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Chapter 11 Closing Case – Emerging Markets: The Private Equity Challenge
1
Chapter 11 Closing Case – Emerging Markets: The Private Equity Challenge University of the Incarnate Word
PMBA 6317 – Global Strategies/Policy/Regulation
Dr. Murat Tash
Melody Colunga
April 09, 2024
Chapter 11 Closing Case – Emerging Markets: The Private Equity Challenge
2
1.
If you were a private equity specialist, what kind of target firms would you look for?
As a private equity specialist, I would look for target firms that have the potential to generate significant returns for investors. This would include firms that have strong growth prospects, a solid financial position, and a competitive advantage in their respective markets. Some specific sectors or industries that could be attractive for private equity investments include technology, healthcare, consumer goods, and financial services. Additionally, I would look for firms that have a track record of successful operations and an experienced management team. Overall, I would look for companies that have strong fundamentals, growth potential, and the potential to generate returns for investors. As a private equity specialist, I would look to invest in profitable, growing companies with strategic investment potential, turnaround opportunities, and a diversified portfolio to reduce risk.
2.
If you were CEO of a publicly traded firm and were approached by a private equity firm, how would you proceed?
As the CEO of a publicly traded firm and approached by a private equity firm, I would
proceed by carefully evaluating the proposal and considering the potential benefits and risks
involved. It is important to understand the terms of the offer, including the valuation of the
company, the amount of equity to be acquired, and the timing of the transaction. Additionally, I
would seek advice from trusted advisors, such as investment bankers or legal counsel, to ensure
that I am making an informed decision. It is also important to consider how the transaction
would impact on the company's existing shareholders and employees, as well as its prospects.
You need to understand what they are suggesting by looking at the offer price and deal terms.
Check if it fits well with the company's long-term plan. Look over the investors by ensuring their
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Related Questions
Chapter 12
Exercise/Problem 10 - Professional Venture Capital
Locate a venture capital-backed firm that recently completed and initial public offering (IPO). Provide a brief summary of the venture's history and success through the IPO and to date.
arrow_forward
10ON COLLIEGE
learning
Commercial companies with non-Omani partners, whether such
partners are natural or juristic person shall comply with the
Select one:
a. Foreign Capital investment Law
O b. Foreign Direct Investment Law
c. Commercial Register Law
19
O d. Public Finance Control Law
Fini
Time
PREVIOUS PAGE
NEXT PAGE
CONTA
INFO
GE
Hor
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Question 11
11) The general rule of thumb when considering financing is to
O work more on raising funds than business operations.
O start raising funds immediately.
bring in angel investors at the last minute.
O wait as long as possible before seeking investors.
Question 12
12)
involves the sale of shares of stock in exchange for cash.
Seed-Stage Financing
O Early-Stage Financing
O Startup Financing
O Equity Financing
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Topic: Exploring the Growing Popularity of Mutual Funds in US Capital Markets
Explain why this topic is interesting in the field of business.
What is the brief history of the problem? This consists of a summary and results of prior research articles
Finally, the learner needs to demonstrate why this proposed study is needed for academic research. Explain why it will expand academic literature, contribute to society, or the professional environment. Who is the intended audience for this research? Dear Expect please note the topic highlighted above as a guideline for answering the questions that follow. This is a dissertation.Thank you.
arrow_forward
Question 3
You just graduated with MBA in Accounting and Finance from the University of Professional Studies and are
employed by JEK Investments Ltd, a brokerage firm in Ghana. Kweku The Don, an illiterate businessman, visited
your firm for a piece of investment advice and possibly make some investments. Although an accomplished
businessman, he was advised by his son to buy some shares on the Ghana Stock Exchange in other to diversify
his portfolio. Your boss has asked you to consider either Cronox Industries or Zealous Incorporated The share
prices and dividends for the two companies and the returns on the Ghana Stock Exchange are shown below for
the period 2016 - 2021.
Zealous Incorporated
Stock price Dividend Stock price Dividend
(GHe)
Cronox Industries
Year
GSE Returns
(GHe)
Market
Returns )
2016
7.62
55.75
2017
2018
2019
12
0.90
60.00
2.25
0.07
10.75
17
0.95
57.25
48.75
2.50
0.12
1.00
2.75
0.08
2020
15.75
1.06
52.30
2.90
0.23
2021
17.25
1.15
48.75
3.00
0.18
a. Compare the two…
arrow_forward
EXERCISE 6: SOURCES OF EQUITY FINANCING
Match the following with the following equity investors: shareholders, risk capital
investors, and government institutions.
• Venture capitalist
Common shareholders
Export Development Canada
• Angel investors
• Preferred shareholders
• Business Development Bank of Canada
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Seed Stage
Early Stage
No Answers Chosen
No Answers Chosen
Mature Stage
No Answers Chosen
Possible answers
Initial public offering (IPO)
Personal savings
Self-sustaining
⠀⠀Private equity sale
⠀⠀Venture capitalists or private equity
Angel investors
Small investments from family and friends (F&F)
Angel investors or funds
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b) Reuel Capital case study
Joseph Mhofu is a fixed income portfolio manager for Reuel Capital. Mhofu is reviewing the
portfolios of several pension clients that have been assigned to him to manage. Two of these
portfolios are Woodlands Groove and LETS pension plan has the following characteristics:
Sector
Singapore treasury
Singapore agencies
Singapore Corporates
Singapore mortgages
Singapore ABS
Woodlands
Groove
Allocation
(ii)
LETS
Allocation
10.1%
14.5%
20.9%
33.7%
8.20%
12.6%
LETS
Duration
7.54
9.02
4.52
1.33
14.6%
23.7%
13.8%
11.4%
18.0%
Non-Singapore governments 18.5%
Bond index benchmark for Woodlands Groove bond portfolio has an effective duration of 4.16.
(1) Calculate the duration of Woodlands Groove bond portfolio and asses the interest rate risk
of the portfolio versus the benchmark.
Woodlands
Groove Spread
Duration
2.00
3.22
0.00
7.20
5.80
4.65
3.67
2.50
Calculate the spread duration of LETS pension plan portfolio and evaluate the credit risk of
the portfolio versus the…
arrow_forward
Question #1 – What is the ‘expectations gap’? Is there even anything the accounting profession can do to close this ‘Expectations Gap’?
Question #2 – To converge or not to converge, that is the question. The adoption of IFRS by U.S. companies would it easier to compare U.S. and foreign companies, as well as for U.S. companies to raise capital in foreign markets.
arrow_forward
Hi there can you please assist on the following question below
You are the financilal manager of competitive investment company in south africa. you have been presented with two possible investments: Pink limited and purple limited as shown below. you have been supplied with the following information regarding the two companies
Pink Limited
Purple Limited
Earnings before interest and tax
R 3 000 000
R 4 000 000
Long term interestbearing debt
R 500 000
R 800 000
Earnings attribute to shareholders
R 2 124 000
R2 822 400
Tax rate
28%
28%
Share capital
R 2 00 000
R 5000 000
Number of ordinary shares issued
200 000
400 000
Number of ordinary shares authorised
1 000 000
500 000
Current market price of the share
R 30
R 20
Dividend per share
R 5
R 3
As a financial manager you are very concerned about the dividend yiled and dividend payout ratioas these will be your indicator of return on your investments
Q.1.1 Calculate the dividend yiled for both companies
Q.1.2.…
arrow_forward
- QUESTION 5
1. Investor A is seeking to invest in commercial real estate (CRE). While Investor A employs talented individuals they
lack the depth necessary to invest directly in the asset class. Investor A has a moderate risk tolerance, and desires
income stability with the opportunity to realize meaningful property appreciation. Which answer choice best
describes the investment quadrant and investment vehicle Investor A would most likely select to invest in CRE?
a. Private Debt, Commingled Funds
b. Public Debt, CMBS
arrow_forward
_________ occurs when an investment bank allocates share from an IPO to corporate executives who may be considering an IPO or other business that will require the help of an investment bank.
Question 23 options:
Flipping
Spinning
Laddering
None of the above
arrow_forward
Advice Mr Liam, an investor about the possible implications for a firm which job is to invest in emerging stock markets.
arrow_forward
Financial Markets and Institutions, 8e (Mishkin) Chapter 2 Overview of the Financial System 2.1 Multiple Choice 1) Every financial market performs the following function: A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. Topic: Chapter 2.1 Function of Financial Markets Question Status: Previous Edition 2) Financial markets have the basic function of A) bringing together people with funds to lend and people who want to borrow funds. B) assuring that the swings in the business cycle are less pronounced. C) assuring that governments need never resort to printing money. D) both A and B of the above. E) both B and C of the above. Answer: A Topic: Chapter 2.1 Function of Financial Markets Question Status: Previous Edition 3) Which of the following can be described as involving direct finance? A) A corporation’s stock is traded in an over-the-counter…
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Question 02
What is equity? How would you determine it? Give proper examples to apply this theory in designing remuneration package for “Admission Officer-Southeast University.”
arrow_forward
How Venture Capitalists Evaluate Potential Investment Opportunities: Case Study Question
1. Did the venture capitalists in the case agree on the most important attributes for an investment decision? If so, what were they?
arrow_forward
Question 12
Which of the following parties would perform an external financial analysis on a firm?
The firm’s compensation committee
A CFO comparing the performance of the firm’s various divisions
A financial analyst forecasting the next period's borrowing needs
The firm’s creditors
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37: What is a venture banking firm?
Which job does it play in corporate development and extension?
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QUESTION 8
4) It is often argued that managers, when asked to maximize stock price, have to choose between being socially responsible and carrying out their fiduciary duty. Do you agree? Can you provide an example where social responsibility and firm value maximization go hand in hand?
arrow_forward
Question 3
What lessons can the fund management industry learn from the Woodford investment scandal?
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Case Study #3: Chapter 6 Business Analysis -
A business can be valued by capitalizing its earnings stream (see example 6.15).
How might you use the same idea to value securities, especially the stock of large publicly held companies?
Is there a way to calculate a value that could be compared to the stock’s market price that would tell an investor whether it’s a good buy? (If the market price is lower than the calculated value, the stock is a bargain.)
What financial figures associated with shares of stock might be used in the calculation. Consider the per share figures and ratios discussed in chapter 3 including EPS, dividends, book value per share, etc.
Does one measure make more sense than the others?
What factors would make a stock worth more or less than your calculated value?
arrow_forward
SEE MORE QUESTIONS
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- Chapter 12 Exercise/Problem 10 - Professional Venture Capital Locate a venture capital-backed firm that recently completed and initial public offering (IPO). Provide a brief summary of the venture's history and success through the IPO and to date.arrow_forward10ON COLLIEGE learning Commercial companies with non-Omani partners, whether such partners are natural or juristic person shall comply with the Select one: a. Foreign Capital investment Law O b. Foreign Direct Investment Law c. Commercial Register Law 19 O d. Public Finance Control Law Fini Time PREVIOUS PAGE NEXT PAGE CONTA INFO GE Horarrow_forwardQuestion 11 11) The general rule of thumb when considering financing is to O work more on raising funds than business operations. O start raising funds immediately. bring in angel investors at the last minute. O wait as long as possible before seeking investors. Question 12 12) involves the sale of shares of stock in exchange for cash. Seed-Stage Financing O Early-Stage Financing O Startup Financing O Equity Financingarrow_forward
- Topic: Exploring the Growing Popularity of Mutual Funds in US Capital Markets Explain why this topic is interesting in the field of business. What is the brief history of the problem? This consists of a summary and results of prior research articles Finally, the learner needs to demonstrate why this proposed study is needed for academic research. Explain why it will expand academic literature, contribute to society, or the professional environment. Who is the intended audience for this research? Dear Expect please note the topic highlighted above as a guideline for answering the questions that follow. This is a dissertation.Thank you.arrow_forwardQuestion 3 You just graduated with MBA in Accounting and Finance from the University of Professional Studies and are employed by JEK Investments Ltd, a brokerage firm in Ghana. Kweku The Don, an illiterate businessman, visited your firm for a piece of investment advice and possibly make some investments. Although an accomplished businessman, he was advised by his son to buy some shares on the Ghana Stock Exchange in other to diversify his portfolio. Your boss has asked you to consider either Cronox Industries or Zealous Incorporated The share prices and dividends for the two companies and the returns on the Ghana Stock Exchange are shown below for the period 2016 - 2021. Zealous Incorporated Stock price Dividend Stock price Dividend (GHe) Cronox Industries Year GSE Returns (GHe) Market Returns ) 2016 7.62 55.75 2017 2018 2019 12 0.90 60.00 2.25 0.07 10.75 17 0.95 57.25 48.75 2.50 0.12 1.00 2.75 0.08 2020 15.75 1.06 52.30 2.90 0.23 2021 17.25 1.15 48.75 3.00 0.18 a. Compare the two…arrow_forwardEXERCISE 6: SOURCES OF EQUITY FINANCING Match the following with the following equity investors: shareholders, risk capital investors, and government institutions. • Venture capitalist Common shareholders Export Development Canada • Angel investors • Preferred shareholders • Business Development Bank of Canadaarrow_forward
- Seed Stage Early Stage No Answers Chosen No Answers Chosen Mature Stage No Answers Chosen Possible answers Initial public offering (IPO) Personal savings Self-sustaining ⠀⠀Private equity sale ⠀⠀Venture capitalists or private equity Angel investors Small investments from family and friends (F&F) Angel investors or fundsarrow_forwardb) Reuel Capital case study Joseph Mhofu is a fixed income portfolio manager for Reuel Capital. Mhofu is reviewing the portfolios of several pension clients that have been assigned to him to manage. Two of these portfolios are Woodlands Groove and LETS pension plan has the following characteristics: Sector Singapore treasury Singapore agencies Singapore Corporates Singapore mortgages Singapore ABS Woodlands Groove Allocation (ii) LETS Allocation 10.1% 14.5% 20.9% 33.7% 8.20% 12.6% LETS Duration 7.54 9.02 4.52 1.33 14.6% 23.7% 13.8% 11.4% 18.0% Non-Singapore governments 18.5% Bond index benchmark for Woodlands Groove bond portfolio has an effective duration of 4.16. (1) Calculate the duration of Woodlands Groove bond portfolio and asses the interest rate risk of the portfolio versus the benchmark. Woodlands Groove Spread Duration 2.00 3.22 0.00 7.20 5.80 4.65 3.67 2.50 Calculate the spread duration of LETS pension plan portfolio and evaluate the credit risk of the portfolio versus the…arrow_forwardQuestion #1 – What is the ‘expectations gap’? Is there even anything the accounting profession can do to close this ‘Expectations Gap’? Question #2 – To converge or not to converge, that is the question. The adoption of IFRS by U.S. companies would it easier to compare U.S. and foreign companies, as well as for U.S. companies to raise capital in foreign markets.arrow_forward
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