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NEWSLETTER of June 7, 2019

 

The following content has been added at finexpert:


Studies > Performance

Oliver Wyman

COMMODITY TRADING GOES BACK TO THE FUTURE

The combination of unprecedented political uncertainty, trade wars, and rapidly evolving technologies is making commodity markets almost as unpredictable as they were during the financial crisis. But the chances of repeating the industry’s most profitable year to date are remote. Black and grey swan events will continue to result in intermittent spikes in volatility. But these will only provide temporary relief from the relentless erosion in trading margins that started in 2014. In fact, we estimate margins could likely decline by at least another 15 percent over the next five years as commodity markets become more stable and more transparent and competition becomes more intense. >more

Studies > Performance

White & Case

RISE OF DIGITAL FINANCE: TOKENISING MINING & METALS ASSETS

Rapid advances in blockchain technology are reinventing the way companies operate and deliver products and services to their clients. These changes are particularly visible in the mining & metals industry, a sector that has been traditionally slow in adopting technological innovations. Yet blockchains and smart contracts, which to this point the sector has focused on as a source of productivity and transparency gains for the mining & metals global supply chain, could herald new sources of finance too. Miners face a persistently challenging environment to raise equity and equity-like capital to fund ventures. >more

Studies > M & A

The Boston Consulting Group

WHY SOFTWARE PMIS NEED TO GET AGILE

In the busy realm of software M&A, perception isn’t always reality. For industry players, deals can be a crucial way to boost innovation, the talent pool, and growth. Yet while participants may consider their integration a success, a closer look often reveals a more complicated — and less triumphant — story. Post-merger revenue and value creation don’t always rise to expected levels. Key opportunities and synergies are often slow to develop. Indeed, companies are sometimes unsure if the opportunities they planned to pursue even materialized. >more

Studies > Alternative Investments

Coller Capital

GLOBAL PRIVATE EQUITY BAROMETER: SUMMER 2019

Two thirds of investors will support a GP decision to sell a stake in its management company if it is to facilitate generational change at the business or to strengthen the resources the manager focuses on its market, according to the 30th edition of Coller Capital’s Global Private Equity Barometer. By contrast, only a third of LPs think it appropriate for a manager to sell interests in its management company in order to fund GP commitments or launch new products. >more

Studies > Macro

Ernst & Young

STANDORT DEUTSCHLAND 2019: NEUER SCHWUNG?

Despite the imminent Brexit, foreign companies continue to focus on the UK as a location: With a total of 1,054 investment projects by foreign companies, the UK once again took first place in the European comparison of locations in 2018; compared with the previous year, however, the number of investments fell by 13 percent. Germany as an investment location also recorded a decline of 13 percent: after 1,124 projects in the previous year, only 973 investment projects were counted in Germany in 2018 - the first decline since the survey began in 2005. In the European investment ranking, Germany fell from second to third place behind France, which recorded an increase in investments of 1 percent to 1,027. >more


Research Papers > Corporate Finance

RATINGS QUALITY AND BORROWING CHOICE

Dominique C. Badoer, Cem Demiroglu, and Christopher M. James
2018
Past studies document that incentive conflicts may lead issuer-paid credit rating agencies to provide optimistically-biased ratings. In this paper, we present evidence that investors question the quality of issuer-paid ratings and raise corporate bond yields where the issuer-paid rating is more positive than benchmark investor-paid ratings. We also find that some firms with favorable issuer-paid ratings substitute public bonds with borrowings from informed intermediaries to mitigate the “lemons discount” associated with poor quality ratings. Overall, our results suggest that the quality of issuer-paid ratings has significant effects on borrowing costs and choice of debt. >more

Research Papers  > Alternative Investments

INTERMEDIATION IN PRIVATE EQUITY: THE ROLE OF PLACEMENT AGENTS

Matthew D. Cain, Stephen B. McKeon, and Steven Davidoff Solomon
2017
Intermediation in private equity involves illiquid investments, professional investors, and high information asymmetry. We use this unique setting to empirically evaluate theoretical predictions regarding intermediation. Placement agent usage has become nearly ubiquitous, but agents are associated with significantly lower abnormal returns in the cross-section. However, returns are higher for funds employing a top-tier agent, and for first-time funds employing an agent. We also find evidence that agents may mitigate investment risk. Our results provide support for both the certification and influence peddling roles of intermediaries discussed in theoretical literature, suggesting heterogeneous motives for intermediation in the private equity industry. >more