement was consistently ranked among the best SGR in Italy. The firm’s CEO Massimo Morchio has previous experience as Head of Global Financials and Head of Specialist Fund in the Allianz Group (Pimco, AGF, Allianz, RAS), as well as being Chief Investment Officer at Ras. Luca Montorfano, the Chief Investmernt Officer, is also an experienced investor, having previously worked as Deputy Head of European Equity in the Allianz Group (Pimco, AGF, Allianz, RAS) and Head of European Equity at Ras, Italy.
The firm’s Alkimis UCITs fund is among their most successful, and since inception (27/11/2009) the fund has returned 26,6% with a volatility between 4 and 5%. The equity L/S strategy employed by the fund has proved to be uncorrelated not only with equities, but with all major asset classes, like bonds and commodities.
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Arbitrator of the Month Betto seraglini is a boutique dispute resolution law firm specialising in international arbitration and commercial litigation. They launched in 2013 with Professor Christophe Seraglini, in order to provide tailored high-quality legal services to sophisticated clients. They work for high profile clients, mostly in the defence, energy, civil aviation, construction and investment sectors in disputes requiring very particular technical and legal expertise. “Since the firm was launched in 2013 it has more than doubled in size. When we opened our doors in 2013 we were regarded as an arbitration boutique, today, our clients are asking more and more for us to defend them in commercial litigation, in particular high-profile cases and international disputes” Jean-Georges Betto explains.
Of course, when working in an industry that is constantly evolving measures do need to be taken to ensure that a firm is at the forefront of any emerging developments. Jean-Georges Betto lifts the lid on how this applied to the company betto seraglini, “as a ‘start-up’ firm we knew from the get-go that we were going to have to do everything to implant ourselves in the market as one of the go-to firms in matters of international arbitration and commercial litigation” he explains.
Financial performance “In our first year we doubled our turnover, the second year we were up another 25%” enthuses Betto when asked about the firm’s financial performance this year. He goes on to explain the reasons for their success:
“How were we going to do this? Since the launch of the firm we have always tried to ensure that the firm is always visible, this is to say high presence on social media platforms, a focus on communication and getting information about our firm out there and last but not least with the creation of an association entitled ‘cabinets de croissance’ which roughly means ‘firms on the grow’. This Think-tank aims to bring together several specialised boutique business law firms with the aim of sharing our knowledge and experience, in particular with future entrepreneurs, and lobbying the Paris Bar authorities in order to make sure that the needs and concerns of this new generation of firms is addressed at all levels” he adds.
“In the current economic environment we are extremely proud of these results that are more and rarer today. The success of our firm is partially down to the partner’s willingness to take risks, to step out and launch the firm, to dedicate all of their time and energy to this project. We also have a unique approach to invoicing which is much appreciated by our clients, instead of billing by the hour, which can often mean that proceedings costs can skyrocket over time, we sit down with our client at the beginning of the case, evaluate the work required to handle the case and agree on a flat fee for the whole proceeding.
2016 and beyond “Law firms today are more than ever, a people industry. This means that we invest heavily in the people we work with” Betto emphaises. Developing this pearl of wisdom, he adds: “We aim to keep our partner/ associate ratio low as we feel this is the best way to teach our associates as well as motivate them, we invest enormously in our associates, who we pay as would any large anglo-saxon firm even though we have a much smaller effective, as well as our support staff and we believe that internal promotion is the best way to construct a solid and dedicated team”.
“This means that our clients have a clear view from the get-go, which helps them manage their finances, and our firm shares with them the risks of an unexpected increase in costs, which builds trusting relationships with our clients.” Recent developments With an optimistic outlook set for the future, “over this past year we welcomed a new partner, Julien Fouret, a leading specialist in international investment arbitration and public international law, widening our scope of legal expertise and once again offering our clients a more comprehensive service” Betto explains when asked what his company is doing to capitalise on this as well as sustain their success.
At the close of 2013, the partners, associates and employees of betto seraglini announced the creation of the betto seraglini for International Justice Fund. “This Fonds de dotation fights to allow access for societies most vulnerable, to international justice and protection of fundamental rights by educating and representing victims” Betto explains.
“We also welcomed a new Portuguese speaking associate Marie-Claire Da Silva Rosa in order to strengthen our lusophone team and our outreach in the Brazilian Market, in which we are already present as we have the advantage of having one of the rare Parisian practitioners (Thierry Tomasi) who can litigate in the Portuguese language. We have also made our stamp on the French speaking African market, representing French blue chip companies in disputes opposing them with African States which has recently had a lot of media attention, and also the Republic of Gabon in a dispute against the Chinese-owned petrol giant Addax Petroleum (Sinopec Group)” he adds.
“Thanks to the mobilisation of its team betto seraglini for International Justice develops not only its own projects and also supports existing organisations in order to work hand in hand with human rights NGOs and be part of a more global approach” he concludes.
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The City of Bellevue is a city of the First Class located in Sarpy County, Nebraska, United States. We invited Larry Burks, Bellevue’s Assistant City Administrator and economic development point of contact, to provide us with an insight into this growing city and the developments which are making it an increasingly attractive investment opportunity.
Bellevue, Nebraska is a dynamic and expanding Midwestern city, currently home to approximately 53,000 people, located within Nebraska’s fastest growing county, Sarpy County. Bellevue, Nebraska is also home to Offutt Air Force Base, Strategic Command (STRATCOM) and the 55th Wing (55 WG), the largest wing of the United States Air Force’s Air Combat Command. As such, the base is a major economic hub for the area, and because of Offutt AFB, many defense contractors are drawn to the Bellevue area, including firms specializing in cybersecurity, programming, process design etc. Burks was hired in 2012 as Bellevue’s first Assistant City Administrator to support the City Administrator in the operation and management of the City. The Assistant City Administrator’s primary duties include economic development, organizational and community development, in addition to strategic planning, succession planning and providing administrative support. Burks states, “Our community currently has a number of exciting opportunities and I am proud to be supporting the people of Bellevue as we go through this exciting time.” In April of 2015 Sarpy County’s unemployment rate was 2.4%, which is among the lowest across all of the American states. Additionally, the city is currently experiencing a wave of exciting new developments set to improve the City’s economic development and quality of life potential. One such development is a commercial retail expansion named Twin Creek Village, a modern commercial-retail development that will soon showcase the Bellevue Event Center. Scheduled to be completed late summer of 2016, the Bellevue Event Center will be a state of the art conference and event center capable of hosting events as large as 800 people. The Twin Creek Development area will also be home to new restaurants, a larger theatre and other entertainment options, as well as a Courtyard by Marriott hotel connected to the Bellevue Event Center. Burks anticipates the Bellevue Event Center and Courtyard by Marriott Hotel will help to attract other businesses to the Twin Creek area. The catalyst intended to help support the City’s economy and establish a new destination place for entertainment and tourism. Another key development supporting the city’s growth is the redevelopment of the Fort Crook Road Corridor, formerly the main thoroughfare between Offutt AFB and Omaha. In the 1990s, the construction of the new Highway 75 led to traffic on Fort Crook Road diminishing. Therefore new uses were created to ensure the area’s full potential was reached.
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The Fort Crook Road Corridor is now becoming an opportunity for mixed use developments, including successful data storage businesses in the Southroads Technology Park, formerly the home of PayPal and TD Ameritrade. These technological successes highlight the potential for significant investment along the Fort Crook Road Corridor, which could bring about a significant return on investment for those savvy enough to invest in the area. There are also a number of automobile dealers expanding on Fort Crook Road supporting the local economy by bringing a lot of traffic into Bellevue and helping to support other area businesses. Bellevue is arguably the premier destination for buying a vehicle in Nebraska. Perhaps the most exciting aspect of Fort Crook Road’s redevelopment is Cornhusker Pointe. A former concrete plant is now being developed into a mixed use, residential and commercial-retail site. The City facilitated the environmental cleanup and marketed the redevelopment of the site in order to draw investment and raise social standards and property values in the area. Cornhusker Pointe is clearly one of the Omaha metropolitan area’s best success stories entering its final chapters. Perhaps the most exciting aspect of the City’s redevelopment planning efforts is the work and growth potential from developing the Highway 34 corridor. This 4-lane road and new bridge over the Missouri River opened October of 2014. Highway 34 has created a connection between two major North - South routes, Interstate 29 and Highway 75. Improving the transportation connection to Interstate 80, one of the nation’s busiest East - West routes. Ultimately this development has expanded the City’s southern connections and provided greater links between southern Sarpy County and the City of Bellevue. In order to take full advantage of these improved transportation links, the Bellevue citizens voted and approved local development incentive legislation, known as LB840, which provides the City with the opportunity to attract new projects through local incentives. The new Highway 34 Corridor is adjacent to a number of Greenfield and Brownfield sites, providing exellent new development opportunities for investors inside and outside of the United States to take advantage of. Ultimately all of these new and innovative developments and redevelopments have an attractive, cost effective appeal to new developers, business owners and investors. Bellevue’s cost of living and quality of life are hard to match. New development will also help increase the area’s workforce expansion. By bringing new industries and businesses into the Bellevue area, an increase will be seen in the talent pool. There are a broad range of state and local incentives including, job training programs and tax incentives, which collectively offer those businesses and industries looking to move into Bellevue, Nebraska an attractive financial package called the Nebraska Advantage. Bellevue, Nebraska prides itself on its patriotism, quality of life and strong work ethic, and has a lot to offer potential investors and businesses looking to move into the area. Burks wants potential developers and investors to know, “We believe that it is an exciting time in Bellevue and that the City is ready for and looks forward to the new opportunities and new relationships the future brings.” To learn more about the opportunities in Bellevue, Nebraska, go to: Bellevue.net
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Fraud Investigator 2015 Sage Investigations provides fraud investigative services to six distinct markets: Tax Attorneys, Business and Corporate Attorneys, Estate and Probate Attorneys, CPAs, and Individuals. Within those markets, Sage represents their clients in civil and criminal matters involving fraud, embezzlement, Ponzi schemes, and business disputes that involve following money trails and developing evidence to prove the client’s case on the plaintiff or defense mode. Our knowledge, skills, training, and experience can reduce the impact of fraud, or as necessary, determine the extent of fraud and provide the client with the options they may consider necessary or appropriate in resolving the matter.
work product. The compass that guides our team is strong leadership and accountability. Our experienced team of investigators understands that confidentiality and discretion are essential to your businesses’ investigation. Businesses must ensure matters are properly handled to avoid impacting someone unjustly by making an accusation that is unfounded or inaccurate. In addition, most business entities do not want to be exposed to negative publicity so losses that are found must be handled to protect the name of the company. Generally, all of these actions are done in concert with the corporate counsel.
As a dedicated fraud investigator, it was a great honor to accept Wealth and Finance Magazine’s award as the 2015 Leading Fraud Investigator, which is recognized worldwide. We bring the talent needed to accomplish the scope of our work. Our team of former IRS Criminal Investigators, Certified Public Accountants, and former FBI investigators, are fully committed to doing the best job for our clients and providing results that reflect the truth. We prepare a plan of action and proceed to access the records that allow us to quickly analyze financial matters in a variety of cases. Our cases have ranged from $500,000 to millions of dollars in revenue. Our expertise has developed over 40 years in the area of fraudulent schemes (Ponzi schemes, vendor fraud, and sophisticated theft schemes) that once the money is traced, the extent of the scheme comes into focus. The investigations include securities in the form of foreign currency exchange, oil and gas limited partnerships, and real estate deeds of trust and promissory notes.
We provide support for businesses suspecting fraud by creating an action plan, conducting an investigation, interviewing witnesses and reviewing records, offering surveillance services, following the money trail and determining weaknesses in internal controls. This agreed upon plan and subsequent services allows the business leader to know what took place so that they can make informed decisions and implement better internal controls to prevent the reoccurrence of fraud within their business environment. Minimizing Damaging Allegations Generally, when fraud is found in a business, the fraud has existed for a long period (months or years) and like an iceberg, we need to look below the surface to determine the extent of the fraud and if there is collusion in the organization. Understanding the flow of money through records, we can quickly identify the pattern and extent of the fraud. Once the fraud has been identified, the perpetrators can be prosecuted or sued civilly and the lost assets can potentially be recovered.
At Sage Investigations, our team has a clear mission in mind. Our investigations firm is: • Dedicated to serving our clients nationally, to help them navigate the difficulties of dealing with the IRS, and other complex (forensic) financial fraud investigations both civil and criminal; • Precise in our focus, narrowing in on our primary strengths of following the money, we steer our knowledge, skills, and experience to financial issues; • Committed to helping our clients propel their case forward by assisting in the review, acquisition, and organization of financial records, interviewing witnesses, evaluating the elements of their case, and helping to create winning strategies; • Consistently integrating technology to the advantage of our client with the use of advanced proprietary financial investigative technology to analyze complex financial data quickly, easily, and efficiently, saving our clients’ time and money.
We also offer business valuation services for litigation and tax purposes to allow our client to better understand the loss incurred by the misappropriation or theft of funds. We provide expertise for the client in the handling of the income tax consequences of a theft or fraud and as necessary, the filing or amending of income tax returns. Our staff is prepared to testify as an expert witness to either the misappropriation or theft and to the extent of damages caused by the misappropriation or theft.
Sage Investigation’s Values are Second to None Sage handles all cases with altruism, professionalism, honesty, integrity, passion, and respect. When you hire Sage, you hire a team of professionals with skill, knowledge, and experience that ensures you have effective solutions. We are innovative with our “DIO” cutting edge technology, and perform every investigation in an orderly and organized manner to develop a clear investigative roadmap and deliver a quality
Company: Sage Investigations, LLC Name: Edmond J. Martin Email: edmartin@sageinvestigations.com Web Address: www.sageinvestigations.com Address: 4103 Westbank Drive Austin, TX 78746 Telephone: 512-659-3179
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Setting up a Business in the UAE
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James Berry & Associates is one of the longest established legal practices in Dubai, offering an overall solution for the highly diverse needs of their clients. We spoke to them to find out more about their region, and how they assist businesses in the UAE. About James Berry & Associates Our services range from businesses entering into the country and establishing legal status, to setting up a business, advising on corporate transactions, or concluding employment arrangements, right through to advising clients of need in their personal affairs. Our associates are legal professionals with qualifications obtained from various international jurisdictions. As a result, their training and experience enables them to provide a high standard of advice and legal expertise in every case. What differentiates us is that, apart from being knowledgeable in the law, and experienced in advising on transactions, we recognise that what ultimately matters to our clients is the outcome. As such, we make it our business to set and manage realistic expectations. Drawing on our years of experience and highly trained lawyers, we provide our clients with clear and practical advice on all their legal issues in a friendly and accessible way. We provide legal advice for businesses through our Corporate/Commercial department and for people personally through our Private Client department. In our region, there is a wide range of options is available to individuals and to international companies who are looking to establish a business presence. This ranges from companies incorporated under the Commercial Companies Law to companies incorporated within the Free Zones. The incorporation team at James Berry & Associates provides professional and personalised assistance to clients. We assist our clients in setting up and maintaining in good standing companies incorporated in Dubai, Sharjah and/or Abu Dhabi. Furthermore, we assist our clients with registrations such as limited liability companies, branches and representative offices of non-UAE companies, professional licenses, professional associations, non-profit organisations and/or business forums as well as free zone companies. Alongside these services, we also work with offshore companies incorporated within UAE Free Zones and/or within other offshore locations. We are registered offshore agents and are therefore fully authorised to assist you in the setting up of offshore companies in the Jebel Ali Free Zone. We also incorporate offshore companies in other popular offshore locations outside the UAE. With offices located on Sheikh Zayed Road, James Berry & Associates provides clients with central and accessible offices to meet our associates.
Company: James Berry & Associates Email :enquiries@jamesberrylaw.ae Web: www.jamesberrylaw.com Address: 304, API World Tower, Sheikh Zayed Road P. O. Box 52294, Dubai, UAE Telephone :+ 971(4)Â3317552 Fax :+ 971(4)Â3317553
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Hedge Fund Manager of the Year Mauritius 1602MS18 40
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Founded in 2008, Barak is a niche fund management company whose main purpose is to provide investors with unique commodity-focused investment opportunities via trade finance assets across more than 30 African countries. We spoke to them to find out more about their company, and how their flagship fund, The Barak Structured Trade Finance Fund, consistently achieves returns.
Barak’s core investment pinpoints sub-Saharan Africa and is related primarily to the soft agricultural commodities and food product-related sectors. The Barak investment approach is based upon the principles of discipline, diversification, collateralisation and downside-case scenario valuation. The company acknowledges that African investments encompass a certain degree of risk given the nature of investing in a continent whose primary markets are influenced by a multitude of volatile factors. Each investment is thus approached with a stringent on-boarding process – using both desktop and on-the-ground due-diligence processes – in order to determine the viability of a potential project’s funding.
the deals are not overly short term and that that new deals are permitted as old deals roll-off. Furthermore, it reflects repayment trends by clients, which is very important to the fund managers. Additionally, the strategy also focuses heavily on global and African commodity prices, and thus takes on transactions that are not heavily reliant on volatile prices, i.e. portfolio exposure will focus on FMCG when commodity markets are as volatile as they currently are. Although we work in a highly competitive industry, the Barak Structured Trade Finance Fund is arguably the only alternative investment fund focusing purely on African agricultural commodities and trade finance, by providing up to 100% debt to clients. Another important factor is that we have an on-the-ground presence in Africa with the ability to fly out to all of our clients in the matter of a few hours. At the same time a competitor may appear to have an impressive setup in Europe for example, but will be without the capability of an on-the-ground ever-presence in the sub-Saharan African region.
As for our fund, The Barak Structured Trade Finance Fund came into inception in February 2009, with approximately USD 500,000 AUM of the Fund Manager’s own money. This is now currently in excess of USD 250m AUM, and up from 160m at the start of 2015. As a result of its success, the fund has won numerous awards over the last few years, with the most recent being the winner of the Global Trade Review Best Alternate Financier in sub-Saharan Africa, which was also won in 2014. In terms of personnel, there are two fund managers on the fund, as well as four deal originators based in South Africa and two in other parts of Africa. We currently have in excess of 80 counterparties on the book who we provide short-term trade finance to, and operate currently in 15 countries in the SSA region. The fund predominately looks at soft-agricultural commodities to invest, with the most popular commodities currently being fertiliser, FMCG, pulses, equipment, minerals and rice. The majority of the investors are located in the UK and Europe, as well as increasing popularity in the US. To date, the fund has produced highly consistent returns since inception with no negative months to date in its 7-year life, and has a goal of 10% annual returns.
Furthermore, our on-the-ground Origination Team ensures that we are always ahead of the curve in terms of the changing industry, and we have members of this team in all the countries in which we operate as least once a week. The due diligence that is constantly conducted in these countries extensively covers all the possibilities of new opportunities, and we do not rely merely on research papers or what the news is saying or what current news is speculating may be unfolding in the regions.” The bottom line is that Barak’s deal-makers prefer to get a first-hand view before actively pursuing a potential deal. Looking further into 2016 and beyond, the future holds many exciting ventures, with a strong pipeline of deals and continued strong investor sentiment to fulfil the funding required for these deals. Furthermore, Barak is going to be launching three new funds in the first quarter of 2016 (a longer-term Impact finance fund, a structured credit fund, and an FX fund), which will provide the company even more opportunities to be the leading alternative financier in sub-Saharan Africa, and arguably the whole continent. Watch this space!
In terms of our strategy, the fund will seek to invest in the full value of trade finance assets or the first loss portion required by all trade financing banks. A particular emphasis will be placed on commodities with a high physical liquidity, and commodities can be of an export, import or regional nature. Furthermore, transactions always contain an off-take agreement, although typically less emphasis is placed on the credit quality of the off-taker and investment decisions are weighted heavier on trading principles and track record rather than debt principles. Investments are entered into with counterparties well known to the fund managers and track records of counterparties are placed high on the list when investment decisions are made. Investments are short-term and cyclical with most investments made during harvesting season when markets are typically at their lowest. The intention is always to maintain a book with the majority of deals averaging between 100 to 120 days, and this ensures that
Company: Barak Fund Management Email: contact@barakfund.com Web Address: www.barakfund.com Address: 14 Marbella Road, Pellegrin, Trianon, Quatre-Bornes, Mauritius Telephone: +230 698 0397
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Hedge Fund Manager of the Year - Best Long/ Short Equity Fund Manager Chilton Investment Company has been managing long/short equity portfolios for institutional clients since the firm’s inception in 1992. Today, Chilton has offices in both the US and the UK, focusing on managing classic hedged equity strategies that seek to generate consistent and superior risk-adjusted returns.
Chilton has a long-term focus and we view ourselves as investors not traders. The firm seeks to invest in, on the long side, high quality and sustainable business models with organic growth, strong cash-flow generation, good pricing power and management who are good stewards of capital. At Chilton, our strategy is fundamental and the investment process is conducted mainly from the ‘bottom-up’. This ‘bottom-up’ approach involves meeting many companies in order to find the best, and most enduring, investment ideas. On the short side, Chilton looks for ‘melting ice-cubes’ i.e. business models that are in secular decline and with deteriorating fundamentals.
2009 and 2014, the market often ignored poor fundamentals and stocks sometimes traded up, even on earnings misses, simply because they were in the right indices. Those days appear to have ended and we saw the market distinguish more clearly between the winners and the losers. As we progress further through 2016, it is clear that global growth concerns continue to dominate the investor’s mind-set. We believe the US will experience solid but not spectacular GDP growth in the region of 2.5%. After 6+ years of a US Federal Reserve fuelled bull market (QE), we have seen a structural shift in the market and we believe that passive index exposure is less likely to be successful going forward. For 2016, we comfortably expect mid-single digit earnings growth for the S&P 500 which is similar to what we witnessed in 2015. We believe the US market currently offers very good opportunities to find high quality business models trading at attractive levels (long side) and ‘melting ice cubes’ which are being punished by the market (short side). Furthermore, we expect to see some volatility during the year and we are equipped to be opportunistic and to take advantage of these market movements.
One of the key features of our company is that we seek to generate alpha on both sides of the portfolio, long and short, throughout market cycles. In this sense, having a permanent short book is advantageous in periods of volatility or drawdown, however in a bull market long/ short investors will invariably lag long only investors. Over the full cycle though, we seek to generate a return superior to that of the market, combined with lower volatility. Although Chilton conducts deep fundamental qualitative and quantitative research on the companies that it invests in, we find that the market is always capable of delivering surprises. As mentioned earlier, Chilton is predominantly focused on constructing portfolios from the bottom up, but at the same time it is also important to be aware of the macro environment in which we operate, and this helps us develop themes as well as leading us to prefer some countries and sectors over others.
Company: Chilton Investment Company, LLC Name: Richard L. Chilton, Jr. Email: jduckworthchad@chiltoninc.com Web Address: www.chiltonfunds.com Address: 33 Sackville Street, London W1S 3EB Telephone: +44(0)20 7087 6000
Looking back on 2015, we were very pleased with our performance as it was clearly a stock picker’s market, which plays to our strengths. We believe Chilton’s out-performance of comparable benchmarks was attributable to strong stock selection within our sector allocations. In addition, our short book performance enhanced our returns and accounted for approximately one third of our positive attribution. 2015 marked a return to lower correlations in stocks, coinciding with the end of QE which helped the short performance. For several years between
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Bamboo Finance Bamboo Finance is a specalised private equity firm investing in creating access to financial services, renewable energy, healthcare and agriculture in emerging economies with offices in Luxembourg, Geneva, Bogota, Nairobi and Singapore. We spoke to them to get their unique insight into impact investing, and learn more about their belief that that it is possible to simultaneously maximize profits and achieve social and environmental change.
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Impact Investing: Is There A Trade-off? Generally speaking, impact investing can mean different things to different investors, and the field is still in the process of helping investors define it for themselves. As such, we need to move the conversation beyond the question of “trade-off.” In Bamboo Finance’s investment approach, profits do not have to be sacrificed for social and environmental impact. While this idea may sound counterintuitive, Bamboo Finance has proven that it is possible to maximize profits and achieve social and environmental benefits by investing expansion capital in companies providing access to essential goods and services for low to lower-middle income consumers in fast-growth markets.
Jean-Philippe de Schrevel
Low-income households in frontier markets are already consumers of essential goods and services (healthcare, energy, financial services, agriculture for example), but they often pay dearly for very poor quality. These hundreds of millions of low-income consumers represent a significant market opportunity for companies that are able to design, produce and distribute quality and affordable products and services. Access to new and/or improved products and services can have an immediate positive impact on their quality of life. When investments are creating access to new and/or improved goods and services for low-income consumers, the social, environmental and economic impact can be intrinsically linked and profit and impact objectives can be achieved simultaneously. Fiduciary Responsibility It’s important to find an investment manager who views their fiduciary responsibility as a transparent and ongoing dialogue about how to achieve a shared vision of social, environmental impact and financial returns. At Bamboo Finance, our fiduciary responsibility begins with an investment thesis and strategy aiming to maximize total performance. We then align our incentives along social, environmental and financial dimensions and report on the performance of our portfolio quarterly. We also engage with external rating agencies to assess the social and environmental dimensions and participate in leading campaigns and initiatives in impact investing. Progress and Potential It has been close to eight years since the collapse of the financial markets, and progress has been evident. However, more investment capital is required to advance the movement and realise the potential of private capital as a force for positive change. Markets take time to build and yet the magnitude of the problems we collectively face today do not leave us with a lot of time. Moreover, it is important to note that the impact investing is still in a nascent stage of market development with different sectors at various stages of evolution. Some sectors are ready for investments while others are testing the viability of business models. New models of financial services have emerged to reach the unbanked even faster and more affordably since its emergence. As such, financial services for low-income consumer remains a high growth, high value and high impact sector. Access to clean energy, agriculture, and healthcare are also sectors in which there is enormous potential for social and environmental impact globally. In our opinion, we would ask people to invest in this area right away. Our Strategy In terms of our investment strategy, we invest growth capital to build middle-market companies serving low-to-middle-income consumers. We deliver social and environmental value and provide attractive
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financial returns to investors. To date, Bamboo Finance manages 280M USD; representing a portfolio of more than 38 investments operating in 20 emerging market countries with a track record of demonstrated returns, and a portfolio of investments that have provided 16 million clients with access to services and created more than 20,000 jobs. Our History Established in 2007, Bamboo Finance was founded by Jean-Philippe de Schrevel alongside a team of microfinance pioneers who continue to forge new paths in impact investing. The vision of Bamboo Finance is to demonstrate that private capital can be profitably deployed as a tool for effective social and environmental change. The mission is to deliver attractive financial and social returns to investors by investing in growth companies that provide access to essential services for low-to-middle income consumers in emerging economies. Our Philosophy As for our philosophy, there are four key factors that underpin what we do at our company. Apply A“Total Return” Approach Firstly, we believe that it is important to acknowledge that there is a risk to doing business as usual, and this mentality has created significant societal and environmental costs. Until recently, the financial world has been governed by a simple two dimensional risk and return model, which no longer can be reconciled with the present day realities. There are social and environmental returns that ought to be included when making an investment and risks ought to be expanded to include the consequences on society and the planet. Fund the Gaps Secondly, it is central to our strategy that we ‘fund the gaps’. Investment opportunities have arisen as a result of rapid growth at the middle and higher end of many emerging economies thereby leaving an “access gap” for low and lower-middle income consumers. At Bamboo Finance, we believe that this gap can be bridged by investing in businesses that provide access to essential products and services. This includes primary care clinics, off-grid renewable energy systems and financial services companies serving small to medium-sized businesses as well as consumers. Take a Long-Term View Alongside these considerations, we firmly believe in partnering for many years and building long-term relationships with our clients. Deploying private equity allows us to engage deeply in the development of businesses as shareholders and board members and allows us to take a long-term view on growing value in the company. Partnerships Are Essential Last but not least, we place particular emphasis on leveraging the value of strategic partnerships, and the true value of strategic partnerships is yet to be realised in impact investing. Currently, large corporate involvement with impact investing tends to mirror traditional CSR grant-focused approaches. We believe the optimal role(s) of corporations is in incubating, catalysing, and investing.
Company: Bamboo Finance Web Address: www.bamboofinance.com
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Eiffel Investment Group is an alternative asset manager specialized in absolute return strategies. Its assets under management - over â‚Ź500 million euros - are invested in credit assets, primarily of European corporates, through public and private markets. Eiffel relies on a fundamental, research-intensive, investment approach to identify attractive investment opportunities. The team combines investment expertise and corporate experience.
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What challenges did your alpha generating investment fund face during 2015? Despite the low yield environment surrounding credit markets, we are convinced that Europe still has a lot of potential for smart investors and that a lot of value remains in smaller, below-radar situations.
Eiffel Investment Group is an independent group, owned by the team alongside former Louis Dreyfus group Chairman & CEO Jacques Veyrat (the company started end 2008 as an asset management division of the Louis Dreyfus group and spun-off mid-2011). The group and its principals have invested €100 million in the funds managed by Eiffel Investment Group, ensuring a very strong alignment of interests with investors and a constant focus on risk management.
A lot of credit funds active in Europe do either distressed or structured credit, or are pockets of a larger global credit fund. We believe that our nimbler and opportunistic approach is adapted to the secular deleveraging by European banks and the ensuing changes of the European credit market provides interesting absolute and relative value opportunities.
In an interview with Fabrice Dumonteil, he reveals the firm’s smart strategies for a low growth and low rate environment, his career history prior to joining Eiffel Investment Group and what makes them unique. How does it fell to have been awarded the Asset Manager of the Year France award? We’re very excited by the Asset Manager of the Year – France award. The best reward obviously is making our clients happy. We strive to perform for them. The group’s substantial shareholders’ equity is invested in our funds, alongside our investors, to ensure a strong alignment of interest.
We hold a concentrated book of core positions that are catalyst driven, so as to capture idiosyncratic opportunities, as un-correlated as possible of market conditions. Capitalizing on our local team knowledge and expertise, we aim to capture “second tier” opportunities that may be outside the radar screen of larger global credit funds.
What previous experience did you have prior to joining EIFFEL INVESTMENT GROUP? How has this impacted on your present role? I have 20 years of experience in general and financial management roles. Prior to the founding of Eiffel Investment Group in 2008 (then as a unit of the Louis Dreyfus group),I was the CFO of Neuf Cegetel, a €7.5bn listed telecom operator. I started my career as a consultant with the Boston Consulting Group. Combining corporate and financial expertise is very relevant when it comes to investing in corporate credit.
What is your approach when it comes to hiring staff? The firm has a long term view and invests in talents (promotion program, increasing responsibilities, training to new tasks, etc.). Employee ownership is a key policy. The goal is that all employees become shareholders of the group in the long run. What makes your company unique? Our firm’s uniqueness relies first in our team and its local expertise of European companies. The team is a combination of solid investment and risk professionals. It is based at the heart of the Eurozone (France), giving it an edge on local situations in Europe / the Eurozone, including situations that may not be on the radar screen of global credit funds.
Please provide us with some information about how you came to join EIFFEL INVESTMENT GROUP? The company started as a subsidiary of the Louis Dreyfus group, one of the world’s largest commodities trader. The idea was to use our understanding of the “real economy” to deploy capital.
We also provide an unusually robust infrastructure for a boutique with (i) ca. €100 million of shareholders’ equity at the firm level, providing solid revenue base for the Firm and allowing to add talented human resources when needed, (ii) over-resourced support teams (operations, risk, compliance) and portfolio and risk management tools and (iii) a strong visibility with trading counterparties due to history.
Senior team members have been investing together at the firm since 2009. Most of the principals had been working together and/or had known each other professionally for a longer period. Tell us about your overriding philosophy when it comes to your clients? Eiffel Investment Group is 100% client focused. It is committed to providing its clients with investment solutions which offer high added-value and that are tailored to their particular needs, as well as first-class service and transparency. Once again, I would mention alignment of interests as something that is vital.
When working in an industry that is constantly changing, what does your firm do to ensure that they are at the forefront of any emerging developments? The firm is constantly looking at new strategies and internal and external development. We added new talents to the team in 2015, in research, in private debt, in online crowdlending solutions, in risk management, etc.
What is your strategy when it comes to proprietary and third party assets in a range of absolute return strategies in European credit? Our strategy is to provide (i) smart strategies for a low growth / low rate environment in absolute return / absolute performance strategies, (ii) superior research with in-depth sector expertise and “first hand” research on companies / platforms, and (iii) alignment of interests with EUR 100m invested across our funds and products.. We rely on superior research with in-depth sector expertise and “first hand” research on companies to do so. Alignment of interests is obviously key, with €100m invested across our funds and products.
Company: Eiffel Investment Group Name: Fabrice Dumonteil Email: fd@eiffel-ig.com Web Address: www.eiffel-ig.com
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Infrastructure Fund Manager of the Year - 2015
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Golding Capital Partners is one of Europe’s leading independent investment managers and advisors for investments in private equity, private debt and infrastructure. We spoke to Jeremy Golding, Founder and Managing Director of Golding Capital Partners, to find out more about the company and how they orchestrated the largest diversified infrastructure fund of funds ever raised in the German-speaking area.
Founded in 2000 in Munich, Golding Capital Partners now manages €5.0 billion of alternative assets in comingled investment programmes as well as individual managed accounts and has invested in more than 190 leading funds, secondary and co-investments transactions worldwide. Their clients are primarily leading insurance companies, pension funds and banks who typically require support and advice on establishing their dedicated private equity, private debt and infrastructure investment programmes.
generally abhorred J-curve in the initial years. And should profits dry up in subsequent slow years the investor always receives more in profits than Golding earns in management fees thus ensuring full alignment of interest with investors to maximize investment performance and reducing their risk of paying high fees on underperforming investments. The successor flagship fund “Golding Infrastructure 2016 SICAV” will be launched in Q2 2016. This fund will continue the successful approach of its predecessor by focusing on a similar conservative strategy of generating early yield of 4-5% combined with an attractive overall return of around 8% net IRR. In addition to creating attractive investment returns one further objective is to provide investors who may be new to the asset class with a means of accessing the infrastructure markets with broad diversification of risk. This will be achieved by pursuing a cautious strategy focusing initially on core and core-plus infrastructure within the most stable markets globally of mainly Europe and North America. Risk can be further reduced by giving investors access to a broadly diversified portfolio of infrastructure assets spread widely across managers, regions, segments, investment styles and vintages. As a result, Golding offers an optimally diversified and risk-reduced way of investing in infrastructure without giving up an attractive return potential and strong yield.
The Golding Capital expertise covers the whole universe of investment styles, ranging from primary funds to opportunities in the secondary markets as well as co-investments in all three of the asset classes. A notable element of Golding Capital’s value-add is specialising in fulfilling the regulatory, tax, reporting and supervisory requirements of their institutional investors which are becoming increasingly challenging in the current regulatory environment. Their 70-strong team of professionals based in Munich, New York and Luxembourg has not only been helping their investors gain access to outstanding private equity, private debt and infrastructure investments but also structuring innovative products tailored to their clients’ needs such as their newly closed infrastructure fund. Within infrastructure, their flagship fund of funds -the Golding Infrastructure 2013 SICAV- was closed in 2015 at a record €590 million, well above the target volume of €400 million. This makes it the largest diversified infrastructure fund of funds ever raised in the German-speaking area. More importantly, the closing underlines Golding’s position as one of the leading independent providers of infrastructure investments programmes in Europe.
From the early days of its foundation back in 2000 Golding Capital Partners has grown to become one of the leading independent investment managers for alternative assets in Europe. This success can be put down to a number of factors which characterize the Golding culture. First and foremost, clients are at the core of the Golding culture which is highly service-oriented and solutions driven. Client requests for new structures, reporting data or general information are met promptly. The quality of reporting is second to none in the industry with an emphasis on total transparency down to the portfolio level as well as being prompt with audited valuations being made available within two weeks after year end to meet regulatory requirements. In addition the highly qualified investment team can rely on its longstanding network of international manager relationships to gain access to the hidden champions in the various asset classes and to ensure receipt of sufficient allocations in these times of severe competition for the best and often access-restricted managers. Last but not least, impressive investment performance has been a significant factor in enabling the Golding Capital team to cement its leading position in the market resulting in a record 2015 not only for infrastructure but also for buy outs and private debt.
The strong demand from institutional investors was fed by several factors. Firstly, it provides investors an easy and fast access to a broadly diversified, international portfolio of outstanding infrastructure fund managers. It focuses on the key markets in Europe and North America and covers all sectors including energy, transport, utilities and social infrastructure. Moreover, the fund pursues a conservative investment strategy with the objective of generating early and stable current yield as well as an overall attractive return of 8-9% net IRR. This is being achieved by systematically constructing a portfolio combining yield-driven infrastructure projects in the core and core-plus areas with return-oriented value-add projects. The “proof of concept” of this strategy was the first yield distribution of more than 3% at the end of 2015, being less than 10 months following the final closing. The investors also had the advantage of having full visibility on a growing portfolio of diversified infrastructure projects with the fund being 40% drawn at closing with over 250 individual projects and assets. Last but not least, Golding recently changed its fee model to an innovative, predominantly performance-driven fee model which has become an integral component of their investment programmes. This so-called “Golding Guarantee” has some major advantages for institutional investors against conventional fee models. Investors are only charged fees on invested capital and those fees due are only actually disbursed when the investor receives profit distributions thus effectively eliminating the typical but
After a another very successful year both in terms of investments and fundraising, the team at Golding Capital is looking forward to consolidating their position in the market for alternative investment programmes. The company will continue to invest heavily in staff, offices, and systems to support their ambitious expansion plans. Golding expects to launch further new products in the next few months with the objective of becoming partner of choice for their broad base of institutional clients. Demand for individual managed accounts is also increasing and Golding expects this to be a significant driver of their growth for the company in the next few years.
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Forming Funds in 2016 PwC Cyprus is one of the main market players in the provision of professional services to Funds and Fund Managers. Through a team of experts, PwC stands ready to offer a complete spectrum of services for the funds market . Starting from consulting services to facilitate the decision making process of what type of fund should be incorporated according to the individual needs and preferences of each client, following to the preparation and submission of the application packages for the granting of a license from the Cyprus Securities and Exchange Commission, and finally to the provision of any other services necessary for the efficient operation of the Fund. PwC operates as a “one-stopshop� for Funds and Fund Managers. Company: PricewaterhouseCoopers Ltd Web Address: www.pwc.com.cy Name: Chris Odysseos Email: chris.odysseos@cy.pwc.com Telephone: 00357 22 555000 Name: Maria Athienitou Email: maria.athienitou@cy.pwc.com Telephone: 00357 22 555000
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PwC has a wealth of experience in servicing international clients in the financial services industry. Partners and members of staff of the Firm are actively participating on the Board and sub-committees of the Cyprus Investment Funds Association (CIFA), which aims to promote the local fund’s industry. In cooperation with CIFA and other local market players, PwC is engaged with the enhancement of the local legislation for funds. Changes in the fund’s regulatory environment.
On a tax perspective, according to the taxation system in Cyprus, no withholding tax applies on distributions to investors and no taxation of capital gains. Also the services provided by the Investment Manager of the fund are not subject to VAT, hence the value base of the fund is not eroded with a non-recoverable cost. Moreover, the company legal form for a Fund can take advantage of the double tax treaty network of Cyprus. Alternative Investment Fund with limited number of persons Private investors may choose to set up an Alternative Investment Fund with limited number of investors (AIFLNP). It can take one of the following legal forms: • Fixed or Variable capital company; • Limited Liability Partnership.
World-class asset management companies and Alternative Investment Funds (AIFs) may serve many different markets, but they have one thing in common: they understand that regulatory compliance and transparency are becoming an important element of the new business environment. It is expected that AIFs will spend a bigger portion of their time and resources over the coming years figuring out how to address regulatory matters. At the same time, it is also important to highlight that regulatory pressures and calls for additional transparency create opportunities for AIFs to enter in new markets which were previously dominated by financial institutions (i.e. P2P lending etc.).
The number of investors in the AIFLNP may not exceed 75 and they need to be well-informed/professional investors. The Law allows the establishment of an AIFLNP with various investment compartments, each one of which will have its own investment policy. However, the limitation on the number of the investors is applicable to the whole scheme. In addition, exceptions may apply in the need to appoint a manager or/and custodian.
To help market participants plan for the future, we have considered the likely changes in the alternative asset management industry landscape over the coming years and identified key areas of success. Our regulatory compliance experts can help interested parties to navigate the regulatory maze.
The main benefits of an AIFLNP include the fact that there are no restrictions on the type of investments of the fund, there is no defined minimum initial capital requirement and no onerous ongoing reporting requirement to the Regulator.
The Cyprus funds market Over the last couple of years, Cyprus has developed as a regional domicile for investment funds and asset managers, and coupled with its competitive strategic location, it has become the most accessible bridge for managers from the Middle East, Asia and the CIS region to enter the EU funds’ industry. Furthermore, the local Alternative Investment Funds (AIF) Law which came into effect in July 2014 provides a level playing field along the lines of the frameworks of the main European investment fund hubs. It is thus apparent that Cyprus’ competitive position is significantly strengthened. A noteworthy increase of funds applications has been observed which is very positive for the industry as it means that customers have surpassed the point where they remained at the decision making process and have now proceeded to the implementation stage. Given the breadth of options provided by the AIF legal framework, various types of funds can be set up in Cyprus, a fact that has already been recognized and appreciated by investors (both local and foreign) and is already being exploited. Why set up a fund in Cyprus? Cyprus offers the full spectrum of legislative framework to all fund products (UCITS and non UCITS). In particular, it provides fund managers to structure as Alternative Investments Fund Managers, as presented in the relevant EU directive, or a MiFID compliant Investment Firm, both offering EU “passporting” ability. Cyprus is a well-regulated EU member state, combines tax efficient features of a modern financial centre with the necessary infrastructure for the funds’ industry. It has a UK based legal system, independent judiciary and friendly business environment. Furthermore, in Cyprus there is a low cost base, efficient and investor friendly government authorities with minimal red tape.
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CFO of the Month
Kepner-Tregoe - William B. Baldwin Kepner-Tregoe, Inc. (KT or the Company) is a world renowned multinational management consulting and capability development company. Founded in 1958, the Company is a leader in helping organizations improve and leverage the critical thinking skills of their people to drive operational improvement. We spoke to William B. Baldwin, CFO of KT, to learn more about the financial aspects of their company and how they have adapted to the many challenges faced by their business.
Kepner-Tregoe’s core business is bringing critical thinking capability to organizations through either training or consulting. For this process, their consulting projects involve applying their own expertise to resolve difficult client issues and to deliver specific agreed upon results.
choosing where to invest, each of our decisions involve elements that must be considered, evaluated and incorporated into our strategic and financial planning. At the same time, we also have to balance these investments with the overall financial and operations management of the company.”
“We are much more than just a training company—we are a capability development company,” says Baldwin. “Our extensive experience tells us that training is one part of this development. But first we must seek to understand what problem clients are trying to solve and provide a complete solution for that problem. Our competitive advantage comes from the fact that critical thinking matters and can deliver significantly improved results to organizations that employ it well. We strongly believe that no other organization does critical thinking capability development better than Kepner-Tregoe.”
In addition to these investments, Baldwin has also helped Kepner-Tregoe provide deeper opportunities for KT employees. This includes the implementation of a new ownership model through the introduction of a restricted stock plan. According to Baldwin, this “has expanded the number of employee shareholders from 15 to 50 over a three-year period and refinanced the company’s bank facilities, which ensures capital availability, when needed, at an effective cost. I have also continued to develop and modify our employee incentive plans to balance employee performance and company growth.”
As CFO of Kepner-Tregoe, Baldwin manages the company’s finance, legal, IT and certain aspects of the HR functions. He is also a member of the company’s Board of Directors and Global Leadership Team. “My responsibilities include financial planning and reporting, banking, financing, tax strategy and much more,” says Baldwin. “Over the summer, I had the opportunity to manage our operation in Japan on an interim basis which was a great experience from a business and cultural point of view.”
Across the board, KT employees are extremely passionate about the impact their proven processes have had on supporting organizations over nearly six decades, particularly KT’s flagship problem solving and decision making methodology. “We are immensely proud of our processes and the benefits that it brings to our clients,” says Baldwin. “Believe it or not, it was actually KT’s methodology on problem solving that allowed NASA to save the astronauts from Apollo 13. It is a story that everyone in our company loves to tell because it illustrates the type of impact KT processes can have when executed well.”
Over the past few years, Kepner-Tregoe has made many major investments. These include geographic expansion into China, Western Australia and Western Canada, as well as investments in consulting resources—primarily in hiring and capability development, product development, and IT systems and infrastructure implementation. “When
In order to ensure that their high standards of service are maintained, KT implemented a set of Basic Beliefs that guide the organization. It is this set of Basic Beliefs that provide the framework for KT’s employee
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recognition, awarding those who go above and beyond. “Unlike many other professional service firms, KT has an extraordinary retention rate,” explains Baldwin. “I believe this is a testament to the passion our employees have for our products, the value we deliver to clients and the culture we have built over the years.”
meet today’s business needs. Alongside these measures, they also attend and present at various industry conferences throughout the world, sharing best practices and client successes. With the world becoming more globalized, Baldwin believes that social media has also become instrumental in achieving success. “Through social media platforms such as LinkedIn, we are in constant communication with user groups, industry groups and many others discussing and exchanging ideas regarding current business issues impacting a variety of industries. Hosting WebEx events also provides opportunities to discuss current business issues.”
Throughout the years, there have been many significant changes in the company’s operations, some of which have been internally driven through changes in strategy, structure and leadership. Other changes have been externally driven, particularly the financial crisis in 2008 and 2009. “The Global Financial crisis dramatically affected our business,” says Baldwin. “So much so that our revenues declined by 32 percent between Q4 2008 and Q1 2009. However, we reacted very quickly through a number of cost containment actions. They say ‘never let a crisis go to waste’ and we fully embraced this crisis to create many positives that remain in place today. This includes our variable compensation and workforce models, quarterly incentive plans and more effective utilization of our consulting resources. Today, we remain very diligent as to how we manage our cost structure and measure what investments we choose to make in the business.”
A key testament to KT’s financial success is that their North America business unit has increased its revenue by 36 percent over last year. According to Baldwin, this growth is the result of a number of factors. Among these include greater involvement by senior leadership in business development, increased sales results from recently hired client relationship managers, greater account penetration with current clients, more effective lead generation activities and growth in certain industry segments, particularly in operational and service excellence. “Alongside these measures, our operating profit has significantly improved as a result of several changes implemented over the past few years,” says Baldwin. “These include having a more variable compensation structure and work force, improved utilization of our consultants within their regions as well as across the company through a ‘global resource pool’ and a quarterly incentive system that rewards operating profit performance of our regions and the total company. Finally, the realization of the investments we have made in new hires and capability development of our consulting resources has added value to the projects and results we deliver our clients.”
According to Baldwin, the crisis also reinforced the importance of maintaining a strong balance sheet and building cash reserves to ensure the financial stability of the business. “It’s not a question of if another financial crisis will occur but when,” Baldwin explains. “So it’s important to ensure that your organization is prepared, and we set cash reserve goals and continue to work towards achieving those goals as well as minimizing debt for operating cash flow purposes. In fact, we have been debt free for operating cash flow purposes for the last five consecutive years.”
Looking to the future, Baldwin remains optimistic that Kepner-Tregoe will continue to grow and is fully prepared to embrace any changes that come along the way. “Each year we challenge ourselves as we develop our strategic, operational and financial plans for the next three-year period. We look beyond growth in revenue, profitability and shareholder value each year to other goals and objectives. We want to continue to deliver sustainable, measurable results to our clients through our processes and help our clients build capability in our processes.
Working within in a highly competitive consulting and training landscape, Kepner-Tregoe understands it must stay nimble to continuously improve its approach as well. That is why Baldwin views change as something that is positive and will only serve to improve their overall services. “While people and organizations are generally resistant to change, or slow to adopt to change, I have learned that change is a necessity and can be very positive if the changes are clearly communicated, well implemented and supported by leadership across the company. Organizations and their people, particularly in today’s business and economic climates, must be quick to understand the need for change, identify what changes are required and to implement those changes in a rational manner enabling individuals and organizations to grow and thrive.”
“In order to achieve this, we need to evaluate our resources, our markets and our products. We also need to ask ourselves who are we looking to hire, what capability development we provide, what product and service innovation we invest in, what markets are growing and what are emerging client needs. In evaluating these questions, it challenges us to ensure we continue to deliver results to our clients, continue to grow revenue, profitability and shareholder value and build an organization with highly capable, valued and engaged employees.”
It is this level of responsiveness that has enabled Kepner-Tregoe to weather a dynamically changing world over nearly 60 years in business. Baldwin believes the consulting arm of the business has been particularly adept at helping the company identify, and solve, critical issues. “Our consultants are in the trenches helping clients resolve business issues that are affecting them today or will affect them in the near future. Communication between our global resources, as well as with our marketing and products group in Princeton, help keep us at the forefront these emerging business issues. “
Company: Kepner-Tregoe, Inc. Name: William B. Baldwin Email: bbaldwin@kepner-tregoe.com Web Address: www.kepner-tregoe.com Address: 116 Village Blvd., Suite 300, Princeton, NJ 08540 Telephone: 609-252-2558
Extending this effort, KT’s North America operations team is also forming a Customer Advisory Group. This group will consist of various clients they will work with to develop new products and services that
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Real Estate Investment Manager of the Year
C-III Capital Partners Since the formative transaction that created C-III Capital Partners in 2010, C-III has grown into a fully-diversified commercial real estate services and investment management company; this full-service platform has a competitive advantage in sourcing, underwriting and managing real estate debt and equity investments. We had the chance to catch up with the firm and learn more about their award winning services.
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What are the primary target investments for funds and accounts managed by C-III Investment Management? Target investments include commercial real estate equity, distressed commercial real estate mortgage loans, CMBS (including newly issued B-Pieces), CDOs, whole loans, B-notes and mezzanine debt.
We have focused on attracting and retaining the requisite human and intellectual capital which we deploy in key markets to assist in the appropriate risk-adjusted return analysis of the investment opportunities we review. Our leadership team has been together for over 20 years and successfully built one of the largest fully-integrated real estate services companies, Insignia Financial Group, Inc., prior to creating C-III. Founded on that deep industry expertise, C-III is focused on using its platform to meet the needs of all constituents in the commercial real estate industry. We are confident that our products, services and strong relationships will make valuable contributions toward enhancing the financial returns of our clients’ commercial real estate portfolios.
Our success as an investment manager is based on several key qualities: Firstly, our basic skill set enables us to identify and execute on investment opportunities amid challenges and volatility – this includes the expertise to underwrite assets brick-by-brick; to accurately assess risk; to capitalize on opportunities at the ideal time; and to scale fund size to meet the available market opportunity. Secondly, we have the resources to distill data into valuable information and use that information to drive effective decision making. Thirdly, we possess the discipline to exit investments when our business plan has been met. Finally, we have the discipline to not invest when opportunities do not exist within the investment strategy.
In the current lending landscape, it is a good time to be an investor and a lender; we are both. Volatility in the current environment is making it challenging for borrowers to get a firm quote. Due to new CMBS risk retention rules that are set to take effect in December 2016, investors’ yield expectations are set to widen and borrowers are concerned their costs will increase. This prospect is driving many borrowers to refinance prior to December 2016, resulting in a significant increase in volume. Only a relatively finite number of investors and lenders that have a fully integrated real estate platform – like C-III’s platform – can manage this increased volume to properly underwrite and manage risk.
In 2015, we launched a new series of debt funds to focus on newly issued unrated and non-investment grade CMBS. With our expertise in the space, we have a good track record of investing in CMBS B-Pieces that dates back to some of the first issuances back in the early 2000s. Our deep understanding of these assets enables us to see that the market was too risky from 2005 to 2007, so we chose not to invest over that timeframe.
To be innovative within the industry and tailor our solutions, we scale our fundraising to closely align our ability to deploy capital with the available investment opportunity. Fixed income markets in particular have cycles of price volatility that influence the pace and returns associated with capital investments. Our equity funds are sized relative to the opportunity set we see for the next two to three years. Since 2010, our investors have committed over $1.3 billion to our debt and equity strategies.
With significant opportunities available going forward, we are well-positioned with adequate capital available to make the most of these opportunities. Specifically, we expect numerous acquisition opportunities to arise out of the current volatility in the capital markets, as well as over $1 trillion of commercial real estate loans scheduled to mature in the next four years alone.
Our equity funds focus primarily on opportunities where we are able to enter at an attractive basis relative to replacement cost, often times by purchasing a defaulted loan and securing a fee simple title through foreclosure or deed-in-lieu of foreclosure, and taking over management of the property with the goal of improving operations. We improve operations in numerous ways, such as reducing bad debt collections, eliminating unnecessary expenses and passing on reimbursements to residents where applicable. Through this strategy, we seek to achieve outsized returns relative to the risk of the investments.
We are honored to be named the 2015 Real Estate Investment Manager of the Year. When we formed C-III Investment Management in 2010, there was a fair amount of pessimism in the market about the wisdom of starting a new investment management business. Conventional wisdom at the time indicated that institutional investors were generally focusing on working with a small set of existing managers, not new, “first time” managers. Over the past six years, it’s been gratifying to witness our investment management business grow from a standing start to achieve this level of performance. Our principals’ 25+ years of experience in the real estate investment and management space enabled us to create a truly new, different model that has delivered strong results. We are eternally grateful to our entire investor base for their confidence in and support of our firm.
With a broad range of activities, C-III Investment Management currently manages 26 investment vehicles, separate accounts and CRE-CDO/reREMICS. The responsibilities of the vehicles include principal acquisition, financing, asset management, property management, disposition, administration, surveillance and workouts.
Name: Robert C. Lieber, Executive Managing Director Email: rlieber@islecap.com Web Address: www.c3cp.com Address: 717 5th Avenue, 18th Floor, New York, NY 10022 Telephone: 212.705.5000
Our investors include some of the largest pension fund plans, university endowments and insurance companies in the United States, as well as private equity firms, private pension plans, fund-of-funds and high-networth individuals.
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CEO of the Month
Ermanno Santilli MagneGas Corporation is a highly innovative technology company that counts among its inventions, a patented process that converts liquid waste into hydrogen based fuels. We spoke to Ermanno Santilli, CEO of MagneGas, to find out more about his company and learn more about the truly game-changing technology they have created.
First of all, could you give us an overview of your company? The technology behind our company and the product MagneGas2® was actually founded by my father Dr. Santilli, and throughout the years we have evolved into a fully independent publicly traded company with over 8000 shareholders. Last year, the increase in our stock performance was close to 140% and our shareholder base and institutional shareholder base grew by approximately 30%. We are unique in the fact that we are the only green technology (or greentech) company that is based on a process called Submerged Plasma Arc Flow technology.
But that’s just one of our operating modes, another involves taking waste manures such as hog manure, raw sewage or anything that has biological activity and processing this waste. For this process, we flow it through instead of zapping it and the heat and the electric arc kills any bacteria. This process renders it completely inert, yet it is still full of the nutrients that nature puts into manures. What this means is that farmers can take what are, in essence, one of the most abundant wastes in the world and reuse these liquids in the form of sterilized water and soil supplements.
Please tell us more about this technology. How would you describe it to someone outside of your industry? This submerged plasma arc flow technology is just a fancy way of saying that we take a liquid and we shoot an electric arc through it. Basically, we zap it with electricity and when you do that a gas is created that bubbles to the surface. Once this is done, we filter it, compress it and then fill our cylinders with it. We have independently verified our gases, and have found that our gases are hotter, safer and cut much faster than any other cutting fuel product out there. Because of this, our gas is currently being used by NASA subcontractors on the Space Center project, the Fire Department of New York City, both the US Army and Navy, and several of the top utilities in the US as well as thousands of customers throughout Florida and the rest of the country.
We continue to test this sterilization application at several large farms and have many discussions underway with the US Department of Agriculture and others in terms of collaborations. As you can imagine, the agricultural business is a very stable business and doesn’t adopt new technologies very quickly. Our third opportunity, energy, uses a very specific type of gas and the reason why our gas is so much more effective is that it has a very high flame temperature. The City College of New York in the US tested our gas and found that it has a 10,500 degree Fahrenheit flame temperature, significantly higher than any other industrial gas. Typically speaking, when you burn something, the higher the flame temperature, the better the efficiency and lower emissions. When you burn something using the product MagneGas2 at such a high temperature you get more complete combustion. Along with our partners in Australia, we found that if you take certain fuels and mix it with our gas you can burn it in a way that is both cleaner and more efficient.
Across our company, we have three lines of business: industrial gas, agricultural and energy. Believe it or not, for industrial gas we actually use soybean oil. With our process, the liquid you put in dictates the type of gas that comes out. What we found to be the best application for the replacement of acetylene is soybean oil, but that may change over time. Many customers rave about the faster cutting speed of our product MagneGas2, and just about everyone who tries it switches over. The customer response is so great that we are ramping up our production to accommodate this ever-increasing demand.
This brings us to another one of our innovations, co-combustion, which is we believe is a real game-changer. Coal fired electric generating plants continue to provide approximately 45% of the world’s power, so it’s not going away anytime soon. In certain countries, however, coal has a bad name and many coal plants are being forced to close due to
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As a growing company, it’s inevitable that you’ll continue to build your team. What are some of the qualities you look for when hiring staff? We find that because our industry is not as dynamic as others, instead, we look for parallel or related industries and try and use the experience garnered there to add value to our company. We look for innovators and early adopters, those with an open mind as well as classical experience in the world of engineering.
their polluting emissions, and/or expensive CO2 taxes. When you burn a lump of coal, it’s burning at best at a 35% efficiency, which wastes energy and creates a lot of particulate matter in the smoke emitted. That smoke contains pollutants that many believe are heavy contributors to climate change. Our work has shown that if you inject the product MagneGas2 into a specially designed chamber and have an ignition point, you have a secondary combustion event that allows you to burn the smoke again at a much higher efficiency. Using MagneGas2 in this coal-burning process, we can add another 30% efficiency at a minimum, while at the same time achieving a substantial reduction in emissions of CO2 and other greenhouse gases. We firmly believe that this is going to have a significant impact on the coal-burning industry as a whole and on our global environment as well.
In fact, we’ve actually had luck recruiting ex-military members, who now make up 40% of our staff, and it is very humbling to have them work for our company. Some of them have been incredibly decorated for their service and we find that that level of structure and experience and their ability to adapt has been very important to us. As for the award, how does it feel to have been selected as CEO of the Month? It feels great to be selected as CEO of the Month and it is certainly an honor. I would like to thank Wealth & Finance very much! Last year’s stock performance is something we’re obviously proud of, but what really drives us is that we are taking this fantastic technology and using it to try and create a strategic shift in the energy markets. I have often said that our work in the co-combustion of coal will be the biggest news in the energy sector since the advent of nuclear power. Our social media following has also demonstrated that a lot of people love what we do, and this is what motivates me to press forward.
The advantages of this technology goes beyond increased energy efficiency. “Scrubbers”, which are the current technology used to reduce coal emissions, are highly expensive, costing up to $700 million dollars each. The average coal-fired power plant needs about four of them. So there is certainly a CAPEX and OPEX opportunity alongside being more efficient. In our industry, people fight tooth and nail to try and improve the efficiency of coal and spend billions of dollars on being more efficient. We can turn the game on its head because we don’t treat the smoke as a waste stream but as a new energy source as a result of using our fuel.
During my time as CEO, we have had a lot of success in terms of product development and market penetration. I am an open integrator and one of the first things I did was to have a worldwide meeting with all of our various partners and collaborators. Actually, this was where the co-combustion model was born. We have brought in many fresh new faces from four years ago and are now moving into a new and bigger facility. And during this time we went from an over the counter company to being listed on NASDAQ.
We’ve been working on this project for about two years with one of the largest power companies in the United States, who has apready spent over $5 billion on carbon capture. Depending on the setup and configuration, we’re getting up to a 20 to 40% reduction in the level of CO2 emissions. There is no other technology that reduces CO2 and saves money. Most companies tend to put it underground or convert it into something. What this company has said to us is that we are the only company they’ve come across that potentially reduces CO2 and saves money.
Lastly, what would be your major plans for 2016 and beyond? Do you have any interesting opportunities on the horizon? Our objectives are quite simple and straightforward. First, we’re going to continue to penetrate the $5 billion industrial gas market. Later this year we are going to place our first unit in the US to produce gas. In addition to this, we have several other customers waiting in the wings for the placement of a unit. We’re going to grow at the right speed for our size and resources. Second, in the agricultural sector, we’re going to continue to partner with the USDA. We also have some very interesting testing going on, both in Europe and the US. Third, on the co-combustion side, we expect to complete our testing in Q2 and we anticipate several significant opportunities to come out of it. We will continue to do more and grow, develop and transform while keeping our operating costs under control. MagneGas Corporation has never been in such a fantastic position to grow and prosper.
Could you give us an insight into what it’s like to work in your industry? What are the major challenges facing your company at present? Generally speaking, launching any new technology can be difficult, especially in our target industries. If you took your mobile phone out of your pocket, chances are that it’s no more than two or three years old. That’s because the mobile phone industry moves to adopt new technologies and ideas very quickly. By contrast, the industrial gas business has far less innovation, and the people in that market are just not as used to changes like you and I are about our phones. There’s a tendency to stick to what we’re doing and less willingness to adopt to new innovations. In terms of challenges, when you experience the type of rise our company has experienced in just one year, you attract a lot of attention and some of this can be quite negative. This negative attention typically comes from people who are speculators and manipulators, shorting your stock and writing wild and speculative things, which has led to a lot of potential distractions. We’ve worked hard to keep our eye on the prize.
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Hedge Fund Manager of the Year Europe
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QW Capital LLP is an investment management firm based in London (UK). They manage equity portfolios following a non-discretionary quantitative approach and offer investors access to their strategies either through managed accounts or a UCITS fund structure with daily liquidity. They also have the ability to provide a variety of tailor made products such as swaps, options and capital protected notes on their strategy.
Investment strategy QW Capital was set up in 2008 and launched their first fund in March 2009. The fist strategy was European equity market neutral investing in Large Cap stocks only. It then evolved into a Global Equity market neutral Large Cap adding to the original European investable universe, an American one; plus, to benefit at the most from diversification a Japanese Portfolio is under construction. From the very beginning, the firm’s approach has been purely non-discretionary and full systematic.
indices and are in the process to add the 120 Largest Cap traded on the Nikkei 225. The strategy, along with being zero correlated is characterized by low volatility and limited downside as a direct consequence of the structure of any spread, where the same amount is invested on the long and on the short, with all the spreads equally weighted in the portfolio. So, the exposure in general and in any sector will always be zero.”
All mathematical models underpinning the trading strategies have been developed internally at 100%.
“You have limited volatility because whatever happened to the market you are always market and sector neutral”. We ended up having a low risk strategy that benefits when there is a lot of trading activity especially where the market is under stress” he continues.
QW Capital always trades in pairs of stocks belonging to the same economic sector, so that the downside is really limited and the time horizon of the trade is short (i.e. a few days); the investable universe, made out of ca. 10,000 pairs, is re-assessed on a daily basis: In that timeframe it is assumed that two stocks in the same sector will revert to a longer term mean under certain conditions. The models are designed in order to detect whether and when these conditions are met and to gauge the mean-reversion chance, providing the portfolio manager profitable signals to trade;
Gianluca Lobefalo cut his teeth in the industry when he worked at JP Morgan in 1997, in foreign exchange research for a couple of years before moving into the buy side at Schroders Investment management still in London for another couple of years. He then moved on to Morgan Stanley where he worked in fixed income for eight years until he had the experience and motivation necessary to start his own firm. But how did he achieve this? “The idea for the firm came to me whilst at Imperial College where I enrolled in PhD program in applied mathematics, during my eight years at Morgan Stanley.
The company believes that their own models are on average more efficient than their main competitors’ ones because they manage to get rid of more inaccurate, so called “false” signals. A convincing proof of this is their high hit ratio (i.e. the percentage of profitable outcomes on the total of the trades): hit ratio is 63%, rarely heard about in the industry.
Investment management The portfolios, Europe, US (and soon Japan) are run independently. Lobefalo is of the opinion that 2015 started off very well, due to the lessening of interventions by the American Central Bank which enabled the market to be freer, despite some intervention in Europe, Japan and China. However, as stress created by the economic crisis in Greece spilled over into the market, “the market became more unpredictable and under stress”. Our models allow us to see “order and investment opportunities” where most investors just see “Chaos”.
The strategy is by construction Zero Beta and Pure Alpha, totally uncorrelated to the market: the source of Alpha is given by the dispersion of the different stocks in the market that QW Capital calls Market Vitality; Looking for market dispersion and benefiting out of it implies that this strategy performs particularly well when market are volatile or in presence of market stress or turbulences: it represents a very good “Tail-risk hedge”, so performing particularly well under market stress conditions as proven by QW Capital track record. At the same time it manages to offer a positive absolute performance: indeed, the performance in 2015 was +7% and it is in excess of 3% for 2016 (as per the 17th of February).
The performance for 2015 was of 7% of “pure Alpha” with zero correlation to the market and low volatility. As expected, our strategy performed particularly well during the most stressed periods of 2015, such as August and December, confirming our effectiveness as a “Tail Risk Hedge”. All in all, 2015 was the year where we managed to over perform our direct competitors in the equity market neutral space, the hedge fund community in general and most, if not all, major equity indices, Lobefalo adds. The final word of Lobefalo who comments that, “If the market continues the way it currently exists, then the future holds many challenges to the fund industry as currently making money is not an easy goal to accomplish; at the same time we expect it to be a friendly scenario for QW Capital strategy
“We decided to start with an Equity market and Sector Neutral fund because we wanted to build a strategy that provided “pure Alpha” performance being “strictly sector and market neutral” at any point in time, explains the firm’s CEO and Managing Partner Gianluca Lobefalo in an exclusive interview.
Company: QW Capital Name: Gianluca Lobefalo Email: GLobefalo@qwcapital.com Address: 26 Cadogan Square, London SW1X 0JP Telephone: 0207 581 3505
He goes on to expand this point by saying this is pure alpha by definition “because all our position are made of spreads of large cap stocks belonging to the same sector (long and short), and with the same size. The investable universe comprises the 270 largest stocks in Europe excluding Ireland and Greece and the 660 Largest Cap traded in the US
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Lebanon:
An Economy of Resilience
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Jammal Trust Bank SAL (JTB) is a rapidly growing medium sized retail Bank in Lebanon that has been serving the local market and a niche market in Western Africa for over five decades.
Jammal Trust Bank SAL draws its financial strength from conservative asset and liability management policies, as well as a high-quality asset profile and deposit base. With a proven track record spanning almost 50 years, JTB provides tailor-made, innovative financial products and services.
ment. In addition, the demand for overall banking services is expected to increase as important structural reforms in the country’s financial infrastructure gather pace. A major thrust on retail banking activities improved the sector’s contribution to the overall income of the Bank in the last three years through the implementation of a carefully formulated business development strategy that focuses on increased market penetration and product diversification. The Bank also expanded its capabilities in the provision of specialized lending to Small & Medium Enterprises (SMEs). The Bank maintained its active role in providing financing for the corporate sector as well
We have a large network of branches throughout Lebanon, primarily in para-urban areas, where JTB prides itself for being one of the few banks to support and serve Lebanon’s SME market through commercial lending thus contributing to economic growth and development rather than less productive financial instruments and government securities. The other important characteristic distinguishing JTB is the fact that JTB’s client base includes major private sector corporations, financial institutions, multinational companies all active in the region and west African states which provides the Bank with protection from risk related exposure to single market. JTB has gained experience for project and trade finance and as a major player in the local syndicated loan market.
JTB believes that there is ample room to further leverage the distinctive advantage it has, by enjoying a privileged access to niche markets both on-shore and off-shore. Such efforts will rest, as defined in the detailed Strategy and Business Plan, on adopting an all-inclusive approach to service large clients and to attract prospects.
JTB enjoys a reputation among its versatile customer base and the market at large for delivering and ever improving a highly personal service and very quick responsiveness to our client’s needs. This reputation is merely a reflection of JTB’s core values and deep rooted philosophy articulated in its logo and motto, “We Speak Your Language”.
In summary, client relationships will be viewed as a whole, with possibly an introduction to doing business with the Bank via documentary credit or other commercial banking facilities and graduating to a web of more complex intertwined services quickly rendering JTB an indispensable business and financial partner for the client and creating efficient and soft barriers to exit.
With significant improvements continuing across all major business activities, the Bank set in 2009 on a growth path which continues to fuel restructuring and expansion strategies. This exceptionally strong year-on-year advance reflects increases in both interest and non-interest earnings and a reduction in provisions for credit losses, demonstrating the success of JTB’s ongoing strategic initiatives, coupled with an effective and proactive management of risk. The results clearly depict the soundness of the Bank’s new retail banking strategy introduced a few years ago, focusing primarily on Lebanon and the Western African States, which has increasingly contributed to a diversification of a steadily growing flow of recurrent earnings. JTB continued to provide shareholders with enhanced returns, while maintaining favorable recognition from clients, counterparties, regulatory authorities, and market observers.
Service quality is the key element for the success of this approach and the Bank has developed a fully integrated system and processes for the purpose of delivering an ever improving relation based on purposeful contact, dynamic client profiling, focused determination on client needs, long-term inter-generational planning and total availability of the relationship manager of the Bank. Amidst the economic regional conflicts, the Lebanese financial sector shows great resilience and has high hopes in a prompt economic recovery. Our faith in Lebanon, our sturdy abilities and our strong belief in the Central Bank astuteness boost our determination to keep developing all existing business lines, to expand our branches’ network and reinforce off-shore activities. Last but not least, continue to provide our stakeholders with enhanced returns while maintaining favorable recognition from counterparties, regulatory authorities and market observers.
Despite the turmoil in the region, signs of economic improvement remains acceptable; coupled with a stable domestic performance has stimulated substantial vigor in JTB’s business since the introduction of its new retail strategy a few years back. As a result, there have been strong contributions across all major operating activities, enabling the Bank to achieve record levels in financial performance.
Company: Jammal Trust Bank SAL Name : JTB SAL Email: info@jtbbank.com Web Address: www.jtbbank.com Address: Verdun Street, Beirut, Lebanon, P.O.Box 11-5640 Telephone: 00961 (1) 781999
JTB’s prospects for the years ahead continue to look encouraging. This is supported not only by the promising economic and business environment, but also by JTB’s more balanced earnings profile, and an increased focus on marketing and new products and services’ develop-
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Infrastructure Fund Manager of the Year 2015 – Germany Founded in 2005, Deutsche Finance Group is based in Munich with offices in Zurich and Paris. We spoke to Symon Hardy Godl, Manging Director of the firm, to find out more about their practice and how their fund of funds consistently achieves results.
Perhaps the most distinguishable characteristic of our firm is that it is 100% management owned, which allows us to make quick decisions, be highly communicative and, as a result, achieve the best results for our clients. Deutsche Finance’s fund of funds offer investors diversified access to institutional private equity real estate and infrastructure strategies which deliver long time superior investment performance, broad diversification, excellent manager allocation and ongoing risk management capabilities.
you get no turnover of a windfarm. For this reason, we provide diversified infrastructure investments the same way as real estate. A focus on more rental based infrastructure investments can also make sense like having a parking lot, schools, hospitals etc. In my opinion, big scale infrastructure projects are overpriced right now, especially in mature markets. From our experience, risk is not always priced right, and a broader mix of investment opportunities can help to manage these risks and to invest big amounts too. Managing risk is sometimes not counted and most investors only focus on a stable cash flow. A fund of funds can deliver really stable cash flow from more than one source and optimise the risk by diversifying on several types of infrastructure assets. This makes even more sense when an institutional investor is not able by size to execute his own diversification.
Furthermore, every target investment of ours is handpicked, with a thorough due diligence process and serious negotiations that are fully aligned with the investment manager. We have access to the bestin-class managers in the private equity real estate and infrastructure business, and they all are the best positioned, well focused specialists for certain markets and sectors. Over the years, they have maintained a consistent track record of success for a long term. As a result, they all help us to capitalise on the extraordinary opportunities in the global private equity real estate and infrastructure landscape. Additionally, we are the only fund of funds which constantly produces new fund of funds products for private individuals and institutional clients for a decade now.
With our strategy, we can choose the type of investments every day, and we are highly independent of market moves. Moreover, we do not have to have highly focussed personnel which only cover one type of infrastructure, and instead we can really move quickly to new opportunities in the market.
As for my expertise, like many of my colleagues I gained a lot of experience working for institutional investors before joining Deutsche Finance Group. For E.ON, the power utility group, I built up a large alternative private markets portfolio for their pension liabilities. This portfolio, with assets of 2,5 bln. EUR and more than 50 private equity real estate and infrastructure strategies, provided the blueprint of the strategies we execute today. From 2008 to 2009, I advised Deutsche Finance with my Partner Sven Neubauer when working for Valartis, a Swiss Asset Management Boutique. Subsequently, we became Partners of Deutsche Finance in 2009. Today we have a personal track record of more than 4 bln. USD in more than 200 individual real asset strategies worldwide, including infrastructure and more than 50 people are working for the success of Deutsche Finance real estate and infrastructure fund of funds.
What really benefits our clients is that any of them can individually define the type and amount of risk it want to carry. As all of our products are fund of funds portfolios of institutional strategies, we can combine target investments as agreed. The type of infrastructure, the regions and currencies, the number of investments are all part of the combined risk in the portfolio and as a result is probably much less than in any other infrastructure investment.
In our industry, most investors think that infrastructure investments are safe and have a regular cash flow component. This is not necessarily true. In actual fact, infrastructure investments are typically highly dependent on factors such as political issues, subsidies and even weather conditions. As real estate investments, the cash flow is only safe when stabilised, and we think of it in the same vein as when there is no wind
Company: Deutsche Finance Group Name: Symon Hardy GODL Email: s.godl@deutsche-finance.de Web Address: www.deutsche-finance.de Address: Ridlerstrasse 33, 80339 München, Germany Telephone: +49891707880112
Looking towards the future, we are very confident that our firm will continue to grow in 2016 and beyond. This year, we will establish at least three new funds and hope to convince new institutions of our diversified investment strategy.
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Intellectual Property – what’s your focus?
Intellectual property law is a vital tool in the creation and protection of dynamic business assets and Edwin Coe’s Intellectual Property team combines dedicated IP specialists and heavyweight litigators. We provide a full service from the acquisition, exploitation and protection of intellectual property, through to its commercial use and the handling of infringement and other contentious issues. Edwin Coe LLP | 2 Stone Buildings | Lincoln’s Inn | London | WC2A 3TH t: +44 (0)20 7691 4000 | e: info@edwincoe.com | edwincoe.com
Contact: Simon Miles Head of Intellectual Property e: simon.miles@edwincoe.com Nick Phillips Partner e: nick.phillips@edwincoe.com
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