ExampleS of mandates
Listed company managing real estate
needs to be protected against interest rates and inflation increase
Turnover: €4b
Debt: €5b
Business need: Protecting the company against interest rates appreciation and financial expense increase as to sustain its long term growth.
Services provided: Daily market monitoring. Regular proposals of hedge inception or optimization. Support in hedge analysis, negotiation, implementation and optimization based on market opportunities. Hedge portfolio valuation, performance and IFRS reports production.
Results: Improved hedge reactivity. Market opportunities better captured. Hedging and financial costs reduced. Customized dashboard always adapted to new the business needs. Financial expenses better controlled. IFRS reporting pack adapted to auditors’ needs (for hedge accounting purpose).
Industrial LBO, export
needs to be protected against currency depreciations and interest rates increases
Turnover: €200M
Debt: €50M
Excess cash
Business need: Protecting the company against currency depreciations and interest rates increases as to secure its EBITDA and debt reimbursement.
Services provided: Formalization and implementation of a currency and interest rates hedging policy. Support in negotiation, inception, follow up and optimization of hedging. Market monitoring. Customized dashboards and reporting pack.
Results: Risks monitored and measured systematically. Foreign exchange and interest rates hedging implemented in a systematic manner, at controlled price. Investments evaluated based on quantitative and objective criteria. Cash flows, operational and financial result, as well as financial covenants protected against financial markets fluctuations.
Industrial small size company, commodity importer
wishes to get protected against an increase in commodity prices.
€10M turnover
Business need: Protecting the company’s EBITDA against commodity cost appreciation.
Services provided: Identification and quantification of operational commodity risks as well as induced currency risks. Implementation of a commodity and currency hedging policy. Assistance in negotiation as well as management of hedging and business flows. Market surveillance. Portfolio monitoring, optimization and valuation. Periodical production of complete reporting pack: accounting, back and middle-office, regulatory (hedge accounting)
Results: Commodity and foreign exchange hedging systematized, by project, at controlled cost. Cash flows and operational margin protected against financial markets fluctuations.
Multi family-office
wishes to protect their clients against the currency and interest rates risks induced by their asset / liability structure, and to optimize the cash investments returns
Business need: Assisting the FO in the management of the interest rates and currency risks induced by his clients’ funding and investments. Helping the FO negotiating derivative products pricing independently (hedging, certificates, autocalls, etc.) with banks and brokers.
Services provided: Asset-liability analysis, risks simulations, quotations and proposals of bespoke hedging strategies. Term Sheets formalization. Dealing room assistance during negotiations and transactions. Follow-up and optimization of the portfolios. Market surveillance. Valuation and performance reporting.
Results: Financial expenses and investment returns optimized. Strategies customized. Performance reports improved (back and middle-office)
Investment fund
wants to quantify the risks related to currencies, interest rates and commodities before acquiring a company
Business need: Identifying and measuring the market risks (currencies, interest rates, commodities) of a targeted company before its acquisition.
Services provided: In parallel to the financial due diligence, audit to measure the business risks (operating and financial flows, intercompany or external), the competencies of the finance team in terms of hedging, the effectiveness and safety of the existing hedging, the adequacy of the hedging practice vs the investor’s objectives, the respect of accounting rules related to derivative products.
Results: Risks quantified. Advantages / disadvantages / costs of the existing hedging policy highlighted. Structural or short-term impacts on the P&L isolated. EBITDA retreated. Proposals to correct or realign the hedging strategy with the fund's objectives after the acquisition.
Small size company, secondary LBO
has to protect its financial expenses against interest rates rise after its bank debt renegotiation
Turnover: €100M
Senior debt: €50M
Business need: Putting in place a hedging strategy that shall respect the hedging obligation on the short term and the managers' objectives on the long term.
Services provided: Analysis of the hedging obligations and objectives, presentation of the advantages / disadvantages / costs of various hedging strategies (including existing hedges “recycling” and impact of negative rates combined to the floor on the Euribor that makes some strategies ineffective or toxic), financial expenses simulations for various scenarios of evolution of the Euribor and debt, recommendations, bank consultation and price negotiation, review of the contractual documentation, market follow up, accounting and back-office reporting production following inception of hedges.
Results: Optimized hedging strategy and pricing taking into account the medium term managers’ and shareholders’ objectives and the negative rates context. Market follow up, hedging valuation and back-office assistance after hedge inception.