Professional experiences

The “Professional experiences” category contains posts about the professional experience of contributors (apprenticeship, internship, consulting mission, first job, etc.).

My experiences as Fixed Income portfolio manager then Asset Liability Manager at Banque de France

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My experiences as Fixed Income portfolio manager then Asset Liability Manager at Banque de France

William ARRATA

In this article, William ARRATA (Lecturer in advanced portfolio management at ESSEC Business School Master in Finance and Master in Management since 2014) shares his professional experience as Fixed Income Portfolio Manager then Asset Liability Manager at Banque de France.

About the company

Founded in 1800 by Napoléon Bonaparte, Banque de France began as a private institution for managing state debts and issuing notes. The first Basic Statutes of the Bank were established in 1808, where the Bank’s notes in French Franc became legal tender. In 1936 the Bank was nationalized. In 1993, a reform granted the Bank independence, in order to ensure price stability, regardless of domestic politics. This reform cleared the path for the European monetary union. In 1998, the Bank became a founding member of the European System of Central Banks which groups together the European Central Bank and the National Central Banks of all countries that have adopted the Euro. On 1st January 1999, France adopted the euro. Nowadays Banque de France’s three main missions, as defined by its statuses, are to drive the French monetary strategy, ensure financial stability and provide services to households, small and medium businesses and the French state. In particular, it manages the accounts and the facilitation of payments for the Treasury and some public companies. The Bank is a sui generis public entity governed by the French Monetary and Financial Code. The conditions whereby it conducts its missions on national territory are set out in its Public Service Contract. François Villeroy de Galhau has served as Governor of the Banque de France since 1 November 2015.

Logo of Banque de France.
Logo of Banque de France
Source: the company.

Since 2019, I work as Asset Liability Manager at the Financial Directorate of the General Secretariat of Banque de France, having previously worked from 2013 to 2019 as Fixed Income portfolio manager in the Markets Directorate of the Directorate General Financial Stability and Operations.

The Markets Directorate of Banque de France encompasses the management of foreign exchange reserves and gold, foreign exchange operations, and the provision of investment services to foreign central banks and international organizations. The Directorate is fully integrated from front office to back office and custody. It is split into five divisions and totals 120 persons, based in Paris, Poitiers, New York and Singapore.

The Financial Directorate of Banque de France encompasses the accounting of Eurosystem monetary policy operations as well as BdF’s investment operations, the costing and budgeting of expenses, management control, Asset Liability Management modeling of the Balance sheet, as well as the investment and management of BdF’s Capital and pension funds, on which the Socially Responsible Investment strategy of BdF is also enforced. It is split into five divisions and totals around 100 persons.

My jobs

From 2013 to 2019, I was Fixed Income Portfolio Manager in the Reserves Management Division of the Markets Directorate, in charge of managing foreign exchange reserves. In essence, the job consists of managing a fixed income portfolio, with the objective of consistently outperforming its benchmark through time.

Since 2019, I am an Asset Liability Manager (modeling mainly) in the Financial Management Division of the Financial Directorate. It consists of balance sheet modeling and projection through time. It is a quantitative position, which requires knowledge in stochastic calculus and programming languages. In addition, it is also a special job in the sense that the central bank balance sheet is unique in its kind such that asset and liability management (ALM) modeling at the central bank also requires understanding monetary policy operations.

My missions

My position as a Fixed Income portfolio manager in the Reserves Management Division of the Markets Directorate started in 2013. Foreign exchange reserves are held in various currencies, and each currency is actively managed against a benchmark into a specific portfolio, which is daily marked-to-market. I have been responsible for the management of one of those portfolios for 6 years. As for all portfolios, it is invested in money market instruments (reverse repos, repos, deposits, fully hedged swaps, STIR futures) on the one hand, and bonds from different types of issuers on the other hand. It also makes use of derivatives such as bond futures, rates futures, and Interest Rate Swaps. Each portfolio is managed in reference to a benchmark, around which risk limits are defined. Those risk limits give leeway to the portfolio manager to do tactical asset allocation, in order to “beat” the benchmark. Tactical allocation can take many forms.

First, the portfolio manager (p.m.) has the possibility do “time the market”, which is named after “duration position” in the Fixed-Income universe. This translates into an increase or a decrease of the differential duration (duration in excess of the benchmark) of his portfolio. A duration position is implemented when expectations from the p.m. on the interest rate path differ from what is priced in the forward curve (i.e. the p.m. expects indeed rates to “reprice” in the future according to his expectations, e.g., to move up or down). To benefit from this expected variation, the p.m. adjusts the differential duration of his portfolio. For instance, he increases the differential duration if he expects rates to go down. Such positions can also be combined. Combining a long duration position with a short duration position on two different segments of the yield curve can be a relevant investment strategy when the p.m. expects the yield curve to steepen or to flatten. This creates a spread position, referred to as “butterfly position”.

Market timing bets can be set using different techniques. This can stem from a regular central bank watching, which allows to understand the central bank “reaction function“ and to take positions in advance of other market participants. It can also be done using quantitative tools such as rates models.

The benchmark can also be beaten using security selection. This consists in substituting a bond whose price is seen as deviating from its fair value with another bond. The p.m. sells the “richer” bond and buys the “cheaper” bond. Such a strategy should not embed a duration mismatch with the benchmark, i.e., the duration of the bond sold (the bond in the benchmark) should equal the one of the bond bought. For instance, the p.m. can choose to sell a bond whose yield is deemed below its estimated fair yield (whose price is too high) and buy a bond whose yield is deemed either fairly priced or above its estimated fair yield, with identical durations for the two bonds. There are many ways to estimate bonds’ fair yield. One can employ a model such as the Nelson Siegel Svensson (NSS) model. This model proposes a parametric form for the zero coupon rate curve of a given issuer. Observed market yields can then be compared to theoretical yields, to identify “cheap” and “rich” bonds.

Such tactical positions can be held over varying horizons, usually not more than 6 months.

The p.m. can also implement some “arbitrage” strategies, for instance on the repo market, by lending “special” securities against least expensive (“General Collateral”) security (see infra). When the risk framework allows it, he can manage the short-term portion of his portfolio by taking advantage of the basis between money market rates between his currency and another currency (“cross currency basis”), when the interest rate parity is not enforced. He can then build a “synthetic” money market position made out in his portfolio’s currency, by using a FX derivative and a foreign currency money market instrument, to benefit from the higher rate of return provided by the synthetic money market rate versus the “natural” one. At last, he can also substitute the purchase of a bond on a given segment by investing in a risk-free instrument and a future on that bond, to take advantage of a deviation in the “cash and carry relationship” (see infra).

My second experience started in 2019 at the Financial Directorate, as an Asset Liability manager in charge of modeling the balance sheet of Banque de France and proposing strategies for the investment portfolios of Banque de France.
The job starts with the modeling of the different assets and liabilities of a central bank balance sheet. The central bank balance sheet is unique and requires an understanding of the dynamics of monetary policy operations, but also on the drivers of banknotes issuances, target 2 positions, accounts of non-banking clients, etc… In an unconventional monetary policy environment such as the one experienced by the Euro System since 2014, the dynamics of the balance sheet have somewhat become more complex. What is crucial in this step is to provide with a joint modeling of all elements concerned as they interact with each other in specific ways.

Another important task lies on the projection of economic and financial market through time. It relies on modeling over a long-term horizon (usually a 10-year horizon) the evolution of the financial and economic variables to which the central bank is exposed. This requires the usage of stochastic calculus and programming skills, as projections models are implemented with programming languages such as R, Python or Matlab. For instance, one can take advantage of the existence of listed options on assets such as Euribor futures, French sovereign bonds futures, fed funds futures or US Treasuries futures. By making some assumptions about the price process of those assets, it is possible to retrieve their implied distributions at given horizons (so called “risk neutral densities”). Those distributions can then be used to build a large number of scenarios (say 1000) which are applied to the modeled balance sheet, to propose a distribution of future revenues through time.

The fact that the BdF belongs to the Euro System also requires understanding the rules for sharing the monetary revenues of the 20 national central banks of the Euro System. Analytical balance sheets have to be modeled, to compute monetary revenues for each national central bank.

At last, this ALM exercise can also serve as the basis for devising optimal investment strategies for investment portfolios of Banque de France non-monetary balance sheet.

Required skills and knowledge

A fixed income portfolio manager should be skilled in money markets, fixed income securities and derivatives, portfolio management (in particular tactical allocation and performance attribution tools) and fully understand the impact of macroeconomics and monetary policy on rates markets.

An Asset Liability Manager should be skilled in fixed income securities, financial accounting, probabilities and statistics, stochastic calculus, rates models and option pricing, programming languages such as R, Python or Matlab, and monetary policy when it comes to modeling the balance sheet of a central bank.

An Asset Liability Management position in an ideal position after a Fixed Income portfolio management position. Having explored the many facets of Fixed Income and monetary policy are indeed very helpful to start an Asset Liability Management position. It is very satisfactory to develop analytical skills on the aggregate balance sheet after having worked on a specific portfolio.

What I learned

I learned a lot in all the fields I mentioned, but in particular about some topics that are not extensively covered in masters in finance’s curricula, such as money markets and monetary policy. I learned a lot about unconventional monetary policy, as it has been enriched from the recent experiences of the Fed, the ECB or the BoE, which we not in textbooks when I graduated 15 years ago. At last, as time went by I gained capacities in programming languages (especially related to quantitative finance), which is a prerequisite for ALM modeling, and a “nice to have” for fixed income portfolio management.

Financial concepts related my internship

I develop below three financial concepts related to my activities: implied repo and basis, par-par asset swap and specialness on the repo market.

Implied repo and basis

The implied repo rate is the rate of return earned by a market participant who sells a bond future contract and buys the Cheapest to Deliver (CtD) bond in the basket of bonds available for delivery at contract maturity. The implied repo rate should be compared to the effective repo rate of the CtD, and the difference between the two is referred to as the “net basis”. An arbitrage profit can be captured by combining a position on the bond future, the CtD and a reverse repo, depending on the sign of the net basis.

Par-par asset swap

It is a position that consists in purchasing a bond and entering into an interest rate swap such that the combined position is a floating rate bond valued at par. Forcing the value of the bundled position to equal par implicitly requires the fixed rate of the swap to equal the bond’s coupon rate, and as a result, the swap’s initial value will differ from zero. As the obtained synthetic floating rate bond is trading at par, its discount rate is a par rate. As such, it is not distorted anymore by the discrepancy between the bond coupon rate and its current market yield (which is at the origin of the discount/premium). Thus it is a pure measure of the ytm of the issuer on the considered maturity.

Specialness on the repo market

A reverse repurchase agreements (“reverse repo”) is a transaction whereby cash is lent on the market against collateral, usually a bond, to mitigate counterparty default risk. Such an operation falls into the many possible money market instruments available to p.m. to earn a return on the short-term portion of their portfolios.

Conversely, a repo transaction implies lending a bond against cash. The counterparty of a repo trader is a reverse repo trader.

When a reverse repo trade is initiated to lend cash, the cash lender will require from his counterparty that the collateral posted fills some characteristics (for instance, Investment Grade sovereign bonds with a residual maturity below 10 years), but he will not require a particular bond. The collateral posted by his counterparty is referred to as “General Collateral” (GC). This is why the rate of return earned on the trade is named after the GC repo rate.

But in some instances, some bonds in the market are particularly looked after (for instance, newly issued bonds in the days surrounding their auction, or the Cheapest-to-Deliver Bond of a future contract). They are usually in high demand when they have been sold short by market makers or primary dealers, and they must borrowed to be delivered to the bond buyers in due time. As those bonds have to be delivered, they cannot be substituted by another bond as would be the case for GC collateral (the repo transaction is said to be “security driven”). Thus the demand from short sellers on those bonds is inelastic to price, and they will be inclined to pay a lower rate than the GC rate to borrow them on the repo market, as they are at risk of failing to deliver otherwise. Such bonds are referred to as “special” (spec) collateral in the repo market, as opposed to the GC.

The rate on special collateral is lower than on the GC, which means that the cash leg will receive a lower remuneration when the borrowed bond is spec. Thus looking for a special bond entails a cost for the borrower. Specialness on a bond is often measured by computing the spread between the GC repo rate and the special repo rate on that bond.

Related posts on the SimTrade blog

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   ▶ Youssef LOURAOUI Portfolio Management at the Central Bank of Morocco

Useful resources

Banque de France

About the author

The article was written in May 2023 by William ARRATA (Lecturer in Advanced Portfolio Management at ESSEC Business School’s MiF and MiM and Asset Liability Manager at Banque de France).

My professional experience as a Global Development and Learning Intern at Danone

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My professional experience as a Global Development and Learning Intern at Danone

Jayna MELWANI

In this article, Jayna MELWANI (ESSEC Business School, Global BBA, 2019-2023) shares her professional experience as a Global Development and Learning Intern at Danone, the world’s leading food company.

About Danone

Danone is a multinational food and beverage corporation that is headquartered in Paris, France. The company produces a wide range of dairy products, water and plant-based food and beverages. Some of the most popular brands owned by Danone include Activia, Evian, Actimel and Danette.

Danone operates in over 120 countries and has more than 100,000 employees worldwide. The company’s mission is to provide health-focused food and beverage products that contribute to the well-being of individuals and the environment.

In addition to its commercial activities, Danone is also committed to promoting sustainable practices and social responsibility. The company has made significant investments in sustainability initiatives such as reducing greenhouse gas emissions, improving water usage efficiency and investing in regenerative agriculture.

Danone is a leading food and beverage company with a strong commitment to health and sustainability. Its portfolio of popular brands and global reach make it a major player in the industry.

Logo of Danone.
Logo of Danone
Source: the company.

The Global Learning Team at Danone

I was part of the Global Learning team at Danone in its headquarters in Paris. It is a team of approximately 15 people who are responsible for launching and maximizing the global learning agenda for the various functions such as Sales & Marketing, Research & Innovation, IT & Data, etc. I was in charge of supporting the global learning agenda for General Secretary, IT & Data and Sustainability.

The global learning and development team at Danone is responsible for creating and implementing programs to support the professional development of employees throughout the company. The team’s mission is to provide employees with the knowledge and skills they need to excel in their roles, grow within the organization and contribute to the company’s overall success.

Some of the key responsibilities of the learning and development team at Danone include:

  • Developing training programs: The team designs training programs that are tailored to the specific needs of different departments and job functions. They can be on-the-job training, e-learning modules, and workshops. For example, I worked closely with the General Secretary team to develop Compliance e-learning modules to be done by all employees worldwide.
  • Managing learning technologies: The team is responsible for managing the learning management system (LMS) used by the company. This includes maintaining the system, monitoring its effectiveness and ensuring that employees have access to the resources they need.

My Experience at Danone

During my internship at Danone, my missions were to support the global learning agenda for the following functions: IT & Data, and General Secretary & Sustainability. My main responsibilities were supporting the implementation of the learning portfolio, liaising with local learning teams to ensure the proper local deployment of the learning activities, measuring and reporting worldwide completion, managing suppliers, and contracts with external learning providers.

It was a 6-month internship that went by very quickly. My day-to-day responsibilities were mainly dealing with the LMS and building reports and dashboards for stakeholders. Though, I was also leading a number of global projects at the same time. One notable project I led was the Compliance campaign. Danone trains its employees worldwide every year on compliance as part of its compliance obligations with external auditors. I led the communications, reporting and stakeholder engagement for this project.

I was also responsible for negotiating deals with external learning providers for upcoming projects. Because of this, I was able to negotiate prices, measuring costs and opportunity costs of learning initiatives.

What I learned during my internship

The main things I learned during my internship at Danone are:

  • I learned how to create powerful AI dashboards to analyze raw reporting data and quickly turn them into insightful analysis.
  • I gained many soft skills such as stakeholder management, interpersonal communication, and negotiation skills.
  • I discovered my passion for health and sustainability and my love for the food and beverage industry.
  • I learned about HR digitalization through innovative technology such as digital onboarding and people analytics.

Financial concepts related my internship

Return on investment (ROI)

ROI is a financial metric that measures the profitability of an investment. In the context of my internship, ROI was used to evaluate the effectiveness of training programs and other development initiatives.

Opportunity Cost

Opportunity cost is the cost of forgoing one option in favor of another. In the context of my internship, the learning team must consider the opportunity cost of investing in employee development vs other potential investments.

Cost-benefit analysis

Cost-benefit analysis is a financial tool that compares the costs and benefits of different options. In the context of learning and development, the learning team can use cost-benefit analysis to evaluate the potential return on investment of different training and development programs. By comparing the costs, the team can make informed decisions about which initiatives to prioritize.

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Useful resources

Danone

About the author

The article was written in April 2023 by Jayna MELWANI (ESSEC Business School, Global BBA, 2019-2023).

My internship experience as a junior consultant at ZEBOX

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My internship experience junior consultant at ZEBOX

Pranay KUMAR

In this article, Pranay KUMAR (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023) shares his professional experience as junior consultant at ZEBOX.

About the company

ZEBOX is an innovation and start-up accelerator program launched by CMA CGM, one of the world’s leading shipping and logistics companies. ZEBOX’s mission is to support start-ups and entrepreneurs in developing new technologies and business models to improve the global supply chain.

Logo of ZEBOX.
Logo of ZEBOX
Source: the company.

As a department of CMA CGM, ZEBOX has access to vast resources and expertise in the shipping and logistics industry, which allows it to provide valuable guidance and support to start-ups in this sector. The program has a global reach and is headquartered in Marseille, France.

My internship

During my internship at ZEBOX, I worked a Junior Consultant

My missions

As a Junior Consultant at ZEBOX, my primary mission was to analyze economic and demographic data from over 10 Asia-Pacific countries to guide ZEBOX’s market expansion efforts. Specifically, I was tasked with developing a comprehensive 3-year plan for ZEBOX’s expansion in the APAC region, covering strategic planning, go-to-market approaches, and market positioning using tools such as Porter’s five forces.

Required skills and knowledge

To succeed in my internship, I needed to have a strong understanding of economics, finance, and strategic management. Additionally, I needed to have excellent analytical and communication skills, as I was responsible for gathering and analyzing data on market trends, the competitive landscape, and consumer behavior in various countries, and presenting my findings and recommendations to both the ZEBOX team and the ESSEC SMIB professor.

What I learned

During my time at ZEBOX, I learned a great deal about how to conduct market research and analysis, as well as how to develop a comprehensive strategic plan. I also gained a deeper understanding of the shipping and logistics industry and the challenges faced by start-ups looking to innovate within this sector. Finally, I developed valuable skills in project management, data analysis, and communication that will serve me well in my future career.

Financial concepts related my internship

Market Research and Analysis

Understanding market trends, competitive landscape, and consumer behavior is essential to making informed business decisions. This involves conducting thorough research, gathering relevant data, and analyzing it to gain insights into the market.

Strategic planning

A comprehensive strategic plan is critical to achieving long-term success and achieving organizational goals.

Porter’s Five Forces

This model helps analyze the competitive forces within an industry and determine the attractiveness of entering a new market.

Why should I be interested in this post?

ESSEC students interested in finding a job in finance may find this post useful as it highlights the importance of having a strong foundation in both hard and soft skills. It also demonstrates the practical application of financial concepts such as market research and analysis, strategic planning, and Porter’s five forces in a real-world business context.

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Useful resources

Here are some useful resources related to my professional experience:

ZEBOX website: This website provides information about the accelerator program and its activities.

CMA CGM website: This website provides information about the shipping and logistics company that launched ZEBOX.

About the author

The article was written in April 2023 by Pranay KUMAR (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023).

My Internship Experience at Kearney

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My Internship Experience at Kearney

Jianen HUANG

In this article, Jianen HUANG (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2023) shares his professional experience as a consulting intern at Kearney.

Kearney

Kearney is a global management consulting firm that specializes in helping clients achieve their strategic goals and solve complex business challenges. With over 95 years of experience, Kearney has built a reputation for delivering innovative solutions that drive lasting results. The firm operates in over 40 countries, serving clients in a range of industries, including consumer goods, healthcare, retail, technology, and transportation. Kearney’s team of experienced consultants bring deep industry knowledge, analytical rigor, and a collaborative approach to every engagement, working closely with clients to understand their unique needs and deliver tailored solutions. With a focus on delivering measurable impact and driving growth, Kearney has earned a trusted reputation as a strategic partner for businesses around the world.

Logo of the Kearney.
Logo of Kearney
Source: Kearney.

My internship

I worked as a part-time assistant and supported the Kearney consulting team based in Shanghai. During the six months internship, I worked on two main projects with clients from two different industries.

The Hainan Free Trade Port is a new special economic zone in China, established in 2020, with a focus on developing a globally competitive, free trade port, and a hub for international trade and investment. The Hainan Free Trade Port aims to promote trade liberalization and facilitation, open up the Chinese economy to international investors, and attract foreign investment. The Chinese government has announced a series of policies and measures to support the development of the Hainan Free Trade Port, including tax incentives, streamlined customs procedures, and relaxed visa policies, making it an attractive destination for international businesses looking to expand in the Asia-Pacific region. With this context, the first client is a state-owned company that was planning to enter the duty-free market. And we have been asked to plan the exhibition and the future expansion.

Quality management is important for businesses to ensure that their products or services consistently meet or exceed customer expectations. By implementing a quality management system, businesses can improve their processes, reduce waste, and increase efficiency, ultimately leading to higher customer satisfaction and increased profitability. Quality management involves establishing processes and procedures to ensure that products or services meet specific standards and requirements, reducing the likelihood of defects or errors that could negatively impact customer satisfaction. By focusing on quality management, businesses can also reduce costs by eliminating waste and inefficiencies in their processes, while building trust and a positive reputation for quality and reliability with their customers. The second project is related to a Chinese intelligence manufacturing player. With the trend of digitalization, the client is now planning to digitalize their quality management system, which includes the digitalization of all stages of the production process. Kearney’s team had been asked to build a QMS for the client and help them enhance their quality control ability.

Financial concepts related my internship

Cost-Benefit Analysis

Cost-benefit analysis is often used in consulting projects to make sound suggestions and convince management. Cost-benefit analysis is a way to evaluate the potential cost and benefit of a potential project. The process involves identifying and quantifying all relevant costs and benefits associated with the project, calculating the net present value of those costs and benefits, and comparing them to determine whether the project is financially viable.

The cost-benefit analysis process includes:

  • Identify the project scope: during this stage, the consultants need to not only determine the topic of the analysis, but also identify key stakeholders, key resources, and technics.
  • Determine the cost: the cost of a project can include direct and indirect costs, opportunity costs, and potential risks.
  • Determine the benefit: a project can bring revenue from the sales, intangible benefits, or advantages we can potentially gain.
  • Calculate the result

DCF

The discounted cash flow method (DCF) is an important financial valuation method that is often used in consulting jobs, and it is one of the most commonly used cost-benefit analysis. It is used to estimate the intrinsic value of an investment based on its series of cash flows. It involves projecting future cash flows, determining the appropriate discount rate, and calculating the net present value (NPV) of those cash flows.

The mathematical formula for the NPV:

NPV formula

CFt = cash flows of each period (from t=0 to t=T)
T = terminal date and number of periods
r = discount rate or interest rate required of the investment (it is the rate of return that the investors expect on their investment).

In a classical project, the initial cash flow, CF0, is usually negative since it is usually the initial investment of the project. The following cash flows, CFt for t=1 to t=T, are usually the profit that generates by the project for each period. The NPV can be rewritten as

NPV formula

In the end, we are comparing the NPV with the initial target we set to evaluate whether we should launch this project. On the other hand, in the case that we have enough resources, we can consider launching all the projects that have NPV greater than 0.

In the consulting project, the consultants usually have been asked to evaluate the value and to show a figure of the benefit of the project in order to convince the management.

Customer Due Diligence (CDD)

In consulting, CDD, or Customer Due Diligence, is a critical component of advisory services provided to clients in industries such as finance, banking, and insurance. Consultants use CDD to assess the risks associated with clients’ customers and to ensure regulatory compliance. CDD helps consultants identify potential financial crimes such as money laundering, terrorist financing, or other fraudulent activities that could pose a risk to their clients. By conducting thorough and systematic customer due diligence, consultants can help their clients mitigate risk, comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, and make informed business decisions. CDD is an essential tool for consultants providing advisory services to clients in highly regulated industries, helping them to build trust, maintain compliance, and protect their reputation.

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Useful resources

Kearney

About the author

The article was written in April 2023 by Jianen HUANG (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2023).

Insuring Success in France: My Journey with InsurdHR

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Insuring Success in France: My Journey with InsurdHR

Lokendra RATHORE

In this article, Lokendra RATHORE (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023) shares his working experience at InsurdHR.

InsurdHR – Company Overview

InsurdHR is a Singapore-based insurance broker platform providing Software as a Service (SaaS) that offers insurance solutions to startups and Small and Medium Enterprises (SMEs). The company is looking to expand its offerings to the French market to help its clients access insurance services more easily.

Logo of InsurdHR
Logo of InsurdHR
Source: InsurdHR.

My internship

I had the opportunity to work with InsurdHR which had partnered with SemioConsult (a privately owned consulting firm) for this expansion mission. As a student at ESSEC Business School on the Cergy campus (France), this project provided me with the unique opportunity to apply my academic knowledge to a real-world problem (market entry).

As a Strategy Consultant, I was responsible for conducting market research and analysis to help InsurdHR enter the French insurance brokerage market. During my time at InsurdHR, I had the opportunity to work on a number of exciting projects that allowed me to further develop my skills and knowledge.

My missions

One of my main missions was to conduct market research with due diligence for competitive analysis, market sizing, risk assessment, and identification of key partners. I used various sources, including Statista, Marketline, and Factiva, to gather data and insights on the French insurance market. Through my research, I was able to gain a comprehensive understanding of the industry and the key players within it.

Another key aspect of my internship was the analysis of other several survey reports on customer attitudes towards insurance in France. This allowed me to effectively segment, target, and position InsurdHR’s offering in the market. My findings helped the company to develop a more targeted and effective marketing strategy, which ultimately will lead to increased customer acquisition.

Working closely with the CEO of InsurdHR, I also had the opportunity to devise a preliminary market penetration strategy for the soft launch of the company’s services in France. This involved creating a roadmap for customer acquisition, with the goal of reaching the target population in the French market. Through this project, I was able to apply my knowledge of market research and analysis to develop a practical and effective strategy for the company.

Throughout my internship, I had the opportunity to work with a variety of people from different backgrounds and gain exposure to the fast-paced and dynamic world of insurance as a service. I learned how to conduct market research, analyze data, and collaborate effectively with others to achieve common goals.

Overall, my internship experience at InsurdHR was a truly rewarding and educational experience. I am grateful for the opportunities I had to learn and grow, and I am confident that the skills and knowledge I gained will be valuable to me in my future endeavors.

The skills required for this internship included strong research and analysis skills, effective communication and collaboration, and an understanding of the French insurance industry. Through this internship, I gained hands-on experience in these areas and was able to make a meaningful contribution to InsurdHR’s expansion efforts in France.

Key Concepts that I learned

I present below a few concepts related to my work: market sizing, risk assessment, and customer acquisition.

Market Sizing

Market Sizing is about determining the size of the target market which is an important first step in creating a successful business strategy. This involves analyzing data on market trends and customer behavior to determine the potential size of the market and the company’s ability to capture a portion of it.

Risk Assessment

In the insurance industry, risk assessment is a critical component of determining the cost and feasibility of offering a new product or service. This involves evaluating the potential risks and uncertainties associated with the market and making informed decisions based on this information.

Customer Acquisition

Customer acquisition is the process of acquiring new customers and converting them into paying customers. This involves developing and executing a strategy to reach, attract, and engage potential customers, as well as measuring the effectiveness of the acquisition efforts over time.

Why should I be interested in this post?

If you are interested in gaining insights into the practical application of academic knowledge in real-world business scenarios, particularly in the insurance industry, this post is definitely worth reading. The author shares his firsthand experience of working as a strategy consultant with InsurdHR, a company that was expanding into the French insurance brokerage market. The post covers various aspects of the author’s internship, including conducting market research, competitive analysis, risk assessment, and customer acquisition strategies.

Additionally, the author provides valuable insights into key concepts such as market sizing, risk assessment, and customer acquisition, which are relevant not only to the insurance industry but to any business looking to enter a new market or expand their customer base. Overall, this post is informative and provides a practical perspective on applying academic knowledge to real-world business problems.

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Useful resources

InsurdHR

SemioConsult

About the author

The article was written in April 2023 by Lokendra RATHORE (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023).

My internship experience as a marketing intern at Amazon

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My internship experience as a marketing intern at Amazon

Fatimata KANE

In this article, Fatimata KANE (ESSEC Business School, Master in Strategy & Management of International Business, 2022-2023) shares her professional experience as a marketing intern at Amazon.

About the company

Amazon is a multinational technology company that was founded in 1994 by Jeff Bezos. Originally started as an online bookstore, the company has since expanded to become the world’s largest online retailer, selling a vast array of products and services across various categories, including electronics, fashion, home goods, groceries, and digital content.

Logo of Amazon.
Logo of Amazon
Source: the company.

In addition to its e-commerce platform, Amazon has also expanded into other areas such as cloud computing (Amazon Web Services), digital streaming (Amazon Prime Video), smart home devices (Amazon Echo), and artificial intelligence (Amazon Alexa). The company is headquartered in Seattle, Washington, and operates in over 200 countries worldwide.

Amazon is known for its customer-centric approach and has a reputation for offering fast and convenient delivery options, competitive pricing, and a wide selection of products. The company’s mission statement is to “be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.”

Amazon France

Amazon France is the French subsidiary of Amazon, which is the world’s largest online retailer. The company’s French website, Amazon.fr, was launched in 2000 and offers customers in France a wide selection of products across various categories, including electronics, books, fashion, home goods, and more.

As of 2021, Amazon France has over 22,000 employees and operates several distribution centers and warehouses throughout the country to ensure fast and reliable delivery to customers. The company also offers various delivery options, including same-day delivery and Amazon Prime, which provides free shipping and access to additional services such as streaming video and music.

I worked as a General Marketing Specialist Intern at Amazon France, in the retail business unit.

My internship

As a general marketing specialist intern at Amazon.fr, my role was to support the retail team in executing various marketing campaigns and initiatives to drive traffic, sales, and customer engagement on the website.

My missions

For example, I could assist in creating and publishing content on Amazon.fr’s social media accounts to promote products and engage with customers. This could include writing copy, designing graphics, and scheduling posts. I also created email campaigns to promote new products, sales, and other marketing initiatives. This could involve designing email templates, writing copy, and analyzing performance metrics.

I could also assist in managing Amazon.fr’s search engine marketing (SEM) campaigns to increase visibility and drive traffic to the website. This could involve keyword research, ad copy creation, and performance monitoring. Besides marketing content creation, I also oversaw auditing the marketing performances, and designed marketing plans for brands.

Required skills and knowledge

Working in this role required creativity, eagerness to learn, good communication skills, and high prioritization capacity.

What I learned

My internship experience with Amazon provided me with exceptional learning opportunities.

First, Amazon has a strong customer-centric approach, and this is reflected in all aspects of its marketing strategy. As an intern, I learned the importance of understanding customer needs and preferences and creating marketing campaigns that resonate with them.

Moreover, Amazon relies heavily on data analysis to inform its marketing decisions, and I had the opportunity to work with various analytics tools to measure the performance of marketing campaigns. This helped me develop a better understanding of the importance of data-driven decision-making.

Furthermore, in a large organization like Amazon, collaboration is essential. As an intern, I had the opportunity to work with different teams and departments to execute marketing campaigns. This taught me the importance of effective communication and teamwork.

Plus, Digital marketing is constantly evolving, and Amazon is at the forefront of innovation in the industry. As an intern, I had access to various training resources and had the opportunity to attend industry events and webinars to stay up-to-date with the latest trends and best practices.

Lastly, Amazon has a reputation for providing a seamless customer experience, and this requires a high level of attention to detail in all aspects of marketing. I thus learned the importance of quality assurance and attention to detail in all aspects of marketing campaigns, from copywriting to design.

Overall, my experience as a general marketing specialist intern at Amazon.fr was invaluable in helping me develop a better understanding of digital marketing and how it can be used to drive business growth and customer satisfaction.

Financial concepts related my internship

Although not focused on finance, my internship in marketing still allowed me to be in touch with several financial concepts such as:

Return on Investment (ROI)

As a marketing intern, I learned the importance of measuring the ROI of marketing campaigns. This involves calculating the revenue generated by a campaign compared to the cost of the campaign. This concept is related to financial analysis, where businesses must analyze the return on investment for any project or initiative.

Cost of Goods Sold (COGS)

COGS is a financial concept that represents the direct costs associated with producing and selling a product or service. As an intern, I learned how Amazon calculates the COGS for each product and how this impacts pricing and profitability.

Gross Margin

Gross margin is a financial concept that represents the difference between revenue and COGS. As an intern, I learned how Amazon manages its gross margin by optimizing pricing strategies, managing inventory levels, and reducing costs.

Why should I be interested in this post?

I greatly appreciated my experience at Amazon and would recommend the company to any curious and eager-to-learn individual who is interested in marketing and retail.

Related posts on the SimTrade blog

   ▶ All posts about professional experiences

   ▶ Bijal GANDHI Cost of goods sold

Useful resources

Amazon France

About the author

The article was written in April 2023 by Fatimata KANE (ESSEC Business School, Master in Strategy & Management of International Business, 2022-2023).

My experience as a PwC Associate Auditor in the Digital Data Hub

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My professional experience as a PwC Associate Auditor in the Digital Data Hub

Federico MARTINETTO

In this article, Federico MARTINETTO (ESSEC Business School, Exchange Global BBA, 2021) shares his professional experience as a PwC Associate Auditor in the Digital Data Hub.

About the company

PwC is a global professional services firm providing audit, tax, consulting, and advisory services to clients in various industries. With a network of over 284,000 employees in more than 157 countries, PwC serves multinational corporations, public sector entities, and emerging businesses. The company is committed to innovation, diversity, inclusion, and corporate social responsibility.

Logo of PwC.
Logo of PwC
Source: the company.

In the department I work for, we provide comprehensive audit and assurance transformation services to give real value for our clients. We offer three types of services: Risk Assurance, Capital Markets & Accounting Advisory Services, and Financial Statement Audit (EN).

Risk Assurance

The uncertainties facing companies today vary between known risks, emerging risks and potentially global risk scenarios. Risk Assurance services improve the “resilience” of your business by helping management make informed decisions.

Capital Markets & Accounting Advisory Services

Thanks to our expertise, we will assist you in dealing with the regulatory aspects related to operations of access to the capital and debt markets (from going public to being public)as well as financial reporting issues considering their potential impacts on financial communications with stakeholders, including through the use of advanced digital solutions.

Financial Statement Audit (EN)

A financial statement audit is the examination of an entity’s financial statements and accompanying disclosures by an independent auditor. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures. The auditor’s report must accompany the financial statements when they are issued to the intended recipients.

My job

I support the audit teams in the development and implementation of digital audit tools leveraging advanced data analytics and automation solutions.

My missions

I work with state-of-the-art technologies to provide high-quality audits, gaining in-depth expertise on technology and data through a structured training program. I can get in touch and interact with domestic and international customers.

Required skills and knowledge

I am within a team that relies on flexibility and agility to solve important problems for our customers. You need excellent writing and speaking skills in English.

What I learned

I am developing a deep understanding of the role that digital plays in the new form of audit process.

Financial concepts related my job

During my job the following concepts were useful: digital transactional platform, digital financial inclusion, and retail agents.

Digital transactional platform

A digital transactional platform enables a customer to use a device to make or receive payments and transfers and to store value electronically with a bank or nonbank permitted to store electronic value.

Digital financial inclusion

“Digital financial inclusion” can be defined broadly as digital access to and use of formal financial services by excluded and underserved populations. Such services should be suited to customers’ needs, and delivered responsibly, at a cost both affordable to customers and sustainable for providers.

Retail agents

Retail agents armed with a digital device connected to communications infrastructure to transmit and receive transaction details enable customers to convert cash into electronically stored value and to transform stored value back into cash. Depending on applicable regulation and the arrangement with the principal financial institution, agents may also perform other functions.

Why should I be interested in this post?

You should be interested in this post, if you have always wanted to see for yourself what it means to work for a big 4. If you have always dreamed of making a difference, helping companies to design their future. The analysis of data and their transformation into essential information fascinates you. Technology and all the most innovative tools are a puzzle to solve. You like to play with passion and without limits. You stand out for empathy, proactivity, and versatility.

Related posts on the SimTrade blog

   ▶ All posts about professional experiences

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

   ▶ Louis DETALLE My experience as an Audit intern at PwC

Useful resources

PwC

PwC Careers with PwC

About the author

The article was written in April 2023 by Federico MARTINETTO (ESSEC Business School, Exchange Global BBA, 2021).

My experience as a leisure tourism management assistant in the French Tourism Development Agency

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My experience as a leisure tourism management assistant in the French Tourism Development Agency

William LONGIN

In this article, William LONGIN (EDHEC Business School, Global BBA, 2020-2024) shares his experience as a leisure tourism management assistant at Atout France USA, which is the French Tourism Development Agency in the United States of America.

Atout France

Atout France is the official French National Tourism Development Agency. It is a government agency responsible for promoting France as a tourism destination to visitors and tourism professionals (tour operators and travel agents) from around the world.

Logo of the Atout France.
Logo of Atout France
Source: Atout France.

Atout France was created in 2009 through the merger of three existing organizations that focused on tourism promotion: Maison de la France, ODIT France, and France Tourism Development Agency. The name Atout France comes from “Atout” meaning asset and “France” the nation that it services. The agency’s main mission is to develop and implement strategies for promoting France as a tourism destination by working with French companies and tourism professionals from around the world. We will explore the strategies used by Atout France in more depth in this article.

Atout France objectives are set by the French government and reflect the needs of French businesses in the tourism sector. To attain the objectives set by the government, Atout France organizes and attends multiple business-to-business (B2B) events to create visibility and encourages French networking. Another key objective set by the French government is promoting the new offers for sustainable tourism called eco-tourism, still overlooked by many international travelers. For example, Atout France in the United States launched an e-learning platform covering eco-tourism in France.

I interned in the branch of Atout France located in New York, as a “leisure tourism manager assistant”. As a foreign worker in the United States, I was granted a diplomatic A2 Visa for my internship. Kind of cool! My experience in New York was really valuable in addition to the experience I had in the company as I was able to make many friends and discover the city through a new lens (a worker and not a tourist). Indeed New York is home to many international institutions such as the United Nations, many consulates, and schools such as New York University (NYU) and Columbia University. New York, also called the Melting Pot, has a developed French community and culture particularly in the areas of art, cuisine, and fashion. The numerous French restaurant venues in the city allows Atout France to showcase French cuisine when organizing events. We could almost call French restaurants the culinary consulates of France in New York!

My personal experience at Atout France

My experience at Atout France USA was very valuable as I learned about company culture, the tourism industry and about the various software used by the company.

My experience of the company culture and workplace at Atout France USA is very positive. As an intern I have been well received and helped in the beginning of my internship. However, I realized very early on that in order to be useful it was important to be proactive. I cannot emphasize enough on the word ‘proactive’ because it is central to understanding how to be a useful coworker in the trade and events department of the company. I learned that it is important to ask questions about tasks, especially that you could be unfamiliar with as an intern. For example, when building the slide show for an internal proposition I made, I went in a freestyle but learned afterwards that there was a corporate template that was essential to respect in order to keep things more organized.

The tourism industry was a completely new industry for me as I have never interned or leaned towards a career in this sector before. What attracted me the most for this internship was to learn more about the industry, have the opportunity to work in New York and serve the nation of France. Throughout my internship I learned about jobs and vocabulary that I was unfamiliar with before such as what travel writers do, what is MICE (which is an acronym for business tourism), or what is eco-tourism. My time in the industry allowed me also to learn about the importance of networking events for professionals and their ways of communicating. Overall, my experience at Atout France encouraged me to learn more about the different forms of tourism and how professionals operate.

The large number of valuable contacts (from the United States and from France) that Atout France possesses is a key asset that adds value for the local and French companies interested in developing businesses. In order to organize its contacts, Atout France uses a Customer Relation Management tool (CRM) called HubSpot. HubSpot is a cloud-based software platform that provides marketing, sales, and customer service tools for businesses. In the case of Atout France, the main purpose is to store data about its contacts. Data about area, domain of expertise and level of engagement with the company are useful for selectively picking the most adequate contacts when organizing events. For example, amongst the tour operator companies of the network, only a segment of them is already selling French packaged trips. This segment of tour operators is interesting for French companies because they already have an interest in the country and are more likely to create more deals or tailor new offers. Throughout my internship I was taught to get accustomed with the use of the software for searching information, creating spreadsheets for business analytics and creating invite lists for events.

Core missions and duties

Event planning

Part of my responsibilities as an intern at Atout France USA were to contribute to organizing events by finding venues, inviting business representatives and communicating with our clients to best build the event according to their needs. Atout France USA organizes events for its local partners and French institutions to increase their visibility on the American market and meet travel professionals that could be interested in doing business with them. Generally, the size of events ranges from dinners with 10 guests to larger events going over 100 guests. As an intern it was my duty to look for appropriate venues matching the style, theme, and logistical capability of the venue according to the needs of the client.

Market research

As part of my duties as an intern I was asked to perform market research for various missions notably to contribute to the updating of the market presentation of the United States created and regularly updated by Atout France. Atout France puts an emphasis on design and credibility of sources when gathering data. Performing such research is very enriching as it allows you to have a better understanding of the industry and analyze the industry better.

Must do tasks – Mindset

When preparing an event, there were many manual tasks that needed to be done. For example, it was imperative to set up the event space with a well-thought decor, and other necessary equipment. When preparing for the event it also involved managing vendors by making sure they delivered food, beverages, audio-visual equipment, or other services. During events interns were often asked to handle registration and troubleshooting during the event by handling any issues that arise, such as technical difficulties or unexpected changes to the schedule.

Required skills and knowledge

To perform well as an intern at Atout France in New York, there are several prerequisites that you should consider such as strong communication skills. Interns are asked to communicate with different stakeholders, including industry professionals, tourists, and colleagues. Therefore, having the ability to clearly communicate and proactively ask questions is a must. Knowledge of the French language is an excellent plus for talking to partners. It can ease communication and make it easier for both French and American partners. Familiarity with the events and tourism industry is largely valued by Atout France as it is a good indicator for adaptability. Atout France has a dynamic workplace, and as an intern, you may have to manage multiple tasks simultaneously so having good time management and a sense of organization can come in very handy.

Learned skills and knowledge

During my internship I have improved and worked on my hard skills and soft skills. Hard skills such as my knowledge of the industry, learned how to use HubSpot, perform market research in the tourism industry. Soft skills such as flexibility during events, bilingual communication and team empathy skills.

Key concepts

Cultural awareness

Cultural awareness is the ability to recognize and appreciate different cultures, values, and beliefs. It involves understanding and respecting differences between cultures and being able to navigate and communicate effectively with people from different backgrounds. Cultural awareness also involves recognizing one’s own biases and assumptions and being open to learning from and about different cultures. Cultural awareness involves developing attitudes of respect, openness, and curiosity toward other cultures, which can help to build stronger relationships and promote mutual understanding. When performing missions it is important to take into account the image that Americans have of France.

Customer Relationship Management (CRM)

Customer Relationship Management (CRM) tool is a tool that organizations use to manage and analyze their interactions with customers and improve customer relationships. CRM involves collecting and analyzing customer data from various sources, including sales, marketing, and customer service, to gain insights into customer behavior, preferences, and needs. The CRM was a very useful tool for analyzing email opening rates, network contracting and marketing data.

Ecotourism

Ecotourism is a type of tourism that focuses on responsible travel to natural areas that conserve the environment and improve the welfare of local communities. Ecotourism examples are visiting and experiencing natural areas, such as national parks, wildlife reserves, and cultural sites, while minimizing the negative impact on the environment and supporting local communities. Ecotourism is also characterized by responsible travel practices, such as reducing waste, etc.

Ecotourism is of growing interest to France in its pioneering mission of the eco touristic industry and carbon neutral objectives for 2030. At the same time ecotourism can provide economic benefits to the local community by promoting conservation efforts by providing financial incentives for protecting natural resources and wildlife.

MICE

MICE is an acronym that stands for Meetings, Incentives, Conferences, and Exhibitions. It refers to a type of tourism that involves the organization and hosting of business events, such as conferences, seminars, trade shows, exhibitions, and meetings. MICE tourism is a growing industry that often involves large groups of people traveling to a specific destination for a specific purpose, such as attending a conference or meeting.

MICE tourism is of interest to Atout France as it provides significant economic benefits such as revenue for French hotels, restaurants, transportation providers, and other businesses.

Travel Agent VS Tour Operator

A travel agent is an intermediary that personally helps clients plan and book their travel arrangements. On the other hand, a tour operator specializes in organizing and selling complete travel packages, which may include transportation, accommodations, meals, and activities. Both professions are both of interest to Atout France as a majority of Americans use their services to plan their travel to Europe.

B2B and B2C

B2B and B2C are abbreviations for “Business to Business” and “Business to Consumer” respectively. Indeed, different companies rely on different business models. Relations and commerce with different customers change the way companies do business. At Atout France, the company’s services are for companies, so it operates on a B2B model when organizing events. However, Atout France also interacts with the public through marketing campaigns. Whether that interaction is a B2C is arguable because the “product” sold by Atout France is the whole nation of France and the operation is made in the nation’s interest rather than in the businesses’ interest as the income gained from such an operation is not directly earned from the consumer.

Why should you be interested in this post?

My article about my experience as an intern for Atout France in New York should be of great interest to people who are interested in the travel and tourism industry, as well as those who are considering pursuing an internship or career in this field. The article provides valuable insights into what it’s like to work for a destination marketing organization and gives a behind-the-scenes look at the operations of Atout France in New York. Readers can learn about the different departments and functions within a tourism development agency, as well as the challenges and opportunities that come with working in this field. Readers can also learn about the vocabulary, skills and qualities that are important to excel in this industry.

Word of conclusion

In conclusion, my experience as an intern at Atout France in New York was an incredibly valuable opportunity for me. I had the chance to work with a talented and dedicated team, passionate about promoting France as a premier travel destination.

During my internship, I gained valuable insights into the operations of the government in the tourism area abroad and learned about the different strategies and tactics used to promote tourism. I had the chance to work on a variety of projects, from developing marketing materials to conducting research and analysis on industry trends.
Throughout my internship, I was impressed by the level of professionalism and expertise demonstrated by the Atout France team. I also had the chance to network with industry professionals and attend industry events, which provided me with valuable connections and insights into the travel industry.

Overall, my internship at Atout France in New York was an incredible learning experience and a valuable steppingstone in my career. It has provided me with a strong foundation in destination marketing and tourism. I would highly recommend an internship with Atout France to anyone who is passionate about travel and tourism and looking to gain valuable insights and experiences in this industry.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Nithisha CHALLA My experience as a Risk Advisory Analyst in Deloitte

   ▶ Alexandre VERLET My experience as an investment banking analyst intern at G2 Capital Advisors

Useful resources

Atout France Organization website

Atout France USA LinkedIn group

HubSpot Firm website

About the author

Article written in March 2023 by William LONGIN (EDHEC Business School, Global BBA, 2020-2024).

My Internship Experience at AlixPartners in London

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My Internship Experience at AlixPartners in London

Federico De ROSSI

In this article, Federico De Rossi (ESSEC Business School, Master in Strategy and Management of International Business, 2020-2023) shares his professional experience as Business Analyst Intern at AlixPartners.

About the company

AlixPartners is a global consulting firm that offers companies facing complex challenges strategic, operational, and financial advice. They collaborate with companies in a variety of industries, including automotive, consumer goods, healthcare, retail, and technology. The company was founded in 1981 in Detroit, Michigan, and has since expanded to become a global firm with offices in more than 25 countries.

Logo of the AlixPartner.
Logo of AlixPartner
Source: AlixPartner.

My internship

During my internship at AlixPartners, I worked as a Business Analyst Intern.

My missions

My role was twofolded: on one side I was involved in providing support to consultants all over the globe on various projects and different industries. On the other side, I also worked hand to hand with the firm’s managing director to spot business development opportunities by, for instance, analysing four of the biggest private equity firms in the world and their portfolio companies.

Finally, I was responsible for conducting research and analysis to support project work, preparing presentations and reports for clients, and attending team meetings.

Required skills and knowledge

As an Intern in a global consulting firm, I already had to master some skills that would have been necessary for a successful completion of the internship itself. Obviously, learning agility and curiosity are given qualities that candidates are asked to have: without them, working 10+ hours a day would not be sustainable and would not make the job interesting. On top of those, problem-solving and communication skills are the bread and butter of the industry. Finally, for what concerned hard skills, a good knowledge of the Microsoft Office suite was fundamental.

What I learned

My internship at AlixPartners provided me with a valuable learning experience. It helped me develop a range of skills, including problem-solving, analytical, and communication skills. I also learned the importance of teamwork, collaboration, and time management.

One of the key things that I learned during my internship was the importance of developing a deep understanding of the client’s business. This involved analyzing the client’s financial statements, conducting market research, and understanding their competitive landscape. This understanding helped consulting firms develop customized solutions that are tailored to the client’s specific needs.

Another valuable lesson that I learned was the importance of effective communication. As consultants, we had to present our findings and recommendations to clients in a clear and concise manner. This involved preparing presentations and reports that were easy to understand and conveyed the key messages effectively.

Finally, working in such a high paced environment, with long hours and very demanding challenges, I definitely learnt how to better manage my time and conciliate my personl life with my professional one.

Financial concepts related my internship

When it comes to financial concepts related to the industry, I haven’t been exposed to much if not for when I had to analyze private equity firms such as KKR, Bain Capital, EQT, and others. It was the first time I was working on PEs and the topic revealed itself to be extremely enjoyable. It’s quite interesting to see the deep connection between private equity and consulting.

Why should I be interested in this post?

Overall, my internship at AlixPartners was a fantastic learning opportunity that enabled me to develop a variety of skills that will be useful in my future career. I would strongly recommend AlixPartners to anyone interested in a career in consulting.

Related posts on the SimTrade blog

   ▶ All posts about professional experience

   ▶ Nithisha CHALLA My experience as a Risk Advisory Analyst in Deloitte

   ▶ Alexandre VERLET My experience as an investment banking analyst intern at G2 Capital Advisors

Useful resources

AlixPartner

About the author

The article was written in March 2022 by Federico De Rossi (ESSEC Business School, Master in Strategy and Management of International Business, 2020-2023).

My experience as an intern in the Corporate Finance department at Maison Chanel

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My experience as an intern in the Corporate Finance department at Maison Chanel

Martin VAN DER BORGHT

In this article, Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024) shares his professional experience as a Corporate Finance intern at Maison Chanel.

About the company

Chanel is a French company producing haute couture, as well as ready-to-wear, accessories, perfumes, and various luxury products. It originates from the fashion house created by Coco Chanel in 1910 but is the result of the takeover of Chanel by the company Les Parfums Chanel in 1954.

Chanel logo.
Channel logo
Source: Chanel.

In February 2021, the company opened a new building called le19M.This building was designed to bring together 11 Maisons d’art, the Maison ERES and a multidisciplinary gallery, la Galerie du 19M, under one same roof. Six hundred artisans and experts are gathered in a building offering working conditions favorable to the wellbeing of everyone and to the development of new perspectives at the service of the biggest names in fashion and luxury.

My internship

From September 2021 to February 2022, I was an intern in the Corporate Finance and Internal Control department at Maison Chanel, Paris, France. As part of Manufactures de Mode, subsidiary of Chanel, which aims to serve as support for all the Maisons d’art and Manufactures de Modes, located in le19M building, my internship was articulated around three main missions.

My missions

My first mission was to develop and implement an internal control process worldwide in every entity belonging to the fashion division of Chanel. The idea behind this was to make a single process that could be used in every entity, whatever its size, so all of them have the same, improving the efficiency during internal and external audits.

During the six months of my internship, we focus our development on a particular aspect of internal control that is called “segregation of duties” or SoD. The segregation of duties is the assignment of various steps in a process to different people. The intent behind doing so is to eliminate instances in which someone could engage in theft or other fraudulent activities by having an excessive amount of control over a process. In essence, the physical custody of an asset, the record keeping for it, and the authorization to acquire or dispose of the asset should be split among different people. We developed multiple procedures and matrix to allow the company to check whether their actual processes were at risk or not, with different level of risks, and adjustments proper to each entity.

My second mission was to value each company to test them for goodwill impairment in Chanel SAS consolidation. We use a discounted cash flow (DCF) model to value every company and based on the value determined, we tested the goodwill. Goodwill impairment is an earnings charge that companies record on their income statements after they identify that there is persuasive evidence that the asset associated with the goodwill can no longer demonstrate financial results that were expected from it at the time of its purchase.

Let me take an example. Imagine company X acquire company Y for $100,000 while company Y was valued at $60,000 in fair value. In this situation, the goodwill is $40,000 (=100,000 – 60,000). Now let’s say we are a year later, and the fair value of company Y is calculated as $45,000 while its recoverable amount is $80,000. The carrying amount of the asset and the goodwill (85,000) is now higher than the recoverable amount of the asset (80,000), and this is misleading, so we have to impair the goodwill by $5,000 (85,000 – 80,000) to account for this decrease in value. As the company was acquired at a price higher than the fair value, it is the goodwill that will be impaired of such a loss.

My last mission was a day-to-day exercise by which I had to assist and support each entity in its duties towards Chanel SAS. It could have been everything related to finance or accounting (reporting, valuation, integration post-acquisition, etc.), and sometimes not even related to finance but to the development of these companies (IT, audits, etc.). This last mission allowed me to travel and visit multiple Maisons d’art and Manufactures de modes to help prepared internal and external audits.

Required skills and knowledge

The main requirements for this internship were to be at ease with accounting and financial principle (reporting, consolidation, fiscal integration, valuation, etc.) to be able to communicate with a multitude of employees by writing and talking, and to be perfectly fluent in English as entities are located everywhere.

What I learned

This internship was a great opportunity to learn because it required a complete skillset of knowledge to be able to work at the same time on internal control aspects, financial aspects, accounting aspects, and globally audit aspects. It gave me the possibility to meet a huge number of people, all interesting and knowledgeable, to travel, to learn more about the fashion luxury industry at every stage of the creation process, and to discover how it is to work in a large company operating on a worldwide scale.

Three concepts I applied during my journey

Discounted cash flow (DCF)

Discounted cash flow (DCF) analysis is a valuation method used to estimate the value of an asset or business. It does this by discounting all future cash flows associated with the asset or business back to the present time, so that they have a consistent value in today’s terms. DCF analysis is one of the most commonly used methods for valuing a business and its assets, as it takes into account both current and expected future earnings potential.

The purpose of using DCF analysis is to determine an accurate value for an asset or company in order to make informed decisions about investing in it. The method takes into account all expected future cash flows from operating activities such as sales, expenses, taxes and dividends paid out over time when calculating its intrinsic worth. This allows investors to accurately evaluate how much they should pay for an investment today compared to what it could be worth in the future due to appreciation or other factors that may affect its price at any given moment over time.

The process involves estimating free cash flow (FCF), which includes net income plus non-cash items like depreciation and amortization minus capital expenditures required for day-to-day operations, then discounting this figure back at a rate determined by market conditions such as risk level and interest rates available on similar investments. The resulting number provides investors with both a present value (PV) which reflects what would be earned from holding onto their money without risking any capital gains tax if held long enough; as well as terminal value (TV) which considers what kind of return can be expected after taking into account growth rates for remaining years left on investments being considered.

Since DCF only takes into consideration anticipated figures based off research conducted prior through financial data points, there are certain limitations associated with using this type of calculation when trying to determine fair market values since unexpected events can occur during timespan between now until end date calculated period ends causing prices either rise above estimated figures proposed earlier before end date was reached thus creating higher returns than originally forecasted initially before actual event took place; at same opposite can occur where unforeseen economic downturns could lower prices below predicted projections resulting lower returns than assumed initially prior situation happening firstly. Therefore, while estimates provided via discounted cash flow are helpful tools towards making more informed decisions when considering buying/selling specific assets/companies, ultimately investor should also conduct additional due diligence beyond just relying solely upon these calculations alone before making final decision whether proceed further move ahead not regarding particular opportunities being evaluated currently.

Goodwill impairment is an analysis used to determine the current market value of a company’s intangible assets. It is usually performed when a company has acquired another company or has merged with another entity but can also be done in other situations such as when the fair value of the reporting unit decreases significantly due to market conditions or internal factors. The purpose of goodwill impairment analysis is to ensure that a company’s financial statements accurately reflect its financial position by recognizing any potential losses in intangible asset values associated with poor performance.

When conducting goodwill impairment analysis, companies must first calculate their total identifiable assets and liabilities at fair value less costs associated with disposal (FVLCD). This includes both tangible and intangible assets like trademarks, patents, and customer relationships. Next, they must subtract FVLCD from the acquisition price of the target entity to calculate goodwill. Goodwill represents any excess amount paid for an acquiree above its fair market value which cannot be attributed directly to specific tangible or intangible assets on its balance sheet. If this calculated goodwill amount is greater than zero, then it needs to be tested for potential impairment losses over time.
The most common method used for testing goodwill impairments involves comparing the implied fair value of each reporting unit’s net identifiable asset base (including both tangible and intangible components) against its carrying amount on the balance sheet at that moment in time. Companies may use either a discounted cash flow model or their own proprietary valuation techniques as part of this comparison process which should consider future expected cash flow streams from operations within each reporting unit affected by acquisitions prior years among other inputs including industry trends and macroeconomic factors etcetera where applicable. If there is evidence that suggests that either one would result in lower overall returns than originally anticipated, then it could indicate an impaired asset situation requiring additional accounting adjustments.

Goodwill

In summary, goodwill impairment analysis plays an important role in ensuring accurate accounting practices are followed by companies so that their financial statements accurately reflect current values rather than simply relying on historic acquisition prices which may not necessarily represent present day realities. By taking all relevant information into consideration during these tests, businesses can identify potential issues early on and make necessary changes accordingly without having too much negative impact downstream operations going forward.

Segregation of duties (SoD)

Segregation of duties (SoD) is an important part of any company’s internal control system. It involves the separation and assignment of different tasks to different people within a business, in order to reduce the risk that one person has too much power over critical functions. This segregation helps to ensure accuracy, integrity, and security in all areas.

Segregation of duties can be broken down into two main components: functional segregation and administrative segregation. Functional segregation involves assigning specific responsibilities or tasks to individuals with expertise or knowledge in that area while administrative segregation focuses on preventing an individual from having too much authority over a process or task by dividing those responsibilities among multiple people.

The purpose behind segregating duties is to limit potential risks associated with fraud, errors due to lack of proper supervision, mismanagement, waste, and misuse of resources as well as other potential criminal activities that could lead to loss for the business. Segregation also ensures accountability for everyone’s actions by making sure no single employee has access or control over more than one critical function at any given time: thereby reducing opportunities for mismanagement and manipulation without proper oversight from management personnel. Additionally, it allows businesses better manage their internal processes by providing checks-and-balances between departments; thus, promoting better coordination between them which can be beneficial when dealing with complex procedures such as budgeting cycles or payroll processing, etc.

In conclusion, segregating duties helps businesses reduce risks related not only fraud but also mismanagement, waste, misuse & other criminal activities which may lead businesses losses & create transparency & accountability within departments so they are able coordinate properly & execute operations efficiently. It is therefore an essential component business should consider implementing into their internal controls systems if they wish to ensure their financial stability long run.

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Useful resources

Maison Chanel

le19m

About the author

The article was written in January 2023 by Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024).

My experience as a Risk Advisory Analyst in Deloitte

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My experience as a Risk Advisory Analyst in Deloitte

Nithisha CHALLA

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) shares her experience as a Risk Advisory Analyst in Deloitte.

About the company

Deloitte is one of the Big Four accounting firms along with EY (Ernst & Young), KPMG, and PricewaterhouseCoopers (PWC). It is the largest professional services network (with teams in different countries working together) by the number of professionals and revenue in the world, headquartered in London, England. The firm was founded by William Welch Deloitte in London in 1845 and expanded into the United States in 1890. Deloitte provides audit, consulting, financial advisory, risk advisory, tax, and legal services with approximately 415,000 professionals globally. In fiscal year 2021, the network earned a revenue of US$50.2 billion in aggregate. Additionally, a few of Deloitte’s largest customers as of 2021 includes Morgan Stanley, The Blackstone Group, Berkshire Hathaway, etc.

Logo of Deloitte.
Logo of Deloitte
Source: Deloitte.

As a risk advisory analyst, I had the opportunity to read a lot of surveys that Deloitte conducted on an annual basis to assess work ethics, strategy and their influence on a particular business line. In order for individuals to relate, these polls also provide an overview of the global standing in the relevant business sector. The 11th edition of the Global Risk Management Survey states that despite the relatively stable global economy, risk management is currently dealing with numerous significant impending risks that will force financial service institutions to reconsider their traditional methods. The company also maintains that risk management must be integrated into strategy so that the institution’s risk appetite and risk utilization are important factors to consider.

My experience as a Financial Risk Advisory Analyst at Deloitte

My hands-on experience with risk management and its applications kick-started with my first profile in the Anti-Money Laundering division after graduation as a Financial Risk Advisory Analyst at Deloitte USI (Deloitte USI is a division of Deloitte US that serves customers of the US member firm and is physically located in India.). In this project, I worked for an international bank to audit and assess the company’s customer risk.

My responsibility at work

As an employee in the Risk Advisory department at Deloitte, I provided a host of advanced services to an international bank. I conducted Enhanced Due Diligence for the client’s high-risk and high-net-worth customers through sources of origin and transactions that exhibit irregular behavior. A large part of my work was to minimize or optimize risk, in maintaining the highest standard of financial understanding, I undertook regular risk assessments. The nature of my tasks has brought me close familiarity with numerous domains, highlighting clientele involvement in economically sensitive industries and geographies all over the world.

The work involved holistic net-worth assessment for high-profile customers in accordance with their diversified financial portfolios. The team starts by researching the client and using public records to confirm any criminal history. The team then determines the customer’s net worth by conducting a thorough analysis of the client’s varied sources of income, including a family trust, an inheritance, self-employment, and stock investments. Additionally, the team examines the transactions to look for any potential signs of money laundering.

The whole process is carried out in accordance with the three stages:

  • Placement
  • Layering
  • Integration

The first step in money laundering is depositing illegal funds in financial institutions to make them appear legitimate. This entails splitting up larger sums of money into smaller, less noticeable amounts, transporting cash across borders to deposit the money in foreign banks, or purchasing pricey items like fine art, antiques, gold, etc. Once the money has entered the financial system, it is moved around, or layered, from one place to another in an effort to conceal criminal activity.

For instance, buying an antique item with the money and selling it later to fund the establishment of a holding company or non-financial trust. These financial entities, which are typically corporations or limited liability companies (LLCs), hold the controlling stack of their subsidiary companies and, as a result, oversee the management of child companies without getting directly involved in their day-to-day management.

Another example would be by locating the holding company in a region with a low tax rate. These controlling companies are simple to establish and can significantly reduce the tax burden of the entire corporation. If a child company declares bankruptcy, the holding company, which may hold additional child companies or portions of child companies, is shielded from the loan creditors. After the money appears legitimate, the money is integrated into the system to gain profit. At this stage, identifying black money is very difficult for the bank system.

My missions

My job has broadened the scope of my leadership abilities, and I have led a group of five analysts for a quality check to ensure that projects with strict deadlines are completed on time and to the standard of quality that clients have come to expect from the company. I’ve received several spot awards during my time at Deloitte for my willingness and capacity to go above and beyond.

By establishing a scope to coordinate with on-site teams and executives across geographies, I have gained significant international exposure in the comparatively brief time I have spent at Deloitte. Additionally, I’ve had a profound introduction to the procedures that enable experts to identify elements that pose risks to the regular functioning of enterprises, and thus eliminate and streamline the same.

What I have gained from the job

The following points mentioned below are a brief sum-up of what I learned through my full-time role in the project:

Tax obligations in various jurisdictions

The tax is calculated for a company based on the base location irrespective of how money is flowing into the company.

Different financial entities

The functioning, policies, and structure are different for different entities like LLCs, LLPs, holding companies, non-financial trusts, etc.

Beneficial Ownership

One company can have multiple form of owners, like joint ownership, proprietorship, or partnership, and in a such complex model, how beneficial ownership is decided.

Required skills and knowledge

The hard skills I needed to make presentations or scatterplots when I first started working included knowledge of Money Laundering, Microsoft Suite and Excel. Since the projects associated with these business lines are typically enormous, having solid soft skills will make it easier to manage them. Good soft skills, compliance, teamwork, and cooperation are necessary on an individual level.

Key concepts

I developed below key concepts that I use during my job.

Know your customer (KYC)

Know Your Customer (KYC) can also refer to Know Your Client. Financial institutions are protected by Know Your Customer (KYC) regulations from fraud, corruption, money laundering, and financing of terrorism. When opening an account and on an ongoing basis, KYC checks are required to identify and confirm the client’s identity. In other words, banks need to confirm that their customers are actually who they say they are.

Due Diligence

It refers to the procedures employed by financial organizations to gather and assess pertinent data regarding a customer. It seeks to identify any potential risk associated with doing business with them for the financial institution. The procedure entails assessing public data sources, including firm listings, private data sources from third parties, or government sanction lists. Meeting Know Your Customer (KYC) standards, which differ from nation to country, involves conducting extensive customer due diligence.

Anti-Money Laundering (AML)

The network of rules and norms known as anti-money laundering (AML) aims to expose attempts to pass off illegal money as legitimate income. Money laundering aims to cover up offenses like minor drug sales and tax evasion as well as public corruption and funding of terrorist organizations. AML initiatives seek to make it more difficult to conceal the proceeds of crime. Financial institutions need rules to create regulated customer due diligence plans to evaluate money laundering risks and identify questionable transactions.

Why should I be interested in this post?

I believe that this post’s description of anti-money laundering, a significant business sector of Risk and Financial Advisory, might be very helpful to those interested in pursuing professions in finance. It will help them bridge the gap between real life work experience and theoretical knowledge. My understanding is that this article also provides a quick overview of the auditing and RFA (risk and financial advisory) work environments at Deloitte, one of the Big Four organizations.

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Useful resources

Deloitte

About the author

The article was written in January 2023 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023).

My personal experience in finance via the yachting industry

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My personal experience in finance via the yachting industry

Evan CHAISSON

In this article, Evan CHAISSON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023) shares his professional experience as in intern in the yachting industry.

About the company

During my first six-month internship I worked for SuperYachtsMonaco. As the name suggests, this company is focused on the yachting industry and is located in Monaco. Founded in 2008, this company has a long history of providing clients with consistent service and top-of-the-line yachts throughout the globe.

Logo of the SuperYachtsMonaco.
Logo of SuperYachtsMonaco
Source: SuperYachtsMonaco.

While interning there, I worked for the Charter department. For those who are not familiar, chartering is when the client wishes to rent a yacht and also have a complete catering service accompanying them on their stay. In other words, chartering a yacht is like renting a hotel on a boat with all the personnel that one might need. Typically, clients will charter a yacht for 1-2 weeks and will set sail on a pre-determined itinerary. An average charter experience involves approximately 10 clients on the same yacht.

My internship

As part of the charter department, my primary mission was to prepare the department’s annual brochure. This is the charter catalogue that new clients will consult before contacting SuperYachtsMonaco and entering more detailed negotiations. Therefore, it was of the utmost importance that the brochure present the yachts in an enticing way and leave potential clients with a good impression of the company. In order to achieve this, I had to create the brochure’s theme and properly organize its layout and photo selection. I also had to write copy for each yacht so as to present the vessel’s most appealing aspects while staying concise.

Additionally, I had to prepare travel itinerary presentations based on itineraries desired by clients. Starting with a simple list of places that were to be visited, this task involved looking up these locations, finding places of interest and then writing copy. One last task I had was to help create the company’s monthly newsletter. This involved writing articles on various yachting-related topics.

Required skills and knowledge

The primary skill that I needed was copy writing. Indeed, I spent a considerable amount of time writing text with a specific target client in mind. This meant that I needed to adapt my writing style every time that the audience changed. Another skill that I needed was the ability to multitask. Aside from my main missions that I previously listed, I also had to accomplish a series of smaller tasks that, in the moment, were just as important as the larger ones. Therefore, it quickly became evident that I would need to find a good balance between the two types of tasks, otherwise I would fall behind on some of them.

What I learned

Overall, I learned the importance of soft skills and, above all, the proper way to interact with colleagues and manage their expectations. Indeed, it was easy to get along with all of my colleagues at the office if the relationship focused on topic external to work. However, it became challenging when I had to interact with these same people in the context of work, especially when these same people were giving me tasks to complete. For instance, my internship mentor initially told me to be open with my colleagues and be direct with them when I did not have the time to help them. Yet when I did this same thing, I was later reprimanded. This is when I learned that I had to read between the lines of what I was being said and communicate accordingly without refusing a task being assigned to me.

Financial concepts related my internship

Given the department that I worked in, I had little to no interaction with anything related to finance. What’s more, this is my work experience during which I came the closest to the world of finance. This is why I can only list one financial concept related to my internship, which is a cost-benefit analysis. One of my missions as an intern was to check an international yachting database for yachts that had recently decreased in price and conduct a cost-benefit analysis to evaluate different options for purchasing or maintaining a yacht. For example. To this end, I had to compare the costs and benefits of buying a new yacht versus a used one and weigh the costs of various maintenance or repair options against the potential benefits of purchasing the yacht in good condition. My findings were then directly reported to the company’s CEO.

Why should I be interested in this post?

A student wishing to enter the world of finance after graduating might find my blog post as useful insight. The first reason is because it provides them with an insight into the yachting industry from the perspective of an intern, which is a position they would likely find themselves in. Even if I had scant experience in finance during my internship.

Aside from this aspect, my hope is that this post will make other students curious to learn more about the yachting industry, as there is immense potential for any student wishing to delve into finance. For instance, I can attest from personal experience that the yachting industry is resplendent with high-net-worth individuals. So, it is easier to find opportunities for students to work with clients who have substantial financial assets and require specialized financial services. It is also a global industry that involves clients from around the world, so, say, a French student wishing to open themselves to the rest of the world might find that the yachting industry to be the perfect opportunity to do so.

Useful resources

SuperYachtsMonaco (SYM)

Super Yacht News

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About the author

The article was written in March 2023 by Evan CHAISSON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023).

My apprenticeship experience within client services at BNP Paribas

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Akshit Gupta

In this article Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) shares his apprenticeship experience as a client services analyst at BNP Paribas, which is the leading European banking group.

Introduction

BNP Paribas is a French banking group which was formed as a result of a merger between Banque Nationale de Paris (BNP) and Paribas in the year 2000. The group’s business is divided in 3 major operating divisions including: Commercial, Personal Banking & Services (CPBS), Investment & Protection Services (IPS) and Corporate Institutional Banking (CIB) and the bank has its presence in 65 countries.

BNP Paribas Logo

BNP Paribas is ranked as the largest banking group in Europe and amongst top 10 in the world in terms of total assets which reflects the size of financial institution. BNP Paribas is a publicly listed company on Euronext Paris and is a part of the CAC 40 and Euro Stoxx 50 index.

Table 1. Ranking of banks by total assets

BNP Paribas Ranking

Source: www.advratings.com

My Apprenticeship Experience

I worked as a Client Services Analyst within the Corporate and Institutional Banking (CIB) division of the bank.

Missions

I had the opportunity to undertake two missions during the apprenticeship at BNP Paribas. During my first year, I worked as a Client Services Officer in the Factsheets team wherein I was responsible for creating and producing factsheets on equity and fixed income linked structured products and custom indices for the institutional clients of the bank. The Client Services is a cross functional team within the BNP Paribas Global Markets. They aim to provide the clients with the best possible post-trade service on the global market activity of the bank. The team works in close coordination with various teams operating on the capital markets (Sales, Traders, Business Managers, Middle and Back Office, Compliance, and Lawyers) and on all types of products (equities, fixed income, commodities, foreign exchange, and derivatives).

My work involved analysing the technical term-sheets (documents which present technical information about the products) of different structured products and produce factsheets (documents which mainly present the financial performance of the products) related to these products in conjunction with the Structuring and Sales teams at the bank. The factsheets were automated and produced on different frequencies like daily, weekly, bi-weekly, and monthly to serve the needs of different clients. These reports included products’ performance measures, and commentary on market data and current economic scenarios on these products.

During the second year of my apprenticeship, I worked as an Operational Client Relationship Manager (OCRM) within the same division at BNP Paribas but with a change of business responsibilities and duties to gain more exposure on the client facing side of the business.

In this role, I was responsible for developing and maintaining strong commercial relationships with the top institutional clients of our bank and manage client’s transversal escalations for multi asset classes including Equities, Fixed Income, Foreign Exchange, and Credit Derivatives. I worked on pre and post trade issues in close coordination with cross functional teams like Sales, Trading, Onboarding, Legal, Compliance and Operations to resolve breaks and efficiently serve the clients.

Required skills and knowledge

  • Strong knowledge of investment banking, equity, and capital markets.
  • Strong skillset in MS Office pack including MS Excel, MS Word, MS Access, and MS PowerPoint to produce reports and KPI dashboards for internal and external purposes.
  • Familiarity with programming in VBA and SQL.
  • Understanding of front-to-back trade lifecycle of different products.
  • Effective communication skills to interact with clients and internal stakeholders
  • Strong interpersonal skills.

What I learnt?

With this apprenticeship experience, I gained strong exposure to the different structured products issued by a bank like BNP Paribas in the global markets, understanding of client communication side, and programming skills in VBA and SQL. Along with the technical skillsets, I also learnt the importance of working as a team, understanding each other’s viewpoints, and aiming towards a common goal. It brought into focus the importance of banking sector and has given me a platform to sharpen my financial acumen.

Key concepts

The following are the two concepts that were required in my work at BNP Paribas:

Global markets

Global Markets is a division within an investment bank which handles all the sales and trading services on both the primary and secondary markets for different financial products. It caters to different clients including financial institutions, corporates and large-scale investors. The teams within this division are generally split based on different asset classes. Relevant knowledge of the different functions within this division is important to facilitate and coordinate client escalations and projects.

Structured products

Structured products are pre-packaged product offerings which are designed as per the client’s risk-return profile. The returns on the investments in these products are based on the performance of the underlying assets. These underlying assets can include individual assets or indices in various markets like equities, bonds and commodities, and derivatives on these underlying assets like futures, swaps, and options.
The structured products are highly sophisticated products since they are tailor-made as per the client’s requirements and risk/return profile. These products have pre-defined features like maturity date, early – redemption mechanism, coupon payments (fixed or variable coupons), underlying asset, and the degree of capital protection. They can guarantee full or partial capital protection and a flexible degree of leverage as well.

Why should I be interested in this post

This post is interesting for anyone looking to enter the Global Markets side of an investment bank and looking to kickstart a career in this field by looking for an apprenticeship or an internship contract.

Useful resources

BNP Paribas

BNP Paribas financial reports

BNP Paribas financial report for year 2021

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About the author

Article written in December 2022 by Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022).

My professional experience as a marketing assistant at Auris Gestion

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My professional experience as a marketing assistant at Auris Gestion

Ines ILLES MEJIAS

In this article, Ines ILLES MEJIAS (ESSEC Business School, Global BBA, 2020-2024) shares her experience as a marketing assistant at Auris Gestion (France).

About the company

Auris gestion is an asset management company created in 2004 which currently manages 3 billion euros. At the beginning, Auris Gestion focused on assisting only private clients with a worldwide offer by providing tailor-made solutions to their investment needs and demands. However, it decided to merge along with Salamandre AM in June 2020 to improve its positioning with financial advisor and Family Office partners. As a result, Auris Gestion makes its expertise and institutional management approaches available to a larger clientele, including individual consumers, asset management advisers, and institutions.

Logo of Auris Gestion.
Logo of Auris Gestion
Source: Auris Gestion.

One of Auris Gestion main strengths is their close relationship with their clients and the fact that it places a high importance on developing this one by providing excellent tailored management, advising, and reporting solutions. To accomplish this successfully, they have decided to dive their team into two independent business divisions: the Private Banking and the Corporate Banking.

My internship

My internship lasted a total of three months and took place in Paris.

What I enjoyed the most about my internship is that I could work in different areas of business and not only finance, which I was quite scared of considering that jobs in finance are known to be very intense and I didn’t consider myself having a wide financial knowledge after my first year at ESSEC. However, I really enjoyed being able to do some marketing. This helped me to get to know inside out. Additionally, it really helped me to improve my finance vocabulary and knowledge in French.

My missions

I was in charge of creating customer master records and separating them into the two different clients and divisions which Auris works for: Private Banking/management and Institutional/Corporate finance.

In addition, I also worked as an assistant in the Marketing department. In this one, some of my tasks included:

  • Editing and writing up content for the new Auris and Salamander websites that they were working on to update their information and highlight their partnership with Salamander. Also, their aim was to create a more visually attractive website for customers to understand better the information and improve Auris’ positioning in terms of modern in technology and marketing.
  • Also, I was in charge of adjusting the website’s vocabulary according the two client divisions: Private Banking (simpler financial language) and Institutional/Corporate finance (advanced financial language and more precise information regarding the services offered).
  • Finally, within the marketing department, I had to create information documents and “poster style” documents about ESG. These documents had as a purpose informing and inciting clients to invest in this growing and important, although dangerous sector (greenwashing) funds. Also, to highlight Auris’ implications and contribution in green finance.

Using excel was one of my competences, which is why they also charged me to create and complete fund factsheets and reports. For successful completion, I had to search in Websites such as Morning Star, or the main company/fund websites, information about the funds which then I needed to update or fill in the Due Diligence factsheet template.

Another of my many jobs, which I found interesting and in which I got to learn loads was by attending and representing Auris during fund presentation and pitches. Here, I got to meet different company representatives and got to see how people pitched a fund. One of my other roles after these meetings, was not only making notes about what I learnt, but also summarizing pros and cons from the funds pitched and presented.

Required skills and knowledge

During my internship some of the skills which I most made use of and I believe were required to do my job were teamwork, adaptability, creativity, critical thinking, communication skills and Analytical skills, considering I worked for the financial department which is very quantitative, and the marketing department which is a bit more qualitative and visual.

Also, autonomy was very important, especially since the manager asked me what would be something that I’ve seen in the company that I’m interested in working on, and then I would go ahead and work on that and do research on my own.

Then, I would say one of the most important required skills is being an advanced user of the Pack Office. This is because I was required to use daily either Microsoft teams, Word, PowerPoint, and Excel.

To continue, some finance and asset management knowledge and vocabulary are obviously essential. However, if you are pursuing a business degree you should have a good base of knowledge already. The same goes for marketing and strategic marketing knowledge.

Finally, knowledge and skills on how to use of marketing tools for the creation of digital content such as Canvas and Adobe Photoshop/Photopea were needed.

What I learned

During my internship I was lucky to learn and expand my knowledge in few areas.
First, I learned how to elaborate and fill Due Diligence factsheets to evaluate different funds from different companies. For this, I had to become familiar with the company websites, Morning Star, understand fund rating, etc.

Then, I got to further improve my knowledge on finance thanks to personal research that I did as well as to some of the employees which were eager in teaching me new financial terms and concepts. Some examples of new things I learnt are structured products, ESG, greenwashing, different bond ratings, etc. One of the workers was very kind and once every few days he would sit with me and explain me concepts which I came across that I didn’t understand or was struggling with.

Moreover, the weekly “Rendez-vous de Lundi”, which is a concept set up by the company which consisted of weekly newsletters sent to workers and published publicly, helped me stay informed about the main the weekly performance of markets through the overview of the markets with charts showing their risk, inflation, and summaries regarding their importance and other news, etc.

Finally, the “Point macro”, which was done every two weeks by the company with the aim of keeping up to date all the workers with the main macroeconomic factors affecting today’s investing world. This really got me to improve my macroeconomics knowledge as well as got me to learn a lot about the diversity and importance of this one in the asset management and investing world.

Key financial concepts related to your work

During my internship, I came across the following key financial concepts: structured products, ESG funds, and bond rating.

Structured Products

Structured products are investments that normally include assets linked to interest plus one or more derivatives. These are sometimes attached to an index or group of assets and create extremely specific risk-return objectives. The package is known to be composed of: a bond, some underlying assets, and the derivatives strategy.

ESG Funds

ESG Funds are bands which carry Environmental, Societal and Governance principles investments. This means that the bonds have gone through a test which determines how sustainable the company or government is in terms of the ESG criteria. This index has pushed a lot of companies to become more responsible. Also, they’re important today due to the importance sustainability, and they’re becoming more popular as investors want to be seen as contributors of stopping global warming and contributing to human development without impacting their returns.

Bond Ratings

Bond ratings are letters which define and judge the quality and creditworthiness of a bond. Normally starts with triple letter A (“AAA” for Standard & Poor’s, and “Aaa” for Moody’s), and starting from BB bonds are known as “Junk bonds” due to their low ratings. What we must remember is that the higher a bond’s rating, the lower the interest rate it will carry, and the lower the risk, etc.

Why should I be interested in this post?

This post might interest you if you plan on working in a future in an asset management company or in this sector as a marketing or asset management assistant. You will be able to see what tasks you might be asked to do, the skills that you must have to perform successfully during your internship, as well as terms you might come across that you will need to learn about.

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Useful resources

Auris Gestion

Standard & Poor’s

Moody’s

About the author

The article was written in December 2022 by Ines ILLES MEJIAS (ESSEC Business School, ESSEC Business School, Global BBA, 2020-2024).

My experience as an Oil Analyst at an oil and energy trading company

by

Youssef_Louraoui

In this article, Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) shares his experience as an oil market analyst during a summer internship at Petroineos Trading Ltd.

About the company

Petroineos is a joint venture between PetroChina International London (PCIL) and the INEOS Group for refining and energy trading. PetroChina is one of the world’s major oil and gas enterprises and the INEOS is a refining and petrochemical group. This joint venture is a young and ambitious firm that was founded in 2011 with a dynamic approach to business and a strong ambition for long-term success.

In Petroineos, there are three sections which handle trading in different products: crude, refined products, and power and emissions. Petroineos’s annual trading volume exceeds 70 million tonnes, with assets worth around $6 billion and trading revenue in excess of $30 billion (Figure 1).

Its strategically positioned refineries in Grangemouth (Scotland) and Lavera (France), is among the oldest crude oil refineries in Europe. It provides gasoline to both domestic (Scotland and
France) and international markets, while also sustaining local economies. Every year, the two refineries process about 360,000 barrels of crude oil per day and create over 16 million tonnes of oil products.

Figure 1. Petroineos Trading Ltd. key numbers.
Petroineos Trading Ltd. numbers
Source: Petroineos Trading Ltd. (2022)

My internship

I was affected along with seven other interns, each with their own specific project that had to be completed throughout the 12-week internship. The first days were intense because we had to deal with jargon, practitioners’ concepts, and the dynamic nature of the trading floor. Fortunately, I had the opportunity to be supervised by a seasoned analyst during the first month of the internship, which allowed me step up my skills and be up and running for the next two months. There was a healthy mix of autonomous work and fruitful discussions with the other colleagues. This forced me to be independent in my job while also working in groups when required, allowing for some flexibility in how I performed.

The highlight of this internship was the relationships created with my fellow interns. It really helped a lot to make this experience so enjoyable. The teamwork, the feedbacks, the help that was offered among interns was really amazing; it created a strong bond inside and outside the office. It was a blessing to meet and learn from them as they are all well accomplished individuals who have a bright future in front of them.

By the end of my internship, I felt that I improved significantly in terms of notions regarding crude oil market, time management, relationships with my colleagues and good memories overall.

Missions

During this internship, I was assigned to the analysis department, which was in charge of providing reports and market updates for the major commodity markets. I did my internship in extraordinary times for the oil and commodity markets as it was a few months after the beginning of the Ukrainian-Russian conflict. At that time, the world was experiencing a global energy crisis, a shock of extraordinary scope and complexity. This crisis reminded us of the events of the 1970s (Oil shocks 73-79). This crisis had many dimensions, including coal, oil, gas, food security, and climate change. Governments around the world are seeking for an equilibrium that would deliver a good energy mix while retaining affordable and secure resources for their people, not only reducing reliance on a single commodity.

Natural gas spot prices had reached unprecedented highs, the equivalent of USD 250 for a barrel of oil. Furthermore, the crisis had fueled inflationary pressures and raised the prospect of a recession, as well as a massive USD 2 trillion windfall for fossil fuel producers above their 2021 net revenue. In response to energy shortages and high costs, governments have invested well over USD 500 billion, primarily in industrialized nations, to protect consumers from the immediate consequences of inflation (especially in gas and oil).

Keeping this in mind, I was assigned coverage on the impact of Western sanctions on the Russian crude oil market. Every market participant seeked to predict the impact of the sanctions on the number of barrels shipped from Russia.

  • Is Russia going to reduce its crude oil export since Europe represented alone more than 80% of its exports volume before the war?
  • Who are the new market players that are profiting from this situation and capitalizing on a discounted Russian crude oil in the international crude oil market?
  • Are there any patterns that can help in better understanding the crude flows?

Those three questions captured the importance of the analysis that had to be conducted in order to give sound and well detailed answers in order to capitalize with trading strategies that could leverage this information.

The main task was the redaction of the report which was shared across the whole company. The basic idea of this report was to give a micro overview on a weekly basis on the main changes that can impact the Urals market. I was in charge of analysing the vessels movement from the main ports in Russia and capture their discharging patterns in order to extract valuable information into the main discharging regions that are profiting from this market.

I also collaborated on other analyses with another intern from the Data Science department, which involved analyzing alternative data to identify any interesting signals that may be used as a trading strategy. In addition, I shared two further quantitative analyses involving econometric relationships to analyze Russian and global oil demand in analysis to other factors of relevance. The projects were incredibly interesting, and the insights were also helpful in understanding the complexities of collecting insights in an environment where analysts are surrounded by noisy data that must be filtered in order to communicate valuable information.

The main conclusions of the Russian coverage:

India and China as the main actors profiting from the discounted price of Urals

Russia becomes the highest exporter of crude oil to India (Urals crude). The pattern change since the war unfolded. Historically, India imported oil from Irak and Saudi Arabia. This interest is based on the decision by the Asian countries to capitalise on a devaluated Russian oil price in the international crude oil market, which reached at some point of the war 30$/bbl difference with the main international oil benchmark (Brent). According to the Indian energy minister, they want to lock in the best price available in the international crude oil market (Figure 1).

According to US treasury Janet Yellen, this trend will continue, profiting from the western price cap on russian crude oil. G7 countries agreed in September to implement the price cap, which the US government hopes will be in place by December 5 when an EU embargo on the shipment of Russian crude comes into force. Under the mechanism, European companies will be permitted to transport and insure shipments of Russian oil to third countries as long as it is sold below a fixed price — an effort to limit the impact of the sanctions on global oil flows but ensure Russia’s earns less from the trade.

Dislocation of the market between Europe and Asia

Europe decreased importantly its dependence from Russian crude oil after the war in Ukraine. There is a shifting of actors in this market, with Asia skyrocketing demand compared to previous years because of the attractivity of the Urals in the international crude oil market. Also, if we shrink oil price volatility to its components, we see that:

  • External factors, other than supply and demand, play a more important role now specifically policy issues are more important than ever, accounting for more than 25% of oil volatility
  • 20 years ago we could explain 90% of oil volatility by supply and demand, now this rate dropped to 65%.

Required skills

I would mention two main skills: market understanding and programming expertise. It is very beneficial to stay on top of market news, as it is good industry practice (especially for an analyst position) to understand the many market events that affect the specific commodity covered. As most businesses strive for automation, acquiring and mastering a programming language can only benefit future analysts. It has become a wider pre-requirement for most analyst positions.

Key learning

Key numbers

Some key numbers to have in mind to understand the crude oil market:

  • Estimation according to a reliable source: 1.43 trillion barrels left in the ground (2022)
  • Estimated part of oil consumption in most developed economies (around 30-45% of crude oil in the energy mix)
  • Estimated daily production per day in the world: around 100mb/d
  • Russia produce approximately 10% of the world daily crude oil demand. Urals production (the most traded grade of crude in the Russian oil market) was fluctuating on average around the 2mb/d threshold

Refinery margins

Refinery margin is derived from the difference between the refinery cost (buying crude) and the profit (selling refined product).

Refinery margin and crack spread

Crack spread represents the differential between the price of crude oil and the price of products refined. It is an industry specific metric to assess refining profitability. Crack refers also to the chemical process of decomposing the crude oil into different petroleum products. As different variables affect the price of crude oil and its refined products, this has an implication for refining margins.

Implementation of a crack strategy

  • Single product crack: Differential of one barrel of crude with one barrel of refined product
  • Multi product crack: Use of different refined products to secure a margin

Trading the crack spread

  • Either long or short crack: If long crack, confident view that refinery margins will strengthen (either crude oil price decreasing or products demand increasing)
  • If short crack, confident view that refinery margins are worsening, either because crude oil price increase or decrease of products demand

Reading crack spread as market signal

  • If crack widens, refined products more expensive than crude oil price, market expects that crude oil price will increase (to tighten back the spread to historical norm)
  • If crack tightens, refined products are sold cheaper than the price of crude oil, market expects that refined products (will reduce production) in order to get more expensive to widen the spread

Why should I be interested in this post?

This post will help any student looking to break into the work of oil or energy trading, but more generally for any analyst position, to have a grasp of the main concepts and skills that are required in the market and have a better understanding of the energy industry.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Youssef LOURAOUI My experience as a portfolio manager in a central bank

   ▶ Aastha DAS My experience during a summer internship as an investment banking analyst at G2 Capital Advisors

   ▶ Aamey MEHTA My experience as a credit analyst at Wells Fargo

Useful resources

Business Analysis

Petroineos

Financial Times (2022) Russia becomes India’s top oil supplier as sanctions deflate price.

About the author

The article was written in December 2022 by Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022).

My experience as an investment banking analyst intern at G2 Capital Advisors

by

My experience as an investment banking analyst intern at G2 Capital Advisors

Aastha DAS

In this article, Aastha DAS (ESSEC Business School, Bachelor’s in Business Administration, Exchange Student from Northeastern University) shares her experience during a summer internship as an investment banking analyst at G2 Capital Advisors.

About the company

G2 Capital Advisors is a boutique, low-middle market investment bank which is sector-focused with an integrated and multi-product approach, creating an uncommon full-service product line. G2 provides unique solutions in the investment banking realm including specializing in buy-side and sell-side advisory, capital markets, and restructuring, with different teams allocated to each part of those practices. Most analysts specialize in one of the products while associates and vice presidents tend to cover more product lines while specializing a certain industry in the business practice, further supporting the C-Level executive heading their respective industry specialty group.

G2 Capital Advisors logo
Women in Finance
Source: G2 Capital Advisors.

G2 follows a unique business model in which their managing directors and leads of industry practices are from a background of sector success, and not necessarily banking careers, like Industrials & Manufacturing, Technology & Business Services, Consumer & Retail, and Transportation & Logistics. The culture and core values at G2 Capital Advisors revolve around dedication to their clients, to be able to provide the best possible, creative yet lucrative solutions for their issues. Their main business practice remains Restructuring and Investment Banking.

Through remaining tenacious in all their business processes, they are able to create a full-servicing bank which can provide accountability in an honest and respectful manner, further differentiating themselves.

My Internship

My Missions

I worked as an intern in the summer of 2022 for the Investment Banking practice at G2 Capital Advisors. I was mainly responsible for supporting the analysts and sometimes supported the associates in the buy-side and sell-side business practices. As the size of this boutique lower-middle market investment bank is a lot smaller than a lot of other banks, my experience was more unique than most investment banking summer analyst positions.

I got holistic views on the whole firm as I got experience in intensive levels in three of four of their business practices: Technology & Business Services, Consumer & Retail, and Transportation & Logistics, on both the buy-side and sell-side investment banking advisory. On the buy-side, I created extensive market maps for clients to source their clients and potential new acquisitions for them. Here I was also able to perform also as a research analyst for M&A and equity research on active advisory and restructuring deals throughout the summer by using Excel to curate and develop market maps, historical financial analysis, and prepare for engagement with clients. I was the forefront of the intern class through ensuring that all the submissions from the group were of top quality for all curated presentation materials including tailored pitch books, Confidential Information Memorandums, deal sheets, and teasers. This helped prepare me, the other interns, as well as the analysts and associates for client presentations, oftentimes doing more research than necessary, to stay ahead of competitors. I also aided in the company’s outreach initiatives through drafting many press releases and research presentations for transaction announcements and quarterly industry reports specifically for the Consumer & Retail and Transportation & Logistics business practices.

In my final weeks as an intern, I was able to generate my own comparables and financial models to aid associates for many ongoing deals. All the interns were also responsible for a research presentation of any of the business practices and I delivered a presentation on Consumer & Retail. In this presentation, I sourced new portfolio companies, hedge funds, and private equity firms for G2 to create connections with and evaluated the intrinsic value of creating relations with each of these different sub-sectors and companies and how it better aligns with G2’s goals to provide industry specialized support for clients. I have since gotten feedback from several of the managing directors and leads in the Consumer & Retail team that many of the suggested partnerships have rendered successful and are in process of deal-making with due diligence underway.

Required Skills and Knowledge

The Investment Banking sector at G2 Capital Advisors is arguably the most profitable business practice and there was a high learning curve to going into this internship. I had to quickly learn the sell-side and buy-side business practices to best support the analysts and associates so that we were able to deliver the best market maps and materials to the clients and our managing directors/deal managers. Along with the steep learning curve of investment banking concepts, I also had to adapt to the G2 form of financial modeling as I had learned it already from a club at my university called Bull & Bear Equity Research club. It is also necessary to develop and come prepared with many soft skills like humility, generosity to always give a helping hand, self-discipline, time management, conflict resolution, and high analytical/critical thinking. As an aspiring intern in the investment banking and advisory space, it is wise to stay up to date with financial news, so it is recommended to read/listen to news through podcasts like the NYTimes Daily, New York Times, Wall Street Journal, The Economist. Most higher-level executives are well versed with financial news and do not need to think twice about it and this is a good tactic to incorporate in beginner’s careers to ensure the interns are knowledgeable on all that is going on in the market, in light of any swift changes.

What I Learned

My internship at G2 Capital Advisors gave me a good understanding of the composition of the entire financial institution and the operation of the financial market as well as investment banking through allowing me to master my Excel capabilities, relationship building skills with clients and other employees, while learning technical skills as well like financial terms and everything that is necessary in the different advisory processes. The knowledge I had previously from taking microeconomics, macroeconomics, macroeconomic theory, financial management, Wall Street Prep, and financial accounting aided me in the internship to create a solidified foundation to grow in the industry. I also learned how lucrative a career in investment banking is because of how heavily technical it can get with developing models, but also how personable it can make you through creating special relationships with many different market leaders, clients, and investors, creating a well-rounded employee in the financial services space.

Key Financial Concepts

Here are three useful financial concepts I learned in the Investment Banking department at G2 Capital Advisors.

Buy-side vs sell-side

Buy-Side – is the side of the financial market that buys and invests large portions of securities for the purpose of money or fund management.

Buy-Side – is the other side of the financial market, which deals with the creation, promotion, and selling of traded securities to the public.

M&A Sell-Side Advisory Process Explained

One of the most in-depth processes I learned was the Sell-side process for investment banking: Detailing my insight below

Process and Timeline

  • 1. Winning the Mandate
    • a. Pitch
    • b. Engagement Review Memo
    • c. Engagement Letter Signing
  • 2. Preparing for sale
    • a. Definite strategy (who, how much, what process)
    • b. Draft Teaser, Executive Summary, CIM
    • c. Kick-off Meeting
    • d. Organize Financials
    • e. Create Projections
    • f. Prepare non-disclosure agreement
  • 3. Marketing
    • a. Launch process
      • i. Contact Buyers
      • ii. Receive preliminary bids
      • iii. Manage deal processes
      • iv. Send teaser and NDA
      • v. Investor meetings/emails
      • vi. Draft Letter of Interest bid
      • vii. Draft Management Presentation
      • viii. Set up data room and due diligence
    • b. Letter of Interest Bid Deadline
      • i. Receive final LOIs
      • ii. Board meetings
      • iii. Management presentation
      • iv. Negotiate with lead bidders
      • v. Execute LOI
  • 4. Confirmatory Due Diligence
    • a. Enter into exclusivity agreement with one bidder post negotiation
    • b. Kick-off diligence meeting
    • c. Facilitate due diligence
  • 5. Closing
    • a. Proceeds waterfall deliverables
    • b. Present finalized deal terms and fairness opinion
    • c. Get board approval
    • d. Signing and closing
    • e. Invoice deliverable sent
    • f. Transaction review memo

What is Restructuring?

Restructuring is a unique concept in investment banking which entails growth and special situations in and out of the court with both a debtor and creditor side, based on what is best fit for the firm. It helps provide clients with clear solutions to ensure sustainable long-term stability. This is usually a practice which is enacted, and advisors are called in when a company wants to change its structure completely or significantly in both financial and operational aspects, during times of financial pressures where clear restructuring of the business is necessary. It often involves revising debt options, operations, and forms of limiting financial detriment while still improving the firm.

A company will often use restructuring advisory when there is debt difficulty, especially regarding consolidating to pay their bondholders. It is also possible to incorporate operation restructure to help cut costs in payroll and/or in the size of assets through significant sales.

Internal restructuring often entails operations, processes, departments, supply chains, executive board, and even ownership change, further enabling the firm to grow profitable while growing. This is when investment banks come in to help with the negotiation of restructuring plans to input financial and legal advisors and potentially even gain aid from investors and appointing new CEOs to implement the new changes and propel the firm forward.

Merger & Acquisition Activism

Activism a particularly new space in the investment banking world but one worth keeping tabs on because of how much it changes and how volatile it can make certain deals. In activist investing, there is usually a sign of change occurring through a catalyst which prompts activist investors to reveal themselves. This is an investment strategy where an investor comes into and/or attempts to pursue poorly-run companies with share prices that have gone down recently, usually an investor which much potential. The activist investor usually takes in a large stake in the company which reveals their interest and pushes for changes because of their vast equity, in efforts to turnaround the company for the better. This hopefully results in price increases for the security.

It is necessary to stay weary of activist investors because they may not always have the company’s best interests at hand. For this reason, shareholder trust is a large factor for activist investors. Most of the most successful activist investors are public figures and not necessarily hedge funds. They often use aggressive and confrontational tactics to pressure the management teams of public companies. It is necessary to grow public and shareholder trust along with public attention to grow their platform to endorse the suggested recommendations.

Why should I be interested in this article?

It is worth reading this article because of the topic it discusses in the popular investment banking space. It is necessary to note how well-rounded investment banking can make an individual but also the uniqueness of this post entails how the experience was at a boutique low-middle market investment bank with full servicing to reveal how one smaller firm can do so much in efforts to create the most impactful and creative solutions to business issues and M&A deals.

Related posts on the SimTrade blog

▶ All posts about Professional experiences

▶ Anne BARBERO Career in finance

▶ Suyue MA Expeditionary experience in a Chinese investment banking boutique

Useful resources

G2 Capital Advisors

Financier Worldwide Magazine (June 2019) The rising influence of shareholder activism in M&A transactions: recent trends in the UK

About the author

The article was written in December 2022 by Aastha DAS (ESSEC Business School, Exchange Student from Northeastern University – Bachelor’s in Business Administration).

My experience as a credit analyst at Wells Fargo

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My experience as a credit analyst at Wells Fargo

Aamey MEHTA

In this article, Aamey MEHTA (ESSEC Business School, Master in Finance, Singapore campus, 2022-2023) shares his experience as a credit analyst at Wells Fargo.

The Company

Wells Fargo is the fourth largest bank in the United States in terms of total assets, with $1.9 trillion AUM. It is headquartered in San Francisco. On February 2, 2018, account fraud by the bank resulted in the Federal Reserve barring Wells Fargo from growing its nearly $2 trillion-asset base any further until the company fixed its internal problems to the satisfaction of the Federal Reserve. In September 2021, Wells Fargo incurred further fines from the United States Justice Department charging fraudulent behavior by the bank against foreign-exchange currency trading customers. Under the leadership of the current CEO Charles W. Scharf the bank is aiming to stabilize and improve the bank’s public image and I was able to witness the transition first hand as well as the CEO’s vision and mission for the company.

I worked in the Subscription Finance Group (SFG) which is under the Corporate and Investment Banking (CIB) department of the organization. The team was newly set up in India to provide support to the main team in the US and UK. This gave me exposure to several different aspects of the business and allowed me to learn a lot.

What is Subscription Finance?

Subscription credit facilities typically take the form of a senior secured revolving credit facility secured by the unfunded capital commitments of the fund’s investors. The facilities are subject to a borrowing base determined based on the value of the pledged commitments of investors satisfying specified eligibility requirements, with advance rates based on the credit quality of the relevant investors.

The purpose of subscription credit facilities is usually to provide liquidity for the fund on a faster basis than calling for capital contributions. Under a credit facility, borrowed funds typically can be made available within a day, while under a typical limited partnership agreement, capital calls may take 10 business days or more.

Logo of Wells Fargo
Logo of Wells Fargo
Source: Wells Fargo.

My Internship

I worked at Wells Fargo full time for 16 months from March 2021 to July 2022 and was mainly involved in the credit risk and analysis of the various clients of the bank (investment funds like hedge funds and real estate funds). Subscription Finance is a niche part of finance which refers to the process by which investors sign up and commit to investing in a financial instrument, prior to the actual closing of the purchase. Wells Fargo lent money to different investment funds. The collateral was the uncalled capital that these funds could draw from their respective investors. Wells Fargo would internally review the investors in each fund and come up with a risk profile for each client. The fees for these loans were LIBOR plus a negotiate premium.

My missions

  • Part of the team that undertook the task of preparing an Annual Review credit memo for the first time in India as well as teaching 7 new members of the team on how the process is done.
  • Co-Led the setup and work of the 5-member Deal Structuring Squad which undertook the task of understanding the terms that were included in various credit memos and educating the rest of the 25- member team on what each data point meant and where this information was sourced from.
  • Led the team that undertook the process of preparing and analyzing the FX Portfolio Overview File every week and established a reporting framework with the US team lead. The team highlighted and resolved 2 key errors that were previously overlooked.
  • Part of the Portfolio Overview team that undertook the preparation of the daily Portfolio Overview File. The team analyzed the daily reports and highlighted any discrepancies that arose. The reports generated were distributed firm-wide.
  • Completed Financial Spreading for 46 deals every quarter.

Required skills and knowledge

For the role I needed to have a working knowledge of how credit ratings are relevant during due diligence of a company. I also needed to have basic finance knowledge of how loans are priced and how hedge funds and other investment funds make money. However, the most important skills that were needed were those of ethics and compliance. As we were working with sensitive and private information it was of utmost importance that we were in compliance with the banks guidelines and did not violate any compliance standards.

What I have learnt

My full-time role taught me how hedge funds and large asset managers set up their different funds. It was insightful to learn about the different structures of the various and how they differ across geographies.

Another important learning was how different asset managers have different funds. The funds have different investment strategies such as real estate and each strategy would have different terms and different credit terms to analyze and look at.

There were several soft skills that I learnt too. The biggest one being communication. We were constantly in touch with the team in the US and liaising with them across different time zones to schedule calls and trainings was a new experience for me.

During this job I was also able to significantly improve my excel skills and understanding of several functions. This helped to increase my efficiency at my role and make some files more functional for the organization.

Three key financial concepts

Here are three useful concepts I used during my job at Wells Fargo.

Interest Rate Pricing

During my time working at Wells Fargo, I learnt that LIBOR was no longer the benchmark that was going to be used to determine pricing. The market was transitioning to a new rate called SONIA. SONIA is rate based on the actual overnight rate in active and liquid wholesale cash and derivatives market which makes it more robust and less volatile than LIBOR. The key difference is that LIBOR is forward-looking – it is agreed at the start of an interest period. SONIA is backward-looking – it cannot be determined until the end of an agreed interest period. This means that borrowers will no longer have upfront certainty about the amount of their interest payments and will require the calculations of the interest due at the end of the period.

Sovereign Immunity

Some of the clients of the bank were government backed funds and institutions. For example, a client was Abu Dhabi Investment Council (ADIC), which is the investment arm of the Government of Abu Dhabi and had $829 Billion of AUM as of 2022. These clients had sovereign immunity. Sovereign immunity refers to the fact that government cannot be sued. In the USA this is particularly relevant in the state of Texas. The main learning point was how banks like Wells Fargo treat such special entities, that is to say how it defines the different credit terms for these entities and how it takes into account for the fact that there is no recourse on such loans (due the sovereign immunity of these entities).

Credit Rating

I learnt that the credit rating analysis done by different agencies such as S&P and Moody’s, do not use the same approach. Often the ratings provided by both agencies may vary. The bank used to collate ratings from these two rating agencies for the same entity. Based on the ratings the bank would use an internal credit rating system to provide three different scores across three different categories for the entity. These scores fell into different bands as defined by the bank’s policy. Based on which band they fell into; different terms were offered to the clients and different negotiation was done. For example, a client that had a lower score across the categories would be offered more flexibility and better terms. The credit ratings were also assigned to the various investors of the fund as they were to be used as collateral while availing the loan which resulted in extensive due diligence.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Jayati WALIA My experience as a credit analyst at Amundi Asset Management

   ▶ Jayati WALIA Credit risk

   ▶ Rodolphe CHOLLAT-NAMY Credit analyst

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

Useful resources

Wells Fargo

S&P Global (rating)

S&P Global (Capital IQ)

Moody’s

About the author

The article was written in November 2022 by Aamey MEHTA (ESSEC Business School, Master in Finance, Singapore campus, 2022-2023).

My experience as an intern of the Wealth Management Department in Hwabao Securities

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My experience as an intern of the Wealth Management Department in Hwabao Securities

Wenxuan HU

In this article, Wenxuan HU (ESSEC Business School, Global BBA, 2021-2023) shares her internship experience as an intern in the Wealth Management Department in Hwabao Securities in China.

The Company

Hwabao Securities is a securities company of China Baowu Steel Group, one of the world’s top 500 companies. With the strong support of shareholders, Hwabao Securities adheres to the business purpose of “creating value for customers, opportunities for employees, returns for shareholders and benefits for society” and continues to provide professional, high-quality and personalized comprehensive financial services for investors.

Logo of Hwabao Securities
Logo Hwabao Securities
Source: Hwabao Securities.

Wealth Management is an important business unit of Hwabao Securities. From 2019 to 2021, approximately 80% of Hwabao Securities’ revenue is derived from wealth management business and securities proprietary business.

Headquarters of Hwabao Securities
Headquarters Hwabao Securities
Source: Hwabao Securities.

My Internship

My missions

I worked as an intern in the Wealth Management Department of Hwabao Securities. I was mainly responsible for supporting the department staff in business analysis and compliance management.

I coordinated and analyzed the company’s 2021 interim brokerage business operation. In practice, I used the Vlookup function and pivot table, etc. to count the market share of the sales department, business revenue, commission breakdown, etc., and created data visualization charts to report to the company president and other managers in the interim meeting. In addition, I calculated the performance of the marketing staff. Based on their performance I adjusted their rank.

Moreover, I was responsible for investor eligibility management (a review system that requires institutions to Know Your Customer( KYC) and identify the customer’s risk tolerance) and branch compliance training and participated in developing compliance test questions for branch heads. In addition, I created a PowerPoint presentation for the training of new regulations of positive repo risk control and compliance management work report to assist the compliance officer in personnel training. I also assisted the compliance officer in completing the company’s risk compliance management work, preparing and integrating multi-departmental internal control compliance checklists, and formulating branch compliance cross-check work plans. I wrote an article about typical case of compliance to improve the construction work of the company’s compliance system. The article was appreciated by the department manager and the staff of the Shanghai Stock Exchange (SSE).

Required skills and knowledge

The Wealth Management Department is an important department of a financial institution, directly managing all branches and sales staff, and an important line of defense to ensure business compliance. Working in the Wealth Management Department requires less computer skills and mathematical abilities but requires financial knowledge and legal background. Interns are required to keep an eye on changes in market regulations to assess the risk of financial transactions between the company and its clients. Interns also need to have strong communication skills and be willing to give advice to colleagues in different departments. In addition, departmental staff should also have a high level of ethics and self-discipline and adhere to the legal bottom line.

What I have learnt

My internship at Hwabao Securities gave me a good understanding of the composition of the entire financial institution and the operation of the financial market. This experience allowed me to master many financial terms and trading processes and raised my awareness of compliance and the different types of risks related to investments. The knowledge I learned in class was also applied during the internship, such as money and credit, macroeconomics, credit management, bank management, risk management, compliance management, and law.

While writing the article about the revision of SSE’s investor eligibility management regulations, I also found areas where compliance management could be improved. My article was called “Dispute over account opening for the visually impaired – enhancing investor satisfaction with personalized services”. In the article, the investor’s application for online account opening at the company was rejected due to the investor’s visual impairment and the company’s lack of corresponding hardware facilities. In order to effectively protect the rights and interests of vulnerable groups, the company developed a personalized off-site account opening business process applicable to the visually impaired investor. The company took several measures to take care of the physical conditions of special groups while achieving compliance. For example, the company let the investor open the account offline with professional staff, rather than online. To ensure compliance, the company informed the investor of the investment risks in detail and made a recording.

The article was adopted and commended by SSE as China’s management methods for special group investors are not yet perfect. For special groups, under the condition of meeting the requirements of regulatory laws and regulations, providing better and more humane services in a targeted manner can better protect the interests of investors. Actively fulfilling social responsibility can reflect the social responsibility of enterprises.

Three key financial concepts

Here are three useful financial concepts I learned in Wealth Management Department.

Anti-money-laundering

Money laundering is the process by which monetary gains are cleansed from their illegal origins. The money laundering process has three stages and often incorporates an important international dimension: placement, layering, and integration. Financial institutions are often used, wittingly or unwittingly, by criminals in this cleansing process.

For securities firms, there are usually a variety of measures in place to fight money laundering:

  • Establish various anti-money laundering systems.
  • Establish internal working mechanism, staff with professional personnel and improve operation process.
  • Improve business systems to meet the needs of AML work and ensure accurate and efficient information collection.
  • Identify customers and reasonably classify and adjust customer risk levels. Strengthen identification and supervision for high-risk customers or accounts.
  • Manage customer information, including identity information and transaction records.
  • Establish abnormal transaction detection indicators and models to identify large or suspicious transactions.
  • Conduct anti-money laundering assessments to provide system-wide risk prevention capabilities.
  • Organize anti-money laundering training and strengthen training for personnel in key positions to effectively communicate the latest regulatory requirements.

The Eligibility Management of Investors

The Eligibility Management of Investors is an obligation that sell-side institutions should fulfill for investors. (A sell-side institution is a party that sells its own products or services. Unlike the physical industry, sell-side institution in the financial industry sell virtual products, such as industry research reports, liquidity services, financing services, etc.) The investor eligibility management system was established by the China Securities Regulatory Commission (CSRC) and the China Financial Futures Exchange (CFFEX), taking into account the characteristics of the stock index futures market. The system requires financial institutions to understand their customers, objectively and comprehensively measure their risk appetite and risk-taking ability, and adhere to the principle of “providing the right products to the right investors”. The eligibility obligation was first introduced in the U.S. to regulate misconduct by securities firms. In recent years, the content of the appropriateness obligation has been gradually enriched and improved, and has played an increasingly important role in the trials of Chinese courts at all levels.

The eligibility management of investors has become a direct legal basis for investors to seek remedies in financial disputes. The purpose of investor suitability management is to ensure that customers can make investment decisions and bear the resulting benefits and risks on the basis of a full understanding of the risks of the relevant financial products. In essence, the investor eligibility management system is the investor protection system.

Repurchase Agreement and Reverse Repurchase Agreement

In my internship, I was responsible for compliance training for staff. I produced PowerPoints on the new regulations for Repurchase Agreement risk control.
Repurchase Agreement (Repo) is a transaction in which a party pledges a certain size of bond to raise funds and promises to repurchase the pledged bond at a later date. It is also one of the open market instruments frequently used by The People’s Bank Of China (PBC), which can achieve the effect of repatriating funds from the market by using positive repo operations. Compared with PBC bills, Repurchase Agreement will reduce operating costs, while locking in funds more effectively and reducing liquidity.

Reverse Repurchase Agreement is a transaction in which the PBC purchases marketable securities from a primary dealer and agrees to sell the marketable securities to the primary dealer on a specific date in the future. Reverse Repurchase Agreement is an operation in which the PBC puts liquidity into the market, and the expiration of Reverse Repurchase Agreement is an operation in which the PBC takes back liquidity from the market, called Repurchase Agreement. Simply put, a Reverse Repurchase Agreement is a transaction in which the investor actively lends funds and obtains a bond pledge is called a Reverse Repurchase Agreement transaction, at which time the investor is the financier who accepts the bond pledge and lends the funds.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Wenxuan HU My internship experience as industry research assistant in Industrial Securities

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

Useful resources

Hwabao Securities

Shanghai Stock Exchange

The People’s Bank Of China (PBC)

China Securities Regulatory Commission (CSRC)

China Financial Futures Exchange (CFFEX)

About the author

The article was written in October 2022 by Wenxuan HU (ESSEC Business School, Global BBA, 2021-2023).

My internship experience as an industry research assistant in Industrial Securities

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My internship experience as an industry research assistant in Industrial Securities

Wenxuan HU

In this article, Wenxuan HU (ESSEC Business School, Global BBA, 2021-2023) shares her internship experience as an industry research assistant in Industrial Securities which is a securities company in China.

The Company

Industrial Securities is a integrated, innovative, conglomerate and international Chinese securities company approved by the China Securities Regulatory Commission. In May 2022, Industrial Securities was listed in the Forbes 2022 Global 2000 list of companies. As of the end of June 2022, the Group had total assets of 238.2 billion RMB and over 10,000 employees at home and abroad. The company has developed into a securities and financial holding group covering securities, funds, futures, asset management, equity investment, alternative investment, industrial finance, offshore business, regional equity market and other professional fields. The company’s core businesses rank among the top in the industry.

Logo of Industrial Securities
Logo Industrial Securities
Source: Industrial Securities.

Industrial Securities adheres to the “industry-oriented” driving force, creates a unique financial ecological alliance, forming a complete ecological chain that runs through the life cycle of enterprises and industries.

Headquarters of Industrial Securities
Headquarters Industrial Securities
Source: Industrial Securities.

My Internship

My missions

During my internship, I work in the Home Appliance Group, which belongs to Industrial Securities. Home Appliance Group is composed of research analyst firm focusing in the home appliance industry.

I was mainly responsible for writing company reports and medium-term strategy reports about firms in the home appliance industry. I was also exposed to how to value companies with Excel and various databases.

I used Wind, Euromonitor and other databases, combined with expert interviews, to analyze the development dynamics of companies like Bear which produces small appliances like blenders, kettles, air fryer, etc. I wrote reports that compared the company with its peers from the perspective of products, channels and marketing, and I found out the competitive advantages of the company. I created over 20 charts in the report to demonstrate its high cost-performance ratio, multiple segmentation categories, and mature online channels. I also tracked the interim reports of leading companies in mature foreign markets, such as Electrolux, in terms of revenue and profit by region, to compare and analyze with major domestic home appliance brands.

I also studied the characteristics of the long-tail small home appliance market where it is located. Long-tail small home appliances refer to home appliances with small demand and sales scale (contrary to large home appliances like dish washers and laundry machines).

In addition, I independently collected information to analyze the market size, financial indicators, and the company’s product channels of XGIMI, a leading company in the Chinese projector industry. I assisted the analyst to create a 55-page roadshow PowerPoint.

In the process of writing the report, I not only honed my analytical and presentation skills and learned to be graphic in the report, but also learned about the market situation of China’s home appliance industry. For example, I found that the two waves of the Covid pandemic in 2020 and 2022 showed different dynamics in terms of impact on the growth of demand for home appliances in China. The first wave of the pandemic increased the home cooking scenario; young consumers purchased basic, just-needed small appliances. The first wave of the pandemic led to an outbreak of live e-commerce, with online sales becoming the main channel for home appliance consumption, which drove rapid growth in demand for small appliances (like blenders and nutri-pots). The second wave of the pandemic has hampered logistics in some areas, and after 2020, the category of basic small home appliances was gradually saturated, and the demand was not fully released. The pandemic pushed consumers to form healthy living concepts and home cooking habits, demand shifted from basic appliances to advanced appliances. This pushed the industry product structure. So, I really felt the impact of the pandemic (a Black Swan) on the market in practice. For investors and companies, any major event means both challenges and opportunities.

Required skills and knowledge

When starting out, interns usually need to learn to write meeting minutes quickly and use Excel to do some simple calculations and data summaries. This is more of a test of the student’s information gathering skills and basic computer skills.

As we become familiar with the work, we need to apply our financial knowledge, understand industry dynamics, develop market insight and learn to express our opinions clearly. This includes being able to read company financial reports, fully analyze company operations, and make predictions about the future.

What I have learnt

During my internship I worked with valuation models. Valuation modeling has always been an important section in company research or industry research reports. For investors, financial projections provide a visual representation of the underlying company’s operations and future state of development. Also, students looking for jobs in investment banks, equity research analyst firms and even consulting firms, need solid modeling skills.
The steps of valuation modeling financial projections are as follows:

  • Forecast operating income and split revenue (different products and business, domestic vs foreign, etc.). Then forecast costs and expenses to complete the income statement forecast.
  • Forecast the balance sheet and complete the forecast for all accounts except for the reserved matching items (money funds and financing gap).
  • Prepare the cash flow statement, and calculate the monetary funds and financing gap on this basis.
  • Fill in the vacant monetary funds and financing gap in the balance sheet, and match the balance sheet.

In fact, the complete financial modeling requires a lot of financial accounting knowledge and requires to be careful and conscientious, otherwise, the data can easily be wrong. On specific financial items, analysts need to mobilize financial knowledge to fill in the numbers. For example, depreciation and amortization are calculated with the fixed assets and intangible assets in the balance sheet forecast. Then we can go back to the income statement to fill in the two vacant cells. In the internship, I found that financial modeling is closely related to the financial management and financial statement courses we studied in university, so we still need to firmly grasp the basics of finance before seeking employment.

Key financial concepts

The discounted cash flow (DCF) model is a standard valuation method, which aims to calculate the value of a company based on the projected future cash flows of the company discounted to the present at the discount rate (weighted-average cost of capital or WACC).

Basic Formulas

Entreprise value formula

Where EV means the enterprise value, FCF free cash flows, WACC the weighted-average cost of capital, and TV the terminal value.

Free Cash Flow

Free cash flow

We can predict future turnover, expenses, tax rates, etc. by extrapolating the past or imagining the future of the company). Although this part of the formula is relatively complex, usually in practice the analysts will use the Excel formula or Visual Basic for Applications (VBA) to collate the various subjects, greatly simplifying the steps of financial modeling.

WACC

wacc formula

Where D represents the market value of the company’s debt, E the market value of equity capital, and t the income tax rate.
The Cost of equity can be calculated by CAPM model:

cost equity formula

Where:

Risk free rate is the rate of return that can be obtained by investing money in an investment object without any risk.
β, also known as the beta coefficient, is a risk index that measures the price volatility of an individual stock or stock fund relative to the overall stock market.
Market risk premium, also known as equity risk premium or market risk return, refers to the difference between the return on a market portfolio and the risk-free rate of return. It measures the rate at which investors are paid for taking risk.
The Risk free rate can be the yield of the country’s national debt and β can be queried through the Wind database, such as the last three years of β.
Market risk premium is sometimes a forecast value in practice.
Cost of debt is the after-tax cost of debt. It is necessary to multiply the pre-tax cost by (1-t).

Terminal Value Calculation

To calculate the terminal value, we can use the Gordon Growth method to estimate the value based on its growth rate into perpetuity.

The Gordon Model, also known as the constant-growth model, is a special case of the dividend discount model, which reveals the relationship between the stock price, the expected base period dividend, the discount rate and the fixed growth rate of the dividend. The model has three assumptions:

1. The dividend payment is permanent in time;
2. The dividend growth rate is a constant;
3. The discount rate in the model is greater than the dividend growth rate.

The terminal value is extrapolated from the Gordon model:

cost equity formula

Where g is perpetual growth rate which means that the company has perpetual growth rate and return on invested capital. The perpetual growth model assumes stable and sustainable growth in the long term. In practice, g is usually a conservative figure.

Related posts on the SimTrade blog

   ▶ All posts about professional experiences

   ▶ Wenxuan HU My experience as an intern of the Wealth Management Department in Hwabao Securities

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

Useful resources

Industrial Securities

Wind Database

China Securities Regulatory Commission

About the author

The article was written in October 2022 by Wenxuan HU (ESSEC Business School, Global BBA, 2021-2023).

My job in the Investors Relations department at SAP

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My job in the Investors Relations department at SAP

Micha FISHER

In this article, Micha FISHER (University of Mannheim, MSc. Management, 2021-2023) shares his experience as an employee in the Investors Relations department at SAP, Europe’s largest software company.

SAP

SAP is a curious case within the DAX 40 index. Unlike many of the well-known German enterprises, it is not a company built around the automotive sector, machinery, or chemicals. Instead, SAP is one of the very few European software companies, that can match the dominant players from the USA.

SAP
Logo SAP
Source: SAP.

However, SAP is not known for its consumer products, and its business is purely focused on the business-to-business (B2B) sector. As one of the leading providers of Enterprise Resource Planning (ERP) systems, SAP provides other companies with the opportunity to transform themselves into intelligent enterprises with integrated processes. Applications cover all possible business processes from supply-chain management to finance through supporting functions like human resources.

In the 2020s, SAP’s current main challenge is to transform its business and its large and international client base from mainly locally managed systems (on premise) to remotely managed systems (cloud services). This presents a great opportunity and comes with many benefits not only for SAP’s customers but also for SAP shareholders, as cloud contracts provide the business with stable and more recurring revenues.

My Work Experience

As a multinational enterprise, SAP offers various jobs in areas like development, consulting, or sales. Due to my proclivity for Finance and Communication, I choose to work for SAP’s Investor Relations department. This department works closely with the CFO and CEO of the company to facilitate an ongoing dialogue with the investor community, to prepare the publication of quarterly results and to manage the annual general meeting of shareholders.

While some colleagues deal with matters of retail shareholders or with matters of ESG investors specifically, I was mostly supporting the institutional side of the team. This means listening to the sell-side analysts of the large investments firms that are covering the company (UBS, GS, JPM, etc.), preparing meetings with those analysts or with portfolio managers and in general keeping an eye on the current sentiment of the market.

Knowledge and skills needed

A good Investor Relations Officer should have a diverse and broad background. Of course, financial knowledge and the skills to analyze financial statements is key, as those topics are part of the daily discussions with external analysts as well as with internal stakeholders.

However, a good general understanding of the industry and of the product landscape is necessary as well. And finally, sufficient communication skills are a must: it is not enough to advertise the company to future potential shareholders, it is also critical to listen to the concerns of existing shareholders and to relay this information back into the board room of the company.

What I learned

The market is always right. This is a very confrontative statement and I suppose not everyone would agree with this initially. However, in my experience, an honest and transparent approach to financial communication is the most successful one in the long term. Investor Relations should not sugarcoat its messages to the market. At the end, the value of the company is fundamentally decided by its potential to generate cash flows (and especially cash flows for shareholders with dividends). Changing the messaging can only delay a change of the stock price. One of my colleagues with a lot of experience loves to quote President Abraham Lincoln on this matter (although nobody knows if he really said that): “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”.

Financial concepts

To work in Investor Relations, you should be aware of several financial concepts: Firm valuation and modelling are at the heart of the job. General knowledge about M&A activities and divestitures can also be very helpful. But the most important concept is to understand the different players on the equity market:

Sell side

The sell side represents all the third-party analysts from investment banks or independent research firms that do not actually trade the stock of the company but sell their reports and insights to those who do. These analysts have a very deep understanding of the industry and the business model and there are excellent at modelling firm valuations.

Buy side

The buy side consists of large private funds, insurance companies and sovereign state funds. These are the actual shareholders of the company and often the portfolio managers of these companies are generalists with various industries in their portfolios. They are a diverse group of firms and while some of them are very passive investors, others are actively trying to influence the decision processes within the company.

Proxy advisors

Proxy advisors provide advisory services to institutional investors. They advise the buy side investors on how to vote during the annual general meeting of a corporation. As the market for proxy advisory is heavily concentrated, it is of utmost importance for Investor Relations to keep an ongoing dialogue with these firms. Well-known proxy advisors are “Glass, Lewis & Co” and “Institutional Shareholder Services (ISS)”.

Why should I be interested in this post?

Investor Relations is a developing function in public companies and the discipline must be better studied in the academic field. It is a key function within every publicly traded company to minimize the information asymmetries between investors and management and thus in my opinion a very interesting area to work in.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Anna BARBERO Career in finance

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

Useful resources

SAP

SAP Investor Relations

National Investor Relations Institute (US-focused association)

About the author

The article was written in October 2022 by Micha FISHER (University of Mannheim, MSc. Management, 2021-2023).