Can Investment Banks Really Help Raise Debt?

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Can Investment Banks Really Help Raise Debt?

Most boutique investment banking institutions in Canada have built their names on raising equity through the public markets for companies in the resources sector. In recent years, a few have diversified into technology, in response to the dismal investor demand for these resources takes on. But equity is only one-half of a company’s capital framework; why should it get all of the attention of investment banks?

Debt is more suitable than equity in many circumstances but putting debt in place is perceived by companies as something that is easy to do often. So they shy away from dealing with an investment bank, which would add an unreasonable cost to their debt raise. That explains why so few companies have focused on helping companies raising and structuring non-dilutive capital. This matter of Market Insights talks about the benefits of engaging an investment bank to help raise debt.

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What will an investment bank or investment company do, and just why will it be made by that skillset a good partner to raise personal debt? Successful investment banks, of their focus or specialty regardless, need to master three functions: 1. Be exceptional story-tellers; 2. Nurture a network of active investors/lenders; 3. Have the ability to create an auction-like environment for its deals.

With respect to debt, those investment banking institutions that have made it their area of expertise know to tell a significantly different story to lenders than they might to equity traders: one attempts to protect its downside, the other to maximize its benefit. A network of energetic lenders is of course necessary, and must cover substitute and non-institutional lenders as well as the banking institutions, because most deals aren’t straight-forward. With this offer, FirePower Capital was engaged by an executive at a food equipment distributor, to buy out both shareholders of the business they proved helpful for.

It is a great example of just why an investment bank or investment company can help companies consummate transformative transactions using personal debt and established them up for success. The professional of a food equipment distributor had in effect bought out day-to-day functions from two semi-retired shareholders and was thinking of buying the ongoing company from them, in a friendly deal that had been discussed for a long time. The company have been using the same bank or investment company, one of the “Big 5” Canadian banks since inception over 60 years back.

The executive and the two shareholders approached the bank to finance this buy-out, their request was rejected however. The executive engaged FirePower Capital to place the deal back on track. With a fresh deal package at hand, we reached out to seven Schedule 1 banks, including the company’s incumbent bank, and let them compete. All seven banking institutions put forward proposals, the best and most severe of which are show in the table to the right.

Top Chinese firms such as China LIFE INSURANCE COVERAGE and Ping An Insurance Group collectively hold about 90 percent of the Chinese life insurance coverage market. Tokyo-based Goldman Sachs managing director Teppei Takanabe, who specializes in the financial sector. With a minimal life insurance market penetration of 3 percent of gross home product and an ever-growing middle income, the easing of ownership curbs is set to make China another battleground for insurers seeking growth outside their house marketplaces. Fitch said in a December survey that Japanese insurance providers’ M&A in the older insurance markets of the United States, Britain, and Australia would provide “only moderate growth”, forcing some of them to divest “unneeded” foreign units. For property-and-casualty insurers including Tokio Marine, Sompo, and MS&AD, China’s opening up comes as they themselves are looking to diversify geographically. They are seeking income from new marketplaces that will help offset the impact of enhanced payouts credited to some natural disasters striking Japan.

Based on Fidelity’s research, it appears that most people are optimistic about how much they can withdrawal overly. While most people think higher returns mean your portfolio will last longer Monte Carlo analysis suggests that risk can also hurt the longevity of the portfolio. In essence, the new retiree will continue steadily to live in an environment where they’ll struggle to find a balance between risk and return. On one hand they can’t afford to be too conservative or they have to go on less overall or see their investments deplete too fast. On the other hand, more risk may also hurt the durability of a profile.