My experience as a Risk Advisory Analyst in Deloitte

January 24, 2023 by Nithisha CHALLA

My experience as a Risk Advisory Analyst in Deloitte

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.

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.

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

January 1, 2023 by Evan CHAISSON

My personal experience in finance via the yachting industry

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

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

December 29, 2022 by 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

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

December 21, 2022 by Ines ILLES MEJIAS

My professional experience as a marketing assistant at Auris Gestion

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.

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.

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

December 20, 2022 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.

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

December 22, 2024December 8, 2022 by Aastha DAS

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

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.

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

November 26, 2022 by Aamey MEHTA

My experience as a credit analyst at Wells Fargo

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

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.

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

October 30, 2022 by Wenxuan HU

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

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.

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

October 30, 2022 by Wenxuan HU

My internship experience as an industry research assistant in Industrial Securities

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.

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

October 21, 2022 by Micha FISCHER

My job in the Investors Relations department at SAP

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.

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).

My experience as a credit analyst at Amundi Asset Management

August 14, 2022 by Jayati WALIA

My experience as a credit analyst at Amundi Asset Management

In this article, Jayati WALIA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) shares her apprenticeship experience as an assistant credit analyst in Amundi which is a leading European asset management firm.

About Amundi

Amundi is a French asset management firm with currently over €2 trillion asset under management (AUM). It ranks among the top 15 asset managers in the world (see Table 1 below). Amundi is a public company quoted on Euronext with the highest market capitalization in Europe among asset management firms (€10.92 billion as of May 20, 2022). Amundi was founded in 2010 following a merger between Crédit Agricole Asset management and Société Générale Asset management.

Table 1. Rank of asset management firms by asset under management (AUM).
Top asset management firms rankings Source: www.advratings.com

Amundi has over 100 million clients (retail, institutional and corporate) and it offers a range of savings and investment solutions, services, advice, and technology in active and passive management, in both traditional and real assets.

Amundi logo Source: Amundi

My apprenticeship

My team at Amundi, Fixed Income Solutions, works in coordination with all the teams of the firm’s global bond management platform. The team’s work revolves majorly around product development on Amundi’s Fixed Income offerings including technological work, generating new investment ideas, and bringing them to clients both institutional and distributors. My position in the team is Assistant Credit Analyst.

Missions

My work primarily involves setting up tools and procedures linked to various investment solutions and portfolios handled by team. The tools are developed through algorithms in programming languages (mainly Python) and their functionalities range from analysis of market signals for investment, pricing of securities, risk monitoring and reporting. I worked on fixed-income portfolio construction and optimization algorithms implementing modern portfolio theory.

My daily responsibilities include report production related to daily fund activity such as monitoring fund balance and calculation of regulatory financial ratios to check for alignment against specific risk constraints. Additionally, I also participate in market research for new investment ideas through analysis of various fixed-income securities and derivatives.

Required skills and knowledge

The work and missions involved in my role require technical knowledge especially programming skills in Python, quantitative modelling and an understanding of financial markets, products and concepts of valuation, various types of risks and financial data analysis. Other behavioral skills such as project management, autonomy and interpersonal communication are also essential.

Three key financial concepts

The following are three key concepts that are used regularly in my work at Amundi:

Credit ratings

Credit ratings are extensively used in fixed income. They reflect the creditworthiness of a borrower entity such as a company or a government, which has issued financial debt instruments like loans and bonds.

Credit risk assessment for companies and governments is generally performed by rating agencies (such as S&P, Moody’s and Fitch) which analyze the internal and external, qualitative and quantitative attributes that drive the economic future of the entity.
Bonds can be grouped into the following categories based on their credit rating:

Investment grade bonds: These bonds are rated Baa3 (by Moody’s) or BBB- (by S&P and Fitch) or higher and have a low rate of default.
Speculative grade bonds: These bonds are rated Ba1 (by Moody’s) or BB+ (by S&P and Fitch) or lower and have a higher rate of default. They are thus riskier than investment grade bonds and issued at a higher yield. Speculative grade bonds are also referred to “high yield” and “junk bonds”.

Often, some bonds are designated “NR” (“not rated”) or “WR” (“withdrawn rating”) if no rating is available for them due to various reasons, such as lack of credible information.

Credit spreads

Credit spread essentially refers to the difference between the yields of a debt instrument (such as corporate bonds) and a benchmark (government or sovereign bond) with similar maturities but contrasting credit ratings. It is measured in basis points and is indictive of the premium of a risky investment over a risk-free one.

Credit spreads can tighten or widen over time depending on economic and market conditions. For instance, times of financial stress cause an increase in credit risk which leads to spread widening. Similarly, when markets rally, and credit risk is low, spreads tighten. Thus, credit spreads are an indicator of current macro-economic and market conditions.

Credit spreads are used by market participants for investment analysis and bond valuations.

Duration and convexity

Bond prices and interest rates share an inverse relationship, i.e., if interest rates go up, bond prices move down and similarly if interest rates go down, bond prices move up. Duration measures this price sensitivity of bonds with respect to interest rates and helps analyze interest-rate risk for bonds. Bonds with higher duration are more sensitive to interest rate changes and hence more volatile. Duration for a zero-coupon bond is equal to its time to maturity.

While duration is linear measure of bond price-interest rates relationship, in real life, the curve of bond prices against interest rates is convex i.e., the duration of the bonds also changes with change in interest-rates. Convexity measures this duration sensitivity of bonds with respect to interest rates.

Useful resources

Amundi

About the author

The article was written in August 2022 by Jayati WALIA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022).

My internship experience at Little Friends for Peace

August 10, 2022 by Talia HAMMOUD

My internship experience at Little Friends for Peace

In this article, Talia HAMMOUD (The George Washington University, BBA, 2019-2023) shares her experience as an intern at a non-governmental organization Little Friends for Peace.

Little Friends for Peace

Little Friends for Peace (LFFP) is a small-medium-sized non-profit organization, based in Washington, D.C., that welcomes youth and adults to experience, learn and practice peace through various peace education programs. Started by MJ and Jerry Park in 1981, LFFP believes that all people can create homes, classrooms, teams, and workplaces where everyone gives, everyone gains, and everyone wins. Named for the “little” part we can all play in spreading peace, LFFP seeks to eradicate violence by teaching skills for peace. Some ways they can do this are by hosting ‘peace circles’, summer camps for children, and weekly visits to the McKenna Center, an organization that helps incarcerated men get back on their feet. Furthermore, they have international programming to certain parts of the world such as China, the Middle East, and Latin America.

Logo of Little Friends for Peace

Source: Little Friends for Peace

My Internship Experience

Since my internship experience took place during the unprecedented pandemic, it was not quite the same as other people’s internship experiences. Firstly, we met weekly on zoom as a team for updates, to-dos, and any exciting news about the NGO. Then we had the option to choose what tasks we wanted to be a part of or lead. For example, I chose to lead the Halloween fundraising event as well as lead in-person peace circles for children between the ages of 6-10 every Monday.

Knowledge and skills needed

Some of the skills required for the internship include organization, fundraising skills, and communication via e-mails, meetings, and social media. I had to organize a fundraising event and create an itinerary for the night. I also had to create advertising and marketing materials to spread awareness and attract attention to the event. This proved difficult as it required the use of a lot of social media outlets to stimulate interest.

What I learned

Operating a non-profit organization is very difficult in terms of financing it. Since a lot of the services they provide are pro bono (meaning for free), the non-profit must find other sources of income to keep the program running. Thus, LFFP must make use of donations, host fundraising events, request grants, and other methods of public funding. Despite this, Little Friends for Peace can maintain operating the business successfully.

Financial Concepts

Interdependence: Non-profits are very dependent on governments and donors which requires them to well connect all parts of operations such as planning, programs, evaluations, etc., to ensure that they receive the right amount of funding and to please potential donors.

Another thing to note is that non-profits must have a substantial amount of cash in operating reserves in case of any downturn or opportunities. For example, due to the pandemic, the government had significant delays in handing out grants and donations to NGOs, thus many organizations had to turn to their reserves to keep business operating.

Why should I be interested in this post?

I think it is very important for all students studying business to experience or learn about all different types of businesses, especially non-profit organizations. I feel that the business behind NGOs and the difficulties of running one is not discussed enough. Therefore, I encourage all business students to consider learning more about the behind-the-scenes of a non-profit organization.

Useful resources

Little Friends for Peace

Non-Profit Finance: 12 Golden Rules

About the author

The article was written in August 2022 by Talia Hammoud (The George Washington University, BBA, 2019-2023).

My professional experience as an intern at Caisse des Dépôts

August 10, 2022 by Louise PIZON

My professional experience as an intern at Caisse des Dépôts

In this article, Louise PIZON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2020-2022) presents her internship experience at Bank of Territories from La Caisse des Dépôts in the Social and Solidarity Economy.

About the company

Caisse des Dépôts et Consignations (CDC), sometimes referred as Caisse des Dépôts, is a French public financial institution created in 1816. Under the direct control of a supervisory commission reporting to Parliament, it carries out general interest activities on behalf of the State and local authorities as well as competitive activities. It employs both civil servants and private-sector personnel under collective agreements.

Launched in 2018, Bank of Territories is a department of CDC. It supports local players in the service of regional development. It offers tailored advisory and financing solutions in loans and investments to meet the needs of local authorities, social housing organizations, local public companies and the legal professions. Bank of Territories also forges strategic partnerships with companies and financial players to carry out projects with a strong territorial impact. It is aimed at all territories, from rural areas to metropolitan areas, with the ambition of fighting against social inequalities and territorial fractures.

It mobilizes 20 billion by year to finance projects for local authorities and social housing actors. It has 35 local offices to ensure greater proximity to its clients. In September 2020, the Bank of Territories and BPI France launched a €40 billion “climate plan” over five years to support French companies in their ecological transition. Priority is given to building renovations and the development of renewable energies, with more than €14 billion budget for each. The rest of the budget should be devoted to innovation (5.6 billion euros), mobility (3.5 billion euros) and industry (1.5 billion euros).

To give an example, in 2013, the Caisse des Dépôts with the help of the State launched the waste recycling and insertion project in Haute Marne. The SCIC (Société Coopérative d’Intérêt Collectif) is called DIB 52 and consists of transforming common industrial waste (CIW), via the creation of platforms allowing the sorting and transformation of CIW into solid recovered fuel (SRF). This project has made it possible to respond to environmental issues thanks to an innovative industrial solution and, in addition, to create jobs.

Logo of La Banque des Territoires
Logo banque des territoires
Source: CDC

What is SSE?

The concept of Social and Solidarity Economy (SSE) designates a set of organizations in the form of cooperatives, mutual insurance, associations or foundations, whose internal functioning and activities are based on a principle of solidarity and social utility.

These enterprises adopt democratic and participatory management methods. The profits made are reinvested. Their financial resources are generally partly public.

Thus, SSE enterprises are concerned with their social or ecological impact. They aim at putting the human being and solidarity at the heart of the economy and respond to the major challenges of society (ageing well, transition to a local, sustainable food system, the circular economy).

My role and personal missions

I was intern in the Social and Solidarity Economy department of Bank of Territories.

I selected innovative start-ups respecting the environment or social utility company and I created their identity card to classify them. Indeed, to be eligible for different type of funding we need to segment them by type of activities. Then some of them will be chose to be financed and we help them for the process of development as an incubator.

The Social and Solidarity Economy department offered them a two-stage support solution for the creation stage and then the development stage. Our mission was to offer them a support as early as possible to be successful during the maturation of the project.

During the creation stage

We help for several tasks :

Create spaces for experimentation in each territory: specific advisors “young people” in an employment support contract, “hosting”/sponsoring of the bearers within a SSE enterprise of the sector (financed).
Help for the rebound in case of failure: assessments of the skills acquired during the creation.
Ensure a flexible and reactive support, adapted to the functioning of these initiatives, based on a mutual relationship between the mentor(s) and the entrepreneur(s)
Offer both technical support (legal, financial, administrative) and support on the substance of the projects’ approach (values, collective management, knowledge of the SSE …).
Immersions in other SSE companies, training on SSE and its values.
To insert the young people as soon as possible in a network as broad and varied as possible (collectives of support to projects). Mutualize the tools and devices of the SSE and the classic economy by the creation of common platforms.

During the development stage

We help them to set up supports for the perpetuation: lines of financing intended for the social innovation of young people (indicators and criteria adapted to the realities of the projects), improve the links between funders to simplify access to funding, make available specific territorial “funds of assistance” for funds for SSE activities of people under 35 years of age.

Raising awareness among local support network’ agents about the characteristics of young SSE projects. Provision of “drawing rights” on all the dimensions that cover support for young people over several years. Offer permanent and informal exchange spaces between holders to simplify the mode of creation of a SCIC. To make a place for young entrepreneurs in the SSE support systems.

Commitment of the Bank of Territories to the development of the SSE and social innovation

The State Secretariat for the SSE and Bank of Territories signed on November 3rd, 2020, an agreement to take an action on the strengthening of the support of SSE companies, the development of their financing and the support to social innovation.

With this objective in mind, Bank of Territories is mobilizing €300 million for the social and solidarity economy (SSE) between 2020 and 2022, as part of a pact to boost the SSE and social innovation.

This pact is based on two main goals:

Strengthening the support of SSE companies: Several actions must be carried out to improve the meeting between SSE companies and private financiers, particularly in the booming field of impact investment.
Financing SSE companies and social innovation

Thus, in addition to its support actions, Bank of Territories is committed to the State to deploy its investment actions over the next three years by:

Massively increasing the use of impact contracts*: These contracts make it possible to finance social innovation based on results and impact measurement. Within this framework, the State will launch calls for expressions of interest to identify projects in which the Bank of Territories will be able to invest in pre-financing.
Reinforcing its direct investments in the sectors of solidarity and medico-social services, food transition, local economic development, education and professional training, and digital inclusion.
Facilitate access to financing.

In addition, indirect investments (impact funds and sharing funds) will allow the Bank of Territories to multiply its support actions to SSE actors, in a complementary way to its direct investments.

General concepts

Impact contract

The impact contract is a partnership between the public and private sectors designed to encourage the emergence of innovative social and environmental projects. These contracts allow for the scaling up of solutions that have been identified in the field and are effective. The private and/or public investor pre-finances the project and takes the risk of failure in exchange for a pre-determined remuneration in case of success. The State only reimburses according to the results obtained and objectively observed by an independent evaluator.

How it works ?

The impact contract renews the financing of innovative projects carried out by actors in the social and solidarity economy. Under this system, social and environmental projects are financed by private and/or public investors, who are reimbursed by the State if the projects achieve the objectives previously set.

Impact contracts are not intended to replace traditional financing of social or environmental activities. They provide a complementary method of financing to facilitate the development of new activities or an innovative program for existing activities.

In concrete terms, the public authorities will launch calls for projects to meet social or environmental needs that are not, or are poorly, covered by the State: the selected structures will then be financed by a third-party investor. Depending on the results observed, based on indicators determined by the stakeholders, the State will remunerate the project leader, who will then be able to reimburse the investor.

Circular economy

The circular economy refers to an economic model whose objective is to produce goods and services in a sustainable manner, by limiting the consumption and waste of resources (raw materials, water, energy) as well as the production of waste. It is about breaking with the linear economy model (extract, manufacture, consume, throw away) for a “circular” economic model.

Intended to generate potential for the creation of activities and jobs, and to respond to the challenges of resource scarcity, circular economy approaches are based on the dynamics of multi-actor cooperation on a territorial scale.

Transition to a local, sustainable food system

The transition to food system refers to the process by which a society profoundly modifies its way of producing and consuming food. The term is used in the context of energy transition, the ecological transition or the demographic transition.

In the 2010s, the term transition to food system is increasingly used in the public debate to designate the expectations or efforts undertaken by the different actors in the chain (producers, processors, distributors, consumers, public authorities) to better respect the environment, improve the nutritional status of food, develop organic and fresh products, and produce under conditions that are more respectful of animal welfare and with greater equity between the actors in the chain.

Useful resources

Banque des territoires

Ellen MacArthur Foundation L’économie circulaire : du consommateur à l’utilisateur Video (in French).

About the author

The article was written in August 2022 by Louise PIZON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2020-2022).

My professional experience as a business developer at AJISO

August 10, 2022 by Louise PIZON

My professional experience as a business developer at AJISO

In this article, Louise PIZON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2020-2022) presents her personal internship experience as a business developer at AJISO in the sector of micro funding.

Presentation of the organization

AJISO is a legal aid provision organization that was established in 1998 with the aim of promoting women and children rights and access to justice in society. It empowers women and children through access to justice, organizing public awareness raising meetings about human rights, legal education and Gender-based Violence (GBV). It also trains paralegals, the ward protection committees and child rights clubs to eliminate all forms of violence in society.

After realizing that poverty is a leading cause of GBV, AJISO embarked on empowering women economically by mobilizing them into Village Community Banks (VICOBA) groups where they receive entrepreneurship trainings and other demand driven skills which in turn allows them to engage in economic activities and improve their livelihood hence reducing the risk of being subjected to GBV.

Every year AJISO together with the paralegals serve more than 500 clients and reaches out to more than 93,659 people (43,808 male and 49,851 female) in Kilimanjaro and neighboring regions with legal and GBV education.

Organization structure of AJISO
Ajiso association in Tanzania
Source: Ajiso

Organization structure of AJISO

Source: Ajiso

My role

My role within the organization was to help underprivileged women and disadvantaged minorities in Tanzania to get out of poverty and empower them. I was also in charge of finding new solutions to resolve problems and limits they are facing in their daily life and VICOBA groups.

My personal missions

The main mission was to promote human rights, access to justice and socio-economic empowerment of women and children in Tanzania :

My first mission was to work on VICOBA which is the main solution use by AJISO to help low-income and poor people to get out of the poverty by using micro funding. The solution of VICOBA groups to help people to build their own business. This solution is great and successful but has limits, so I found solution to these limits.

My second mission was to help communities, especially women that wish to join these groups but are unable to afford shares due to their extreme poverty situations. You need 10.000 Shilling to enter in these groups which represent around 3 euros.

My third mission was to work on the problem of wood in households. Indeed, most of the households have a traditional oven which uses a lot of wood. Women spend a lot of time in the wood to find firewood and during this time they are losing customers and money. Because of this they are enabled to buy shares in VICOBA group.

In addition to my missions, I have been working on the preparation of a training guide on VICOBA groups for a better understanding of the system for members and interested people.

Required skills needed

To work for AJISO you need minimum a bachelor’s in economics. The skills and knowledge needed are basics in finance, background in law, social work, gender issues, media or other relevant fields.

The language requirement is English C1.

You need to be flexible and have a strong adaptability to other culture as you will face “different” ways of work, “different” times of work, “different” ways of communication, and different planning and organization. You need also to be altruist to live together. It means a “different” way of managing projects and “different” expectations about the results of the projects. You should be capable to cope with these differences.

You need to send a contribution of 450€ to participate to the program.

Concepts

Village Community Bank (VICOBA)

VICOBA (Village Community Bank) is a savings and loan fund for members who have joined together and formed a group for economic improved purposes. The system started in Tanzania twenty years ago and has shown great success for its members to be able to lend to each other, help each other in various problems as well set up joint economic projects.

The micro funding provided by VICOBA involves banking transactions and group deposits using a share system. Shares are funds that are invested by a group member in the group for the purpose of making profit and becoming the owner of the group. A group member can buy one or more shares. The value of one share will be based on the agreement of the members of the group and it is recommended that the rate take into account the economic potential of its members. So, this feature requires group members to buy shares for each one by loudly stating the number of shares they are buying and the amount of social fund they are investing.

The VICOBA system is like any other financial system that requires a lot of attention in managing its records and assets. The VICOBA system encourages records to be stored in categories (shares and loans) and this is to simplify and be sure when one of the records is read differently or when it causes controversy. In the VICOBA system, records are recorded in the member’s book, group ledger.

With the help of the Economic Empowerment program of AJISO, at least 900 (756 female and 144 male) people including people living with disabilities 34 (18 male and 16 Female) were empowered with knowledge of VICOBA and entrepreneurship which in turn has enabled them to start and expand their businesses to improve their livelihood.

Economic benefits from VICOBA Bank

VICOBA has a lot of economic benefits compare to a normal bank. VICOBA members can benefit from borrowing’ procedures without collateral. The low interest rates are decided by the group members and it is charge between 5 to 10%. At the end of each cycle, shareholders received a return on investment. So, you can win money by simply injecting money into the fund (buying shares).

The poor and low-income household have access to a wide range of financial services such as deposit, loans, payment services, money transfers and insurance products.
All these benefits permit to low-income household to be able to invest in their small businesses and increase their income. VICOBA bank is simple with transparent transactions, It is a safe economic and a good way to secure group members’ market.

Weekly meeting of a VICOBA group
Meeting Vicoba
Source: Vicoba

My takeaway

Working for AJISO was a great experience both on a professional and personal level.

During this internship I understood that the success of an organization is based on the projects that propose long-term solutions to the problems of development and poverty. It was very beneficial to me and made me understand the importance of our involvement in a responsible cooperation generating a human development which will allow the village population that wish develop their business to set up autonomous actions to reach precise objectives. I believe that we can reduce poverty with the implementation of community development, social justice and various forms of emergency interventions.

For the personal aspect, I have acquired a greater sensitivity and knowledge of global inequalities. I understand the importance of helping each other to make things evolve. I learned to be humble because we are so lucky to live in such conditions in France and I am thankful.

Why should I be interested in this post?

If you are interesting to work for a NGO or helping low income people to going out of the poverty through micro funding this post is for you. In this post, I explain my experience as a business developer withing the association AJISO headquarter in Tanzania. And how an almost entirely female association has succeeded in lifted a large part of the population out of poverty.

Useful resources

AJISO

About the author

The article was written in August 2022 by Louise PIZON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2020-2022).

My experience as an M&A Analyst Intern at Oaklins Atlas Capital

August 10, 2022 by Basma ISSADIK

My experience as an M&A Analyst Intern at Oaklins Atlas Capital

In this article, Basma ISSADIK (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023) shares her experience as an M&A Analyst intern at Oaklins Atlas Capital.

In May-June 2021, I was able to intern at Oaklins Atlas Capital, which is the Moroccan branch of Oaklins, a leader of M&A advising in mid-market operations. Oaklins group has advisory teams in 45 countries around the world. The Oaklins team provides mergers and acquisitions, growth equity and equity capital markets, debt advisory and corporate finance advisory services.

Oaklins Atlas Capital

Founded in 1999, Atlas Capital is an independent investment bank in Morocco covering all businesses: investment banking, asset management, stock market intermediation and private management. Offering a range of financial services with high added value, it targets a diversified clientele, whether companies and public offices, financial institutions, private companies or individual investors. It then was included in the Oaklins group and network which has presence across the globe through its 45 teams from Stockholm to Shanghai, from New York to São Paulo. The bank benefits from cross-border collaboration which helps the teams find the best suitable deals for its clients with a track record of more than 1900 deals being closed in the past five years.

Logo Oaklins Atlas Capital

Source: Oaklins Atlas Capital.

My internship at Oaklins Atlas Capital

During May-June 2021, I worked as an M&A Analyst intern at Oaklins Atlas Capital. During my time at the bank, my main responsibilities were writing fact sheets about new clients (through communication with the Oaklins Network) and target companies / projects in Morocco. I was also responsible for drafting presentations (teaser, pitch, kick off meetings), for valuations (DCF, transactions) of the target companies once our clients confirmed their interest with it, and for assisting senior management in day-to-day tasks in relation to the transactions.

This experience was my very first in investment banking and it helped me understand the M&A process and how important negotiation and customer relationships were to this field. This internship introduced me to the very basics of Mergers and Acquisitions through a high-level of personal attention and monitoring as I was in a team of five in total including two partners and three interns. I had the opportunity to learn directly from professionals who have been in the field for 20+ years. Moreover, through this internship, I have been exposed to many industries: textile, technology, agriculture, food processing industry, electrical equipment, infrastructure, renewable energy and to clients from all over the world.

Skills needed

Strong interpersonal skills
Financial analysis skills
Customer service (if you are to interact with clients)
To be familiar with finance and be able to analysis financial data
To be familiar with digital tools such as pptx and excel

What I have learnt from the internship

This internship has helped me learn so much about cross-border operations and how to approach potential acquirers with target companies and discuss the acquisition with them. It has also enabled me to have a solid understanding of many industries as I was in charge of sectoral research.

Key concepts related to my work

Mergers and acquisitions

Why do companies merge with and acquire other companies? Mergers and acquisitions are the act of consolidating companies or assets with an eye toward stimulating growth (it can expand a company’s market shares without it having to do significant heavy lifting), gaining competitive advantages (maybe eliminating competition and gaining market share), increasing market share, or influencing supply chains (eliminating a tier of costs).

A merger describes two companies uniting into a single company, where one of the two companies ceases to exist after being absorbed by the other company. The boards of directors of both companies must first secure approval from their respective shareholder bases. In 2006, Disney and Pixar completed a successful merger.

An acquisition occurs when one company (the acquirer) obtains a majority stake in the target firm, which incidentally retains its name and legal structure. For example, after Amazon acquired Whole Foods in 2017, the latter company maintained its name and continued executing its business model, as usual.

Tender Offer

A tender offer is a bid to purchase some or all of shareholders’ stock in a corporation. Tender offers are typically made publicly and invite shareholders to sell their shares for a specified price and within a particular window of time.

The price offered is usually at a premium to the market price and is often contingent upon a minimum or a maximum number of shares sold. To tender is to invite bids for a project or accept a formal offer such as a takeover bid. An exchange offer is a specialized type of tender offer in which securities or other non-cash alternatives are offered in exchange for shares. For example, Elon Musk has recently announced making a tender offer to acquire Twitter.

Proxy fight

A proxy fight refers to the act of a group of shareholders joining forces and attempting to gather enough shareholder proxy votes to win a corporate vote. Sometimes referred to as a “proxy battle,” this action is mainly used in corporate takeovers. For example, Microsoft Corporation made an unsolicited offer to buy Yahoo for $31 per share. The board of directors at Yahoo believed the offer by Microsoft under-valued the company, and, consequently, the board stalled any negotiations between Microsoft and Yahoo executives.

Why should I be interested in this post

This post is interesting for everyone who would like to work in investment banking and who would like to kick start their career by doing a summer internship.

Useful resources

Oaklins Atlas Capital

About the author

The article was written in August 2022 by Basma ISSADIK (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023).

My experience as an M&A/TS intern at Deloitte

August 10, 2022 by Basma ISSADIK

My experience as an M&A/TS intern at Deloitte

In this article, Basma ISSADIK (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023) shares her experience as an M&A/TS (Mergers and Acquisitions / Transaction Services) Intern at Deloitte.

Summer 2021, I was able to intern at Deloitte Casablanca for a couple of months. I was in the Transaction Services team which was in charge of advisory in deal and IPO readiness, target screening, sell-side and buy-side due diligence, transaction accounting and reporting, and business integration or separation. Transaction services typically refers to the services provided when a business transaction takes place. An example of a business transaction would be a merger or acquisition of a company.

Deloitte

Founded in 1845, Deloitte is one of the biggest professional service providers in the world. Being one of the “Big Four” accounting firms, it provides services in audit and assurance, consulting, financial advisory, risk advisory, tax and legal advisory. Deloitte was founded by William Welch Deloitte in London in 1845 and expanded into the United States in 1890. It merged with Haskins & Sells to form Deloitte Haskins & Sells in 1972 and with Touche Ross in the US to form Deloitte & Touche in 1989. As of 2020, Deloitte is the third-largest privately-owned company in the United States, according to Forbes. The firm has sponsored a number of activities and events including the 2012 Summer Olympics.

Logo Deloitte.

Source: Deloitte.

My internship at Deloitte

When I arrived at Deloitte in July 2021, the team was working on a specific project in cooperation with the Minister of the Industry. I was in charge of analyzing the eligibility of our clients to obtain financing from the Minister of the Industry. We already had set criteria for the companies that would later be presented to the Minister of the Industry. Our mission was to select the interesting project in accordance with the “banque de projet” which had already been established and advise the companies to meet the criteria as best as they can. These criteria were of different natures:

In financing for instance, there should be a portion of the project financed by the shareholders / founders.
The forecasted financial figures should be realistic.
The business plan should fit within the criteria and so on…

The junior analysts made sure I was closely supervised and assisted whenever I needed help with anything. I was communicating with them on a daily basis, and they all ensured I had a great experience at Deloitte which is what differentiates the firm from other competitive professional services companies. From the start I was given a lot of responsibilities which I was very happy about. I was able to participate in meetings and had the opportunity to lead one at the end of my internship. It was a really good experience in a way that enabled me to have direct contact with professionals and feel very useful to the team as well.

Skills needed

To have some experience in accounting
To be able to communicate and interact with the team
To possess analytical skills and problem-solving skills
To be familiar with financial reporting
To be familiar with digital tools such as pptx and excel
To have a strong learning ability
Be able to take responsibilities early on

What I have learnt from the internship

This internship has taught me a lot on the importance of meticulousness and how vital it is to be very rigorous with the data we are given and the analysis we do of it. I have also learned lots about the role of an auditing and consulting firm in advising clients to make the best decisions for their companies.

Key concepts related to my internship

Due diligence

Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering a proposed transaction with another party. Due diligence (DD) is an extensive process undertaken by an acquiring firm in order to thoroughly and completely assess the target company’s business, assets, capabilities, and financial performance. There may be as many as 20 or more angles of due diligence analysis.

The main types of due diligence inquiry are as follows:

Administrative DD: Is the aspect of due diligence that involves verifying admin-related items such as facilities, occupancy rate, number of workstations, etc.
Financial DD: Financial DD aims to provide a thorough understanding of all the company’s financials, including, but not restricted to, audited financial statements for the last three years, recent unaudited financial statements with comparable statements of the last year, the company’s projections and the basis of such projections, capital expenditure plan, schedule of inventory, debtors and creditors, etc.
Legal DD
Asset DD
Human Resources DD
Environmental DD
Taxes DD : Due diligence in regard to tax liability includes a review of all taxes the company is required to pay and ensuring their proper calculation with no intention of under-reporting of taxes.
Intellectual Property DD: Almost every company has intellectual property assets that they can use to monetize their business. These intangible assets are something that differentiates their products and services from their competitors.
Customer DD
Strategic Fit: Acquirers are generally also very careful about exercising due diligence in regard to evaluating how well the target company fits in with the overall strategic business plan of the buyer.

Why should I be interested in this post

You should be interested in this post if you are interested in working in finance in general because it might help you understand if you would like to work in the field or not, and maybe help you refine your professional project.

Useful resources

Deloitte

About the author

The article was written in August 2022 by Basma ISSADIK (ESSEC Business School, Global Bachelor in Business Administration, 2019-2023).

Mon expérience en contrôle de gestion chez Chanel

May 11, 2022 by Emma LAFARGUE

Mon expérience en contrôle de gestion chez Chanel

Dans cet article, Emma LAFARGUE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2024) partage son expérience en contrôle de gestion chez Chanel.

Présentation de l’entreprise

Chanel est une entreprise française de haute couture, prêt-à-porter, accessoires, parfums et autres produits de luxe. Elle a été créée en 1910 par Gabrielle Chanel. La maison appartient aujourd’hui à Alain et Gérard Wertheimer et son siège est basée à Neuilly. La maison est connue pour ses produits tels que le parfum numéro 5 créé en 1921, le tweed ou encore les sacs. Chanel est une des rares entreprises du luxe qui n’est pas côté en bourse. Son chiffre d’affaires s’élève à 10 milliards de dollars en 2020.

Logo de l’entreprise Chanel
Logo Chanel
Source: Chanel

Mon poste et qu’est-ce que le contrôle de gestion ?

Le contrôleur de gestion est la personne chargée de contrôler les budgets de l’entreprise en lien avec la mise en œuvre de la stratégie de l’entreprise.

De mon côté, j’étais au service de contrôle de gestion « Reporting et Budget » au sein de la division Mode de chez Chanel (il existait aussi d’autres service de contrôle de gestion comme la gestion des stocks). Mon périmètre était très large, je gérais tout d’abord les budgets de fonctionnement des équipes (sans la masse salariale qui était gérée par un autre employé), cela concerne donc les déplacements, voyages, séminaires, intérims et différents frais consultants. J’étais en charge de toutes les équipes de la division mode : le digital, la communication, le service clients (CRM pour customer relationship management), les sessions d’achats, les opérationnels ainsi que les équipes produits.

Je gérais également les coûts de collection c’est-à-dire les coûts de création de tous les prototypes destinés aux défilés et les budgets des sessions d’achats, soit le moment après le défilé durant lequel les directeurs des boutiques monde se rendent au siège pour choisir quelle pièce sera présente dans quelle boutique.

Enfin, je m’occupais des budgets de la logistique (supply chain) et des centres de distribution (retail). Ce volet passait par une partie « Suivie de projet » qui concernait un nouveau centre de distribution. Il fallait donc suivre la mise en fonctionnement de ce centre, en particulier les dépenses de de fonctionnement (OPEX pour operational expenses) et les investissements (CAPEX pour capital expenditures).

Concrètement, durant mon stage, j’exerçais différentes missions :

Lors des clôtures mensuelles : mise à jour mensuelle des fichiers de suivi des coûts par l’extraction des données de la comptabilité et consolidation dans nos fichiers de suivi et tableaux de bord
Travail d’analyse : traitement des données, analyse des écarts existant entre les chiffres de prévisions et les chiffres réalisés
Reporting aux différentes équipes pour les tenir au courant de l’avancée dans leurs budgets

La partie la plus intéressante de mon stage, selon moi, a été l’élaboration des budgets pour l’année suivante. L’objectif de ce travail est d’estimer les dépenses pour l’année suivante afin qu’elles soient validées par la Direction Financière et la Direction Générale.
L’élaboration des budgets passe par des réunions avec toutes les équipes opérationnelles afin de définir leurs besoins, comprendre leurs différents projets et les estimer.

L’élaboration des budgets permet au contrôleur de gestion de rester informé des différents projets que mènent les équipes pour pouvoir ensuite suivre au plus près leurs dépenses l’année suivante.

Au niveau opérationnel, le contrôleur de gestion est donc en relation directe avec toutes les équipes opérationnelles dont il a la charge, avec le service de comptabilité qui est chargé d’enregistrer et d’imputer les factures et donc les différents postes de coûts. Le contrôleur de gestion est aussi en relation avec le responsable du contrôle de gestion et le directeur financier.

Compétences et connaissances requises

Le travail se fait principalement sur Excel, ainsi, il faut maîtriser les principales commandes : recherche (recherche H ou V dans les feuilles Excel), somme.si (sommes conditionnelles), TCD (tableaux croisés dynamiques), etc.

Il faut avoir des connaissances sur l’entreprise, le secteur dans lequel on évolue et les différentes équipes avec qui on est en contact de manière régulière pour établir les budgets. La connaissance de chaque équipe est importante car l’activité peut différer beaucoup d’une équipe à l’autre (le suivi des budgets pour les coûts de collection est totalement différent de celui effectué pour la logistique).

Il faut également des connaissances dans le domaine financier : savoir analyser un compte de résultat, comprendre les différentes notions comptables telles que les immobilisations et amortissements.

Un esprit d’analyse et de synthèse sont aussi nécessaires pour effectuer les reportings mensuels aux différentes équipes.

Enfin, les qualités relationnelles sont indispensables car le contrôleur de gestion est en constante interaction avec les autres services de l’entreprise.

Autres articles sur le blog SimTrade

▶ All posts about Professional experiences

▶ Anna BARBERO Career in finance

▶ Chloé POUZOL Mon expérience de contrôleuse de gestion chez Edgar Suites

Resources utiles

Chanel

Association Nationale des Directeurs Financiers et de Contrôle de Gestion (DFCG)

A propos de l’auteure

Cet article a été écrit en mai 2022 par Emma LAFARGUE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2024).

Mon expérience de contrôleuse de gestion chez Edgar Suites

May 10, 2022 by Chloé POUZOL

Mon expérience de contrôleuse de gestion chez Edgar Suites

In this article, Chloé POUZOL (ESSEC Business School, Grande Ecole Program – Master in Management, 2022-2024) partage son experience de contrôleuse de gestion chez Edgar Suites.

L’entreprise : Edgar Suites

Edgar Suites est une start-up fondée en 2016 par Xavier O’QUIN, Maxime BENOIT et Grégoire BENOIT. Elle propose à ses clients de vivre une expérience au cœur de la ville en logeant dans une suite urbaine : un mix idéal entre appartement et hôtel. Pour cela, l’entreprise loue des locaux initialement occupés par des bureaux, qu’elle transforme en T1 (studio), T2 (2 pièces) et T3 (3 pièces).

Exemple de suite

Source: Edgar Suites

En mai 2021, Edgar Suites a levé 104 millions d’euros auprès du fonds d’investissement BC Partners. Depuis cette levée de fonds, l’entreprise a triplé son activité avec presque 150 suites urbaines à Paris, Levallois Perret, Bordeaux, Lille et Cannes.

Logo de l’entreprise Edgar Suites
Logo Edgar Suites
Source: Edgar Suites

Mes missions

En tant que stagiaire, j’ai eu plusieurs missions bien différentes, certaines seulement temporairement et d’autres tout au long de mon stage.

Lorsque je suis arrivée chez Edgar Suites, il n’y avait pas encore de contrôle de gestion mis en place. L’entreprise avait juste quelques fichiers Excel avec lesquels elle faisait tant bien que mal les calculs de chiffres d’affaires (CA) et d’excédent brut d’exploitation (EBE) qui représente le bénéfice d’une société avant les intérêts, impôts, amortissement et provisions (EBITDA pour Earnings before interest, taxes, depreciation, and amortization)…

L’entreprise avait embauché un prestataire extérieur pour construire des fichiers de reporting financier et comptable grâce à un tableur (Excel) et une suite de logiciels qui permettent de transformer des données disparates en informations visuelles, immersives et interactives (Power BI). J’étais chargée de surveiller l’avancée du dossier, de superviser le respect des dates limites (deadlines) et surtout de vérifier la cohérence des fichiers envoyés (écarts, cohérences entre les grands livres, les résultats de l’entreprise (P&L pour Profit & Loss) et les budgets). Cela m’a ainsi permis d’apprendre à maîtriser un éditeur de requêtes de données (Power Query, un des logiciels de la suite Power BI) pour importer des données de l’entreprise dans le tableur Excel.

En plus de cette première responsabilité, j’ai été chargée d’améliorer les fichiers internes de suivi d’indicateurs utilisés pour l’aide à la décision et pour mesurer l’efficacité d’une mesure (KPI pour key performance indicator) notamment le coût au check-in et le coût par équivalent temps plein (ETP) qui est une unité de mesure permettant d’évaluer la charge de travail et la capacité d’un employé.

Réalisation des reportings mensuels

En plus de ces missions, j’étais responsable de la rédaction de tous les reportings mensuels pour BC Partners (le fonds d’investissement auprès duquel Edgar Suites a levé des fonds pour financer son développement) et pour les propriétaires d’immeuble à loyer variable (loyer calculé selon un certain pourcentage du chiffre d’affaires) où il s’agissait de calculer le chiffre d’affaires, les coûts fixes, les coûts variables du mois et ainsi les bénéfices du mois. Je devais aussi m’occuper des rapprochements bancaires (contrôle de la concordance entre les relevés des comptes bancaires et les comptes correspondant dans la comptabilité) et de la gestion des factures qui s’effectuaient à l’aide du logiciel Pennylane.

Réflexion sur la responsabilité sociétale des entreprises (RSE)

Enfin, j’ai également participé à la réflexion sur la responsabilité sociétale des entreprises (RSE) pour prendre en compte les enjeux environnementaux et sociaux d’Edgar Suites. Les dirigeants souhaitent, en effet, être labellisés B-Corp (Benefit Corporation). Une entreprise peut recevoir la certification B-Corp lorsque ses actions sont en adéquation avec les exigences sociales, environnementales et de gouvernance du public. Il s’agit d’une certification qui s’obtient après un long processus. J’ai donc effectué des recherches et conduit des entretiens pour trouver le cabinet de conseil adéquat pour nous accompagner tout au long de ce projet. J’ai également participé aux réunions de réflexion sur les actions d’Edgar Suites afin d’atténuer l’impact social et environnemental de l’activité.

Compétences et connaissances requises pour ce stage

Les principales compétences et connaissances techniques (hard skills) requises sont de maîtriser un tableur comme Excel et d’avoir de bonnes bases en comptabilité et en finance. En effet, pour réaliser les reportings, il était nécessaire de comprendre les données importantes de l’activité pour pouvoir les analyser et les synthétiser. Ces données importantes chez Edgar Suites étaient le coût par check-in, l’EBITDA, les coûts fixes et les coûts variables (notamment les loyers variables). De même, pour faire de la modélisation financière, il est essentiel d’avoir de bonnes connaissances financières afin de créer une logique et une présentation cohérente au sein du fichier.

Enfin, les compétences humaines et comportementales (soft skills) essentielles étaient principalement de savoir travailler en équipe ; cela permet de mettre à contribution les idées et les compétences de tous les membres du groupe pour améliorer le résultat du travail sur l’entreprise.

De façon générale, je suis très satisfaite de mon premier stage que j’ai effectué à la fin de ma première année à l’ESSEC. J’ai été responsabilisée et j’ai pu découvrir le fonctionnement comptable d’une entreprise ainsi que me familiariser avec la finance d’entreprise. En effet, j’ai pu manipuler les états financiers d’Edgar Suites pour me familiariser avec leur lecture et leur analyse. De plus, j’ai pu observer le fonctionnement des finances de l’entreprise : comment l’entreprise gérait ses coûts ; comment Edgar Suites essayait d’améliorer sa rentabilité ; quelles étaient les répercutions sur le plan financier des décisions de management …

Concepts clés

Je détaille ci-dessous quelques concepts clés qui m’ont été utile de maîtriser pendant mon stage :

Contrôle de gestion

Le contrôle de gestion est un service au sein d’une entreprise, chargé d’aider à la prise de décision. Il est responsable de l’élaboration des budgets, de la mise en place de procédures de gestion et de règles, du suivi des résultats, du choix des indicateurs clés dans les tableaux de bord et de la production et la diffusion d’outils de pilotage. L’objectif principal du contrôleur de gestion est d’optimiser les performances matérielles et financières de l’entreprise.

Chiffre d’Affaires

Le Chiffre d’Affaires (CA) correspond à la somme des ventes des produits ou services d’une entreprise. Il se calcule en multipliant les quantités vendues par leur prix de vente. Il s’agit donc d’un indicateur principal sur les performances de l’entreprise.

EBE ou Ebitda

L’Ebitda (Earnings before interest, taxes, depreciation, and amortization) correspond au bénéfice avant les intérêts, les impôts, les taxes, la dépréciation et l’amortissement. Il mesure donc la création de richesse avant toute charge. Il s’agit d’une notion assez proche de l’EBE (Excédent Brut d’Exploitation). Il existe deux formules pour calculer l’Ebitda :

Ebitda = Chiffres d’affaires – achats – autres charges externes – charges du personnel – autres charges

Ebitda = Résultat net + charges d’intérêts + charges d’impôts + amortissements et provisions

Lorsque l’Ebitda est positif, cela signifie que l’entreprise est rentable au niveau opérationnel mais pas forcément qu’elle est bénéficiaire (après la prise en compte d’autres éléments comme les charges financière).

Responsabilité sociétale des entreprises (RSE)

La responsabilité sociétale des entreprises (RSE) correspond à la contribution des entreprises aux enjeux du développement durable. Cela consiste à faire des efforts pour la protection de l’environnement et pour l’amélioration de la société. Ces efforts se font en collaboration avec toutes les parties prenantes (fournisseurs, clients, employés, actionnaires…). Il existe aujourd’hui de nombreuses certifications, comme la certification B-Corp, qui reconnaissent l’investissement des entreprises dans la RSE.

Articles à lire sur le blog SimTrade

▶ All posts about Professional experiences

▶ Anna BARBERO Career in finance

▶ Emma LAFARGUE Mon expérience en contrôle de gestion chez Chanel

▶ Ghali EL KOUHENE Asset valuation in the real estate sector

Ressources utiles

Edgar Suites

B-Corp France

A propos de l’auteure

Cet article a été écrit en mai 2022 par Chloé POUZOL (ESSEC Business School, Grande Ecole Program – Master in Management, 2022-2024). Vous pouvez me contacter via mon adresse mail ESSEC pour plus d’information sur mon stage.

My internship experience as a financial research analyst in Tianfeng Securities

May 6, 2022 by Pai LI

My internship experience as a financial research analyst in Tianfeng Securities

In this article, Pai LI (ESSEC Business School, Global BBA, 2021-2023) shares her internship experience as an assistant financial research analyst in Tianfeng Securities which is a Securities Research Institute in China.

The Company

Tianfeng Securities is a global full-license integrated financial securities service provider. Tianfeng Securities Research Institute is a high-end industry research think tank in China. It brings together more than 200 team members to build bridges and links between funds and industry and enhance the ability of financial services to serve the substantial economy.

Tianfeng Research Institute 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.

Logo of Tianfeng Securities

Source: Tianfeng Securities.

My Internship

My missions

The department I practiced for was the Securities Research Institute, and the position was financial research assistant. My work mainly consisted of two parts, the daily research work about industry and the related work of writing in-depth research reports about companies.

Daily work includes using a financial database called Wind (like Bloomberg but focused on mainland China) to find industry data, prospectus, company annual reports and other materials, doing market shares calculations, doing valuation models, collecting information for industry research topics, writing new stock purchase proposals, updating internal industry databases, modifying and improve the Powerpoint presentation of roadshow reports, operating social media for publishing weekly reports, comments, and in-depth reports.

In addition to the above routines, I also participated in the writing of the first draft of the Institute’s in-depth reports. At the beginning I wrote some simple company tracking reviews. These short reports were completed by referring to the relevant announcements and materials of the company. Next, I gradually participated in the writing of the in-depth reports. In the process of continuous maturity and improvement of the reports, I learned a lot of research skills.

Writing in-depth reports requires the collection of a large amount of financial and business data, and an overall overall grasp of the structure and context of the company. Not only did I improve my ability to understand the company’s business by collecting information from all parties, but I also learned to build a valuation model to predict the company’s future performance.

Required skills and knowledge

In terms of technical skills, you need to have financial knowledge, frameworks and insights for industry analysis and company analysis, and report writing skills. These professional abilities of mine have been greatly improved during this internship.
In terms of behavior skills, industry researchers need to have logical thinking ability to predict the future direction of companies and industries. In addition, interpersonal communication skills are also very important, through which research results can be presented to the buy-side clients in the best possible state.

What I have learnt

My biggest gain in this internship is that I learned how to write a professional report. I summarize the essential qualities of an extraordinary in-depth report into seven points:

The selection of the company is meaningful.
The core point of view about the company is highlighted.
The discussion about the business of the company is rigorous and logical.
The business and financial data are authentic and credible.
The business charts are clear and detailed.
The text is concise and straightforward.
The exhibit are exciting.

In addition, I also deepened my understanding of the industry of securities firm research. I realized that it is a highly homogenized industry, because the same teams research the same companies, and the companies provide the same type of information (announcements, financial and accounting data). This is an industry that pays great attention to timeliness. When a news comes out, investors expect to see relevant research results immediately, and will be swept away by other reports later. This is an industry with high barriers to entry. When looking for data, well-funded securities companies are equipped with sufficient database access qualifications, while small agencies can only search for free public information. Every year, many finance students try hard to get an internship in industry financial research, but few can get it. Therefore, in the face of such as intense competition, what we need to do is to maximize our core competitive advantages.

Three key financial concepts

Here are 3 useful valuation methods.

P/E Valuation Method

The Price-to-Earnings (P/E) valuation method is based on the price-earnings (P/E) ratio:

Price earnings ratio

EPS comes in two main varieties. TTM is a Wall Street acronym for “trailing 12 months”. This number signals the company’s performance over the past 12 months. The second type of EPS is found in a company’s earnings release, which often provides EPS guidance. This is the company’s best-educated guess of what it expects to earn in the future. These different versions of EPS form the basis of trailing and forward P/E, respectively.

The price-earnings ratio can be used to predict the stock price by the following calculation formula:

Stock price prediction based on the price-earnings ratio

P/B valuation method

The P/B valuation method is based on the price-to-book (P/B) ratio:

Price-book ratio

Generally speaking, stocks with low price-to-book ratios generally have relatively high investment value (in their balance sheet).
The price-to-book ratio can be used to predict the stock price by the following calculation formula:

Stock price prediction based on the price-to-book ratio

The P/B valuation method is suitable for companies with large and relatively stable net assets, such as steel, coal, construction and other traditional companies. However, it is not suitable for enterprises with light assets such as technology Internet and consulting services, which are small in scale and dominated by labor costs. The valuation should be based on the principle of “peer ratio and historical ratio”. Usually, the lower the price-to-book ratio, the safer the investment.

PEG valuation method

The PEG valuation method is based on the price-to-earnings growth (PEG) ratio:

Price-to-earnings growth ratio

In general, the smaller the PEG, the better and safer. But PEG>1 does not mean that the stock is overvalued. It must be measured according to the overall indicators of its peers. If the PEG is greater than 1, but its peers are higher than it, which also means that although the company’s PEG is already higher than 1, its value may also be is underrated.

Useful resources

Tianfeng Securities

Wind Database

About the author

The article was written in May 2022 by Pai LI (ESSEC Business School, Global BBA, 2021-2023).

My experience as a junior market research analyst at Procolombia

April 14, 2022 by Diana Carolina SARMIENTO PACHON

My experience as a junior market research analyst at Procolombia

In this article, Diana Carolina SARMIENTO PACHON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2022) shares her experience as a junior market research analyst in the investment department at Procolombia.

The company: Procolombia

Procolombia is the Colombian government entity that promotes direct investment, exports, and tourism into Colombia. The entity has several offices both in Colombia and in different countries around the world in order to reach to other governments, and thus facilitate negotiations. Examples of the locations of these offices are Paris, New York, London, Tokyo, Beijing, Dubai, Mexico, among others.

Procolombia is divided into the three departments: investment, exports and tourism.

Investment

Investment department whose main mission is to promote and bring into Colombia direct foreign investment. Examples of investments executed by the promotion of Procolombia are Amazon, Softbank, and Harley-Davidson.

Exports

Exports department with the main objective of promoting Colombian good across the world, and its main mission is accompanying and support exporters as well as contacting different public and private entities interested in Colombian products.

Tourism

Tourism department main focus is promote tourists into Colombia and expand the market share of the country in the Latin-American tourism.

The investment department organization and execution

Firstly, the investment department is divided into four regional hubs: North-America & the Caribbean, Latin-America, Europe-Middle East & Asia. Each hub is specialized in its respective region and market. Secondly, each hub has a general manager and usually 4/5 advisors specialized in a specific industry (Chemicals, Industries 4.0 which refers to AI/IoT/digitalization, Investment & Real Estate, Agro, Energy, etc.) which would facilitate the operations of the department so that every person is assigned with a specific region and industry.

The process of bringing investment

First of all, the investment advisors from Procolombia contact the respective firm/investor to create a very first contact, or the investor may contact Procolombia to obtain the very first information.
In the second place, if the investor is interested, he or she will ask for further information and probably require the specific opportunities available. For this purpose, the Colombians firms or projects looking for investing usually provide their basic financial information such as EBITDA, debt ratios, and the amount of money required, so that investors can have the primary financial information.
Once the investor shows more interest after having analyzed the basic financial metrics, there will be some factories and free-trade visits alongside meeting with the respective companies in order to gain deeper insight, and if they finally decide to invest, Procolombia will be supporting them in legal and tax matters to facilitate their investment journey in Colombia.

My internship Experience

I was specifically an intern of the North America management team. My main mission was supporting the team by providing market research of the potential investment opportunities as well as the possible investors that could be reached in order to promote the country in North America (US, Canada, and Caribbean countries). Additionally, I provided the consolidation of financial data about different Colombian companies and consolidated such information in such a way that it was understandable by potential investors.

Furthermore, I also had to support the logistics of the various events in which Procolombia looked to promote the country usually with very important high-level guests such as ambassadors, officials or investors looking for large investments, experience that showed how negotiation among different countries were conducted and how was the planning of such plans executed.

Skills needed

This internship required computational abilities with the purpose of comprehending the data and financial information of companies along with rapid analytical skills that can synthetize and summarize such information efficiently.

Regarding soft skills: team oriented and adaptability are crucial as operations are most of the time executed by sharing diverse opinions and agreeing with others which requires the wiliness to work and listen carefully. Besides, confronting different situation which may be one’s out of comfort zone is also a very common situation in the workplace, thereby it’s essential to be open to different challenges and situations as new issues can arise at any moment.

Financial Concepts

Even though my internship was more focused on the promotion of foreign direct investments in Colombia, I was still able to have direct contact with some financial concepts that were used regularly in the running of the entity, such as Ebitda and Debt Ratio.

Foreign direct investment (FDI)

Foreign direct investment (FDI) indicates the transfer of foreign capital into an entity or organization with a long-term vision. For instance, when an American or European multinational corporation invests in Colombia with the aim of opening facilities in this country in order to facilitate the operations in the region, and probably improve profitability. An example of this is P&G, Henkel or L’Oréal, companies that invested in the country in such a way that the performance both in Colombia and Latin America becomes more efficient in addition to providing employment, development and technology .

EBITDA

EBITDA refers to Earnings Before Interest, Taxes, Depreciation & Amortization. In other words, it’s the operating income however the non-cash costs such depreciation & amortization are added. It is usually used because it reflects the earnings from operations and the efficiency of them.

Net debt

All the debt (long-term + shot-term) – all cash & equivalents which would indicate what they company still owed in case of liquidation

Solvency ratios

Solvency ratios were usually used so that the investor could know the debt state of the company such as debt ratio = Total obligations/ Total Liabilities indicating how much financial leveraged the company has. The higher it is, the riskier the company may be, e.g., a 0.5 debt ratio indicated that 50% of the firm assets are financed by debt.

Thus, this experience also helped to shape some basic financial knowledge in real life situations and even taught me the importance of understanding financial concept as even if they are not directly in our expertise, they will always be the base of discussions in the business world.

Useful resources

Procolombia

About the author

The article was written in April 2022 by Diana Carolina SARMIENTO PACHON (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2022)

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