1 / 17

Strategic Risk Management

NOT AN OFFICIAL UNCTAD RECORD. Strategic Risk Management. An alternative view for investing huge revenue windfall. African Oil Conference - Algiers, April 4th, 2006. Drawings: The Economist. Bests Asset Managers are different!. Yale endowment: an alternative view for investing reserves.

loc
Télécharger la présentation

Strategic Risk Management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. NOT AN OFFICIAL UNCTAD RECORD Strategic Risk Management An alternative view for investing huge revenue windfall African Oil Conference - Algiers, April 4th, 2006 Drawings: The Economist

  2. Bests Asset Managers are different! Yale endowment: an alternative view for investing reserves % Allocation de capitaux % Capital Allowance Annualized Yield (2) (10years-return from 06/2005) Present 2005 To Institutional Expected Risk 2003 1999 Stand 30/06/05 Average (2) Real return Domestic Equity 14,0% 14,1% 14,9% 15,1% 32,0% 6,0% 20,0% 15,7% (1) Absolute Return (1) 25,0% 25,7% 25,1% 21,8% 17,6% 6,0% 10,0% 13,1% Foreign Equity 14,0% 13,7% 14,6% 11,1% 17,4% 6,0% 20,0% 12,7% 17,0% 14,8% 39,5% Private Equity 14,9% 23,0% 6,1% 11,4% 29,0% Real Assets (3) 25,0% 25,0% 20,9% 17,9% 7,5% 6,0% 15,0% 17,7% Fixed Income 5,0% 4,9% 7,4% 9,6% 19,5% 2,0% 10,0% 7,4% Cash 0,0% 1,9% 2,1% 1,5% 3,5% Total 100% 100% 100% 100% 100,0% 6,0% 11,1% 17,4% Sources: Data consolidated from ”The Yale Endowment 2005 Report” 1) Alternative Asset Management 2) Average Value of University American Funds (06/30/2005). Past Yields do not herald future results 3) Include Real Estate/Oil & gas/Timberland

  3. Bests Asset Managers use active management Yale Diversifies Policy Asset Allocation : Target 1985 - 2005 Sources: Data consolidated from ”The Yale Endowment 2005 Report”

  4. African Oil Companies have a social responsibility • In real term, 2005 extra revenue nearly doubles 1974 and 1980 dollar surpluses • To face, oil price volatility and declining reserves, windfalls have to be invested in: • oil production and refining capacity, • the world's biggest companies, • private equity deals at home and abroad

  5. Nanjing Auto/Rover Automobile Hyop/Unicredito Banking TMNF/Real Seguros Assurances Oracle/I-Flex Software Telefonica/O2 Telecoms Mittal/Krivorijstal Acier Casino/CBD Distribution CVRD/Canico Mines Tata/Millenium Steel Acier Mittal Steel/Arcelor Acier South/ North CNPC/EnCana (Pétrole) South/ South North/ South North/ North Source: Thomson Financial-L’Expansion Capital flows are flooding, but Africa is missing

  6. Africa does not appear as well in the information loop Internet World Map Source: MichelCartier.com La carte internet du monde

  7. What miss African Oil Companies to be part of the game? • Safe and hospitable investment environment where profitable opportunities exist • Local financial market • Domestic Corporate finance and Fund management capability • Technology transfer via financial investments • Professional platform for M&A.

  8. How to achieve it? • Mix increase Oil production capacity with traditional financial investment, private equity at home and abroad • Take a long term view for managing revenues, • Enable the development of competencies poles in Energy, Telecoms, Software, Health care, Finance, Tourism, etc... • Be inspired by Kuwait and South Korea experiences in investing in less cyclical asset in complement to oil investments, • Create Partnerships controlled by Oil companies with independent financial professionals.

  9. Present and alternative Oil Company 1.Direct co-investments and partnership in Oil project and companies Direct investment 2. Investment via several investment funds Fund 1 Oil Company Fund 2 Financial Advisor ... Fund 10 3. Mix investment via Partnerships controlled by oil companies Companies 1, 2,…10 Oil Company Alternative funds Controlled Partnerships Real estate

  10. Kuwaiti & Korean Experiences Korea, an industrial approach Kuwait, a financial approach • Kuwait Investment Office (KIO) manage reserves for future generations. • 10% of oil revenues, • Mix portfolio invested in all type of asset classes and geographical zones, • Long term horizon and own financial teams, • 100 people Kuwaiti and non Kuwaiti • ETRI (Electronics and Telecommunications Research Institute), create the conditions of a long term value creation for future generations • ETRI focus on Industrial Property on four axes : • Technology Transfer, • Patents, • Start up creation, • Consulting and infrastructure for business development. • Emergence of world leaders

  11. KUWAIT, a financial approach • KIO wants to be a first class asset management company with a complementary mission for developing excellence in the Kuwaiti private sector : • Contribution to Kuwaiti human capital education and training • Active participation to investment growth in Kuwait • Transparency in operations and application strong governance • Development of a dynamic and motivated enterprise environment • Constant research of improvement in its investments process. • Controlled by the Board of the Kuwait Investment Authority, mother company, chaired by Minister of Finances, with as members : • Oil Minister • Central Bank Governor • Finance Secretary • Five other Kuwaiti experts on investments and finances of whom three are totally dedicated to this task

  12. Korea, an industrial approach • Electronics and Telecommunications Research Institute (ETRI) has been involved in more than 2.700 enterprise projects and more than 1.400 Technology transfers • ETRI spread over 264 companies mainly in Korea and abroad(Singapore …) • Today these companies represent more than 4.000 stable employees and annual revenues of WON 700 bln. • Some of these Companies are Worldleaders in domains like mobile phone, flat screens, or computers components. • With more than 3.500 international patents, ETRI is just behind American AT&T et IBM.

  13. How to implement it? • Build an investment platform with a 5 to 8 years time horizon, • Hire an experienced professional team dedicated to complement actual investment with additional asset classes such as Private Equity, Alternative investment and Real estate, at home and abroad, • Immerge in-house talents to be part of the team with purpose to train them to the best practice of Corporate finance & Asset management, • Align the interest of team members with those of the structure to be sure to keep the bests, • Transfer technologies from investment abroad to local market, • Use the expertise of your platform team for your own M&A operations.

  14. How it could be structured? Oil Company Oil Co partnership Investment Committee Operational Partner DO1 DO2 DO3 DO4 B/O* M/O* IT* F/O* CD1 CD1 CD2 J2 CD1 CD2 J1 Sec 1 A1 A1 Compt. A2 A2 A3 A4 *F/O Market Operations; M/O Post Market Operations; B/O Operations Management; IT Information Technologies; CD Department Managers; J Lawyer; A Deputy Manager; Sec Assistant; Compt Accountant Oil co personal

  15. Where is the Value? General Partner acquires companies and alternative assets or real estate Oil Company Limited Partner General Partner 99% Capital Profit & return Of capital Carried interest1 • General Partner • Sold-out Investments Portfolio: • IPO, • M&A • Recapitalizations • Transfers & Arbitrations for Alternative Assets and Real Estates • General Partner • adds value to investments through • Operational Experience, • Capital Markets experience, • Structuration Experience, • Board Involvement. Cash and/or stocks

  16. Expected benefits from this type of structure Professional Team & Regulatory Environment Technology Transfers and Education • Access to a large pool of professional resources • Adapted Regulatory Environment • Portfolio Management Methods • Techniques of M&A, LBO, Structured Finance, Alternative Assets Management • Strategic Risk Management & Coverage • Governance Regulations imposed by Venture Capitalists (Rigor & Transparency) • Industrial Technologies from acquired companies Financial Performance • Financial Output over 10% • High & Effective degree of influence & control over Investments • Legitimate access to non-public information before investment-decision • Strong alignment of Interests between Investors & Management Long Term Value Creation Diversification and Risks reduction • Access to unique opportunities in a vast & growing marketplace of privately held companies • Low correlation with other Asset classes • Private Equity and Alternative Assets Management as Risks mitigators

  17. Strategic Risk Management For any Question : Jean-François Casanova 52, rue de Ponthieu 75008 Paris Tel :      +33 (0)1 45.62.16.64 Mobile:   +33 (0)6 15 38 64 08 E-mail : jcasanova@riskvalue.com

More Related