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)

My experience as a junior financial analyst at ACE

March 24, 2022 by William LONGIN

My experience as a junior financial analyst at ACE

In this article, William LONGIN (EDHEC Business School, Global BBA, 2020-2024) shares his experience as a junior financial analyst at ACE Finance et Conseil, which is a wealth management firm specialized in financial investments.

ACE Finance et Conseil

First, let me present ACE Finance et Conseil. It is a wealth management firm created by Gabriel Eschbach in 2002. It is located in Strasbourg in the East of France. ACE Finance et Conseil currently manages a portfolio of 230 clients who are individual investors. The profile of these investors varies in terms of wealth and investment objectives. Most of the clients of ACE Finance et Conseil are living in the East of France, especially in the Strasbourg area. The ambition of the company is to expand its base of clients at the national and even international level.

Logo of ACE Finance et Conseil.

Source: ACE Finance et Conseil.

The founder of the company, Gabriel Eschbach, is a graduate student from the University of Strasbourg. Gabriel also attended a program in wealth management at ESSEC Business School. Building on his past professional experience in large financial institutions and insurance companies, he has developed extensive skills and knowledge on financial markets and asset management.

My personal experience at ACE Finance et Conseil

My job was to find relevant information on the firms of interest for ACE. To find such information, I used the Bloomberg Terminal. Beyond the search of information about companies, I also spent time on building a portfolio based on our current knowledge of the market conditions. During my internship, the stock market was bullish (Summer 2021). ACE’s strategy was to find the most interesting stocks based on the risk level that the firm was willing to take on behalf of its clients.

Bloomberg – Terminal and keyboard
Bloomberg terminal and keyboard
Source: Bloomberg.

My most valuable experience in the firm was to be able to understand the investment philosophy of the firm, which relied on a rigorous analysis of the relationship between risk and (expected) return on the one hand, and on a clear understanding of the investors profile of its clients on the other hand.

Everything is planned! And what I came to realize is that investing has nothing to do with gambling. No technical analysis, no gibberish, only careful analysis of companies through the fundamental analysis of their financial accounts (balance sheet and income statement), financial ratios and company news. As we are unable to predict the future, ACE has an investment philosophy based on the rigorous investment process combining the analysis of the relationship between risk and (expected) return of financial assets and a clear understanding of the risk profile of its clients on the other hand.

The ACE Finance Conseil team.

Source: ACE Finance et Conseil.

Core missions and duties

During my internship I had to do research on companies and create short presentations for ACE clients. For example, I prepared presentations on Chinese companies for a new client who was not familiar with the Chinese stock market. The Chinese companies involved were the so-called BATX that stands for Baidu, Alibaba, Tencent and Xiaomi. My presentations’ focus was on Tencent and Alibaba, two companies that stroked our interest at that time. The Bloomberg Terminal gave information about the profits made by each business units of the company, and its future estimates. Unlike other sources of information, Bloomberg standardizes information about the different drivers that generate revenue in a company. This gives an excellent overview of the current state of the company in addition to the existing important financial indicators such as the P/E and EPS ratios, the working capital, and the quick ratio (these financial indicators are defined below).

At ACE everyday was a different day, I had many types of missions. Every morning, I prepared a morning briefing. This allowed me to learn many things on the link between political news and companies. I really enjoyed the diversified aspect in my work, and I hope to find a job where I can thrive the same way I did at ACE Finance et Conseil.

About the skills and knowledge

For this type of internship, the prerequisites were to know how to read financial statements as well as knowing what the key financial indicators are, how they are calculated, and how they can be interpreted. Being able to browse the internet with ease and to be familiar with financial tools like the Bloomberg Terminal were important to be efficient in the job. Have an interest in the geopolitical field was an advantage to be able to interpret the news and extract the important information that would affect the economic world and the value of companies.

At ACE I understood that there is a whole other side to the iceberg, companies that are focused on b2b sales (business to business) that play a major role in the economy. These companies in the shadows are mostly part of a supply chain for major b2c (business to consumer) whose brand is known by the public. b2b businesses rarely make it on to the front pages of mainstream news medias but a lot of information is available on media for investors.

Unfamiliar with the region of the East of France I learned many things on the culture and way of living in an anchored European city. Strasbourg is considered as a capital of Europe as it hosts major European institutions such as the European Parliament and the Council of Europe. Because of its ties to both Germany and France after World War II, Strasbourg served as a symbol of reconciliation between peoples.

Key concepts

I present below some key concepts that are useful to understand the internship that I did at ACE Finance et Conseil.

Asset management

Asset management consists in managing capital in the best way by respecting the level risk decided to be taken by the manager, with respect to an estimated rate of return. The responsibility of asset management’s firm is to know how to invest and manage assets correctly and accurately.

ACE Finance provides private investors with more comprehensive advice as part of their investment advisory services and fully documents discussions. The objective is to create transparency regarding the costs and risks associated with their investments. With ACE, clients can module their portfolios and are able to express their preferences after receiving advise from the firm based on fundamental research.

Asset allocation

Asset allocation is a step-in asset management which consists in defining the weight to be given to each category of assets within an investment portfolio. Allocation is generally made by sector (cyclical, defensive, sensitive), by profile (growth, value), by geography and/or by asset class (equities, bonds, real estate, commodities, etc.)

In determining the best asset allocation, the key is to be able to balance between the expected return on assets and the riskiness associated with each of them. Asset allocation depends on the time the investor is intending to invest his/her assets, his/her tolerance for risk and the volatility of the various assets.

As mentioned earlier ACE accompanies clients in their investment and gives them the opportunity to have a say on the way of allocating assets. The level of risk, the geographical or sectoral distribution of the portfolios and the type of products used, or the time horizon of the investments is different specific to each client.

Example of equity portfolio.

Source: ACE Finance et Conseil.

Active and passive asset allocation

There are two types of asset allocation management styles: passive and active. Passive management is management based on a buy-and-hold strategy. Active management is based on rebalancing of the portfolio via discretionary decisions or decisions based on quantitative models. Stock picking and market timing are key to a successful active management.

ACE is mostly focused on active management of assets. The goal in active management of assets is to be able “beat the market”, the benchmark. The work done by ACE is to select the assets, using various analysis tools, the mostly likely assets that are likely to grow faster than the benchmark and market in general. This management method, as opposed to passive management, concerns all funds and portfolios that do not aim to reproduce the performance of a reference market, but to do better than the reference market.

Stock picking

Stock picking is a methodic process were an investor searches for stocks that are likely to bring future cash flows. The analyst’s or investor’s view for the price of the stock will determine whether the position is long or short.

When it comes to stock picking ACE does research on various companies and keeps track of the news. The financial statements (balance sheet, income statement and cash flow statement) with the focus on key business indicators (sales and profits) are important to understand the structural investments in the company. ACE also pays great attention to key financial ratios such as: P/E, EPS, working capital, quick ratio, and the EBITDA.

ACE also has partner companies such as JP Morgan and Gemway Equity that collaborate with ACE in this process. Getting insight and trying to understand other people point of view is part of the culture at ACE and how it has done so well for these past 20 years.

Financial indicators

EPS ratio

The Earnings Per Share (EPS) ratio is a financial ratio that shows the amount of net profit that a stock can generate. To calculate the EPS, we divide the total earnings (net income) of the company by the number of outstanding shares issued by the company (or average of outstanding shares).

Earnings per share formula

Note that if the company issued common and preferred shares, the EPS ratio is adjusted to take into account the preferred dividends. The EPS can be positive or negative based on the positive or negative earnings (profits or loss). In case of a negative EPS the company in question does not present a profitable overall activity. However, having a negative EPS is not as rare as you might think. As firms are not always making a profit due to heavy investment (start-ups for example). A company which presents a very fluctuating EPS from one year to another or an EPS which does not stop decreasing from year to year, could cause the downfall of the stock price.

At ACE, the EPS is a ratio that we looked at as an indicator of where the wind was blowing but did not base our decisions uniquely on this ratio since it does not look at the investments made by the firm that could generate important future cash flows.

P/E ratio

The price to earnings ratio (P/E or PER) is an indicator used in stock market analysis. The calculation of PER is very straightforward, divide the market capitalization by the net earnings or by dividing the market price of a share by the earnings er share (EPS). Another way of calculating it is by dividing the individual price of a share by the net income per share. You can calculate PER based on quarterly and yearly results and even projected results which would give the expected PER ratio.

Price earnings ratio (PER)

The PER represents the number of years it would take for a company to buy all its stocks. For example, a PER of 20 means that a company would take 20 years to “redeem” all its floating capital with constant profits.

This indicator can be used to evaluate a company to its competitors despite their differences in size as it looks at firm valuation according to their profits. A lower PER indicates a cheap stock, a higher PER an expensive stock.

Analysts may consider two types of PER: the trailing PER and forward PER. Simply put, the trailing PER looks at historical earnings to calculate PER. The forward PER considers expected earnings.

Bloomberg Terminal – Relative value function (RV) – Baidu – 14.06.2021
Bloomberg RV function
Source: Bloomberg.

The RV function on the Bloomberg Terminal gives us indications on the relative value of the firm. At ACE when doing some research on Baidu, the PER was one of lowest amongst its competitors. The value of the PER is important as it reflects investors’ expectations. Thus, the PER can reveal the speculations of investors, who anticipate a strong increase in future profits: in which case, the higher the PER, the greater the expected increase in profits. So it is important to monitor and the progress of the PER.

Working capital

Working capital is an accounting concept which represents the amount the business has available to pay total operating expenses such as suppliers and employees. This indicator gives information on the company’s ability to cover its expenses.

Working capital

Quick ratio or Acid test

The quick ratio, or acidity test, is used to determine short-term liquidity in a company. To calculate this ratio, the value of the company’s current assets, excluding inventory, is divided by the company’s current liabilities (see formula). The goal of an acid test is to estimate the financial stability of a firm by measuring the company’s ability to immediately pay its debts using cash.

Acid test ratio

Assets used to calculate the quick ratio include cash and other very liquid assets such as marketable securities and accounts receivables. Inventory is also excluded from the quick ratio formula because it cannot be sold immediately to generate cash flow.

EBITDA

EBITDA (earnings before interest, taxes, depreciation, and amortization) is an indicator that is used to compare companies on their potential ability to generate wealth regardless of the balance sheet differences. EBITDA does not consider the investment and financing policy and the impact of taxes. On the contrary, a negative EBITDA means that the company is not profitable. The EBITDA is computed as follows:

EBITDA

EBITDA is a financial indicator that measures a company’s revenue before subtracting interest, taxes, depreciation and amortization charges and provisions on fixed assets.

Why should you be interested in this post?

If you are looking at getting an internship in an investment firm, this post will surely be interesting to you. This post provides a little reminder of the basics of asset management. There are plenty of investment firms in the world however ACE is unique by its approach to understanding the markets and counselling its clients. In this post I detail some of the core missions that I had as a newcomer to the professional investing field.

Word of conclusion

As my first internship inside of an asset management firm, this initiation to the financial world was exactly what I was looking for before applying at ACE Finance et Conseil. ACE Finance et Conseil differentiates itself from other companies by its simplicity in functioning and the richness of its experience. This unique experience has made me want to explore the financial world even more.

Useful resources

ACE Finance et Conseil

Bloomberg terminal

Bloomberg market concepts

About the author

Article written in March 2022 by William LONGIN (EDHEC Business School, Global BBA, 2020-2024).

My professional experience as financial research assistant in a green finance institute

March 16, 2022 by Haiyuan XU

My professional experience as financial research assistant in a green finance institute

In this article, Haiyuan Xu (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2022) presents her personal internship experience as assistant financial research analyst in the sector of green finance.

About the company

The International Institute of Green Finance (IIGF) is the first international research institute in China with the goal of promoting the development of green finance. It was established in September 2016 by a donation from Tianfeng Securities Company (Tianfeng Securities issued the first green corporate bond of a private listed company in the market). Its research topics include green finance, climate finance, energy finance and health finance. The IIGF is committed to building a domestic first-class and world-leading green finance think-tank with Chinese characteristics.

Logo of the International Institute of Green Finance (IIGF).
Logo of IIGF
Source: IIGF.

What about my internship？

Job missions

My position was financial research assistant in the green bonds sector.

My work can be summarized as the construction of a financial database about green bonds, and the writing of financial research reports.

Regarding the database construction, the relevant data of green bonds were mainly collected from public channels such as the WIND database (WIND is a financial data and analysis tool service company providing financial data, information, and software service in mainland China). For the database of the institute, I collected information such as the type of green bonds (most of the green bonds were convertible bonds), green bond issuers, use of raised funds, certification and underwriting to update and maintain the existing green bond database. In addition, I participated in the establishment of the standard for the definition of non-labeled green bonds, so that the green investment of general bonds is also included in the database, which makes the database more convincing.

In terms of financial report writing, I participated in on-site research, collected data, and wrote the first draft of the green bond report. Finally, the institute issues the annual green bond market development report, which is of great help to the development of green finance in China.

Requirements for this internship

The job was a team job and required cooperation and communication skills (soft skills). Of course, this job also required me to be financially literate. In addition, I needed to have the ability to collect data, process data and analyze financial markets (hard skills).

What I have learnt from the internship

What impresses me most is the knowledge I have learnt from the business of green finance. I think the development of China’s green finance market is relatively imperfect, and many products can be innovated. According to recent data released by the People’s Bank of China, as of the end of 2021, China’s green loan balance in local and foreign currencies was 15.9 trillion yuan, a year-on-year increase of 33%. But at the same time, driven by the “dual carbon” goal, the scale of China’s green credit products is far from meeting the relevant investment and financing needs, and there is still huge room for growth. At present, the Chinese government is strongly supporting the development of green finance. China is rich in green energy such as wind energy and hydropower. Therefore, based on the above conditions, I believe that China’s green financial market has great potential for development. I look forward to setting up a green public fund company to raise funds for the development of green finance in China.

Earn money in a green way.

Source: IIGF.

Financial Concepts

I explain below some financial concepts that I found useful during my internship at IIGF.

Convertible bonds

A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond’s life and is usually at the discretion of the bondholder.

Green bonds

Green bonds are fixed-income financial instruments which are used to fund projects that have positive environmental and/or climate benefits. They follow the Green Bond Principles stated by the International Capital Market Association, and the proceeds from the issuance of which are to be used for the pre-specified types of projects.

Underwriting

Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee.

Useful resources

International Institute of Green Finance (IIGF)

The report published by the IIGF

Green finance for developing countries

About the author

The article was written in March 2022 by Haiyuan_Xu (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2022).

My experience as a financial analyst at CASIM

March 13, 2022 by Liangyao TANG

My experience as a financial analyst at CASIM

In this article, Liangyao TANG (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2022) discusses the valuation methodologies in private equity and venture capitals based on her experience at the CAS Investment Management Co., Ltd.

CASIM

Chinese Academy of Sciences Holdings Co., Ltd., also referred to as CAS Investment Management Co., Ltd., is the first state-owned asset management company approved by the Assets Supervision and Administration Commission of the State Council (SASAC). Its predecessor is the Chinese National Economic Council-CAS Scientific and Technological Promotion & Economic Development Foundation. On April 12, 2002, CAS investment completed the industrial and commercial registration and was restructured into a limited liability asset management company.

Logo of CAS Investment Management.

Source: CAS Investment Management.

Since 2008, CAS Investment has carried out Private Equity fund investment business as an institutional investor. It had directly invested in many strategic emerging industries that helped shape China’s technological development. As of the end of 2018, the registered capital of CAS Investment was 5.1 billion RMB, holding more than 50 companies, which mainly distributed in information technology, high-end equipment manufacturing, environmental technology, and new materials. For the past 25 years, CASIM has supported over 300 successful commercialization and industrialization of technological development, some of which have become the industrial bellwethers and have contributed to promoting scientific achievement conversion in China. The Investment portfolio include Cambricon Technologies, Farasis Energy, ThunderSoft Technologies, and SIASUN Robostics.

My Mission

Passionate about creating value for enterprises and gaining a more on-edge understanding of the business world, I carried out a four-month internship as a Financial Analyst in the CAS Investment Management Co., Ltd. During that time, I joined the team and worked together with a Managing Director and a senior analyst. My responsibility is to conduct market research and desktop analysis for the project, which has allowed me to quickly dive into the TMT industry, especially the e-commerce sector. I conducted more than 20 financial statement analyses, operation strategies analyses, and market analyses to evaluate different investment opportunities. The qualitative analysis includes competitor benchmarking, business model analysis, supply chain and distribution analysis. Quantitatively includes building financial models to calculate future cash flow and income stream, and building market models to estimate the potential market size and market share. In addition, I also performed due diligence by conducting more than 50 interviews with industry experts on multiple projects. During the financial due diligence, I utilized Excel VBA to process and analyze ratios in the massive inventory and operation data to verify the authenticity of the target company’s financial performance. Those analytical work have greatly improved my hands-on ability to build market models and identify potential investment risks. I co-delivered the formal investment proposals for distribution to the Investment Committee, an infrequent task given to an intern during the past several years.

Knowledge and skills required

This investment analyst role requires the candidate to have a deep understanding of the business world and the target industry to be able to value the future potential of a business. The candidate also has to have the critical thinking ability to identify the risks and make rational decisions. During this experience, I have significantly reinforced my knowledge in financial statement analysis and market analysis. I also gained a solid improvement on my fast-learning abilities, analytical skills, and logical thinking capacities, which could be very beneficial for me moving forward in my career path.

Key financial indicators to understand valuation

When and what valuation method should be used has always been a matter of constant debate in the financial industry. The valuation methods depend on different stages of development and different rounds of financing of companies. This brings great differences in the estimated value of firms, resulting in no unified framework in the industry. The valuation can be said to be the most difficult part of a project. The valuation methods that are often used in Private Equity and Venture Capital firms include price-earnings ratio (P/E), price-book ratio (P/B), price-earnings growth (PEG), discounted cash flows (DCF), etc. I describe a few of them below.

P/E

The P/E method is one of the most common valuation methods. There are usually two types of price-earnings ratios for listed companies: historical price-earnings ratio (also called Trailing P/E) and forecasted price-earnings ratio (also called Forward P/E). The historical P/E ratio uses the current market value to divide by the earnings of the company in the previous financial year (or earnings in the previous 12 months). On the contrary, the forward P/E ratio uses current market capitalization, divided by the company’s earnings for the current fiscal year (or earnings for the next 12 months). Investors invest in the company’s future and estimate the present value for the company’s future operating capabilities. Therefore, the calculation formula using the price-earnings ratio method is:

Enterprise value = forecast price-earnings ratio × company profit for the next 12 months.

The price-earnings (P/E) ratio can be chosen from those of the comparable companies, their direct competitors, or the average price-earnings ratio of the industry in which the target company is located. The price-earnings ratio mainly depends on the expected growth rate of the company. The company’s valuation at its growing stage usually is much higher than that of a company at its mature stage. Also, it depends on the business’s risk level or the risk tolerance from the investors. A lower price-earnings ratio is used for a risker business because investors would demand a higher return from the investment.

EV/EBITDA

Another commonly used ratio in private company valuation is the EV/EBITDA ratio. The ratio is used to compare the enterprise value (EV) with the Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA). This gives investors a sense of how many times of the EBITDA they will have to pay if acquiring the target enterprise. Comparing the EV/EBITDA ratio of a company with the industry average and direct rivals also gives investors an idea of a fair target price. This method could leave out the effect of the company’s depreciation, inventory, non-recurring income and expenditure. Therefore, it is a good supplement to the price-to-earnings ratio valuation method.

P/B

The price-to-book (P/B) ratio is the ratio of market value/ tangible net assets value, or the ratio of share price per share to total book value per share. The EV of the firm is the same as discussed above in the P/E ratio section, and the book value is equal to total assets minus the intangible assets and total liabilities. The P/B ratio demonstrated important information about its market value compared to its accounting measures.

The advantages of this method are that the net assets’ data is easy to obtain, and the book value of net assets usually is authentic and less manipulated than net profit. Additionally, even if the company hasn’t been profitable, the price-to-book ratio is rarely negative, so it’s easier to calculate. However, the book value is affected by the choice of accounting policies. If companies implement different accounting standards, the price-to-book ratio will lose comparability. Secondly, the P/B ratio will not be a good measure for those companies with very few fixed assets. Those companies normally have a bigger portion of intangible assets, such as goodwill, intellectual property, brand reputation, and so on, which are not taking into consideration in the book value and could be easily manipulated. For example, for the service providers, media and entertainment producers, and IT companies, the company’s potential has very minimal relevance with its fixed assets. Therefore, the P/B ratio can be meaningless in some cases.

To sum up, the valuation of private enterprises, especially for start-up companies, is a unique and challenging task. The process is usually a combination of scientific computation and some flexibilities. No valuation method is perfect; analysts need to be very flexible and sharp with the method and the supplementary information they use to draw an objective conclusion.

Useful resources

McKinsey & Company (23/10/2019) Pricing: The next frontier of value creation in private equity

Insider Intelligence (06/01/2022) Financial Services Industry Overview in 2022: Trends, Statistics & Analysis

BVCA Private Equity Explained

About the author

The article was written in March 2022 by Liangyao TANG (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2022).

Senior banker (coverage)

March 5, 2022 by Frédéric ADAM

Senior banker (coverage)

In this article, Frédéric ADAM (ESSEC Business School, Grande Ecole Program – Master in Management, 1990-1993) explains the job of (dedicated) salespeople in banks, who deal with global corporate customer needs. There are generic terms for this type of job : we are going to speak either about “senior banker” or “(global) relationship manager”, that can be included in the so-called “coverage” .

Introduction: Coverage at the “center of the playing field »

The term “Coverage” (or more commonly “customer relationship manager”), stemming from the Anglo-Saxon world of finance, has become an increasingly essential cog in the banks to serve their customers, as finance business became more and more complex from the 1980s, giving rise to the advent of the main commercial business lines, embodying expertise/financial engineering in different forms, which can be grouped into the five main following families:

Transaction banking: cash management, correspondent banking, receivable & supply chain finance, trade & export finance
Financial markets: treasuries & bonds, derivatives & FX, stocks & commodities
Project finance: real estate, shipping & aeronautics, infrastructure
Mergers and acquisitions (M&A)
Corporate & Structured finance: LBO, debt restructuring & advisory, securitization

At the same time, the so-called “support” or “transversal” functions in banks have undergone a similar evolution (development and complexification). These professions have gained in increasingly varied and specialized skills, but also in number, especially in the risks, legal and compliance departments.
This evolution contributed to put the “coverage” at the “center of the playing field”. These “support business lines” can also be grouped into the five main following families:

Back-office
Risks, Permanent Control & Audit Department
Finance & Procurement Department (including asset and liability management (ALM))
Compliance & Legal Department
IT Department

Coverage players: common points and differences between banks

There is an initial invariant in all banks, whether they operate as retail banking actors (for individuals and small businesses) or investment banking actors (for large corporates). You can only access the senior banker after a first (successful) experience, mostly, in commercial business lines. Knowledge of the offers made by the commercial business lines, but also of the internal processes of the banks, in particular on the risk component, are logical prerequisites.

Then, depending on the typology of the banks, these prerequisites may differ (in number, or even in duration of experience), namely:

Retail banking: a preliminary experience in Transaction Banking or on (Corporate) Risks will be appreciated
Corporate & Investment banking: Transaction Banking remains important, but it will often be supplemented with a 2nd commercial line experience / skill, the trend being to seek more M&A profiles for Large Cap coverage in recent years

Finally, the organization of coverage is not the same according to the typology of banks:

Retail Banking: customer relationship management is often carried out by one person, named « chargé d’affaires entreprises » (or business manager), supported by 1 or 2 assistants, dealing with the risk aspects (monitoring of banking commitments) and day-to-day flow business issues.
Corporate & Investment Banking: on large customers, the model is often available with a pair of senior banker (lead) / relationship manager (back-up) type, who monitors the risks (commitments) of the customer, but also is in a lead position on various commercial issues, except for the high value-added component, namely the M&A assigned to the senior banker.

The (common) mission of Coverage players: embody & simplify “One Stop Shopping”.

What is “One Stop Shopping”? It aims at identifying the customer’s needs and, to orient / put in contact, like a “guidance service”, the customer, towards the right expert(s) in the five main commercial lines. To do this, the pitch is a recurring tool, which is a client presentation, outlining “what I understood of your needs” and the business line solutions that the bank makes available to the client to address these needs. A “coverage pitch” can thus often lead to a more detailed/specific “business (line) pitch”, with an indicative / dedicated commercial proposal, often called an “early bird” (pricing is then given provided…).
This ability to articulate coverage with the commercial business lines, and thus allow the customer to do their shopping at a one-stop shop / single entry point, contributes to the attractiveness of the job, in particular with Large Cap, which have complex and numerous issues, and demand a very high level of responsiveness. Thus, for a Large Cap, having valuable and responsive coverage in particular, with which it maintains a close (trustfully) relationship, can prove to be a decisive competitive advantage… For example, during an external growth operation, the financing of a major international contract or a radical transformation of its business model (and its associated capital expenditure needs).

Useful resources

Soraya Haquani (February 24, 2011) Les nouveaux visages des banquiers conseils L’AGEFI Hebdo.

Alumneye (September 7, 2021) 5 questions sur le Coverage en banque d’investissement L’AGEFI Hebdo.

Bogler Marc (June 4, 2021) Le Coverage en Banque de Financement et d’Investissement LinkedIn.

About the author

Article written in February 2022 by Frédéric ADAM (ESSEC Business School, Grande Ecole Program – Master in Management, 1990-1993).

My professional experience as a Credit Analyst at Société Générale

February 7, 2022 by Louis DETALLE

My professional experience as a Credit Analyst at Société Générale

In this article, Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023) relates his internship at Société Générale as a Credit Analyst.

Source: Wikipedia.

Quick presentation of the bank and its activities

Société Générale is one of the three main French banks and one of the oldest. Created in 1864, Société Générale is famous for both Investment Banking activities and Retail Banking. The business department I was a part of deals with the daily relationship between the bank and its clients whatever they need. That’s what made my internship so interesting because I was able to work on a huge variety of topics.

When was it?

My internship took place between July 2021 and December 2021. So it represented a 6-month internship which is the duration for which students with few professional experiences should aim for. Bear in mind that the longer the internship, the better for the recruiters you will encounter later: a long professional experience shows that you are able to work for a long time and that can be committed.

What were my missions during this internship?

As for what I was asked to do, my job consisted mainly of preparing credit analysis in order to facilitate the approval of the loan request. Indeed, as you may know, banks cannot agree on any credit demand the client asks, they must conduct a close and thorough analysis of the company: its business plan, its strategy, its past and above all, its financial health…

The commercial team I was involved with works hand-in-hand with the clients and cannot necessarily conduct the financial analysis as thoroughly as a person whose main job would be to do so. Therefore, my team would often provide me with some files concerning a company, explaining me what they had been asked to implement by the client and I would work on that topic for 2 or 3 days. Genuinely, I always started with some sector analysis, “has a watershed occurred recently and can it unsettle the client’s business and perhaps its ability to reimburse the credit it is asking for?”, then I had to work on the overall overview of the company, its history, its management, its strategy for the foreseeable future and what have the previous strategies yielded. Last but not least, I was asked to work on the financial analysis of the company that I always divided into 3 parts. First, I would analyze the P&L account and assess the profitability of the company over the past 3 years, “what is the core business?”, “how does the firm produce value?”, “how has the profitability evolved over the past 5 years and why?”… Second, I would check the global equilibrium of the firm balance sheet with a close look at the liabilities part. Hence, I would compute the financial ratios that you will learn in this course and study: 1) have they evolved significantly? 2) compared to other firms from the same sector, how do they look?

Finally, I would work on the cashflow statement which gives a key information to the bankers: the ability of the client to manage its cash and allocate its resources to the different expenditure items.

What skills have I acquired during this internship?

On the hard skills side, I developed strong analytical skills in financial analysis, accountancy and in terms of synthesis. On the soft skills side, I was able to develop my discussion skills through several meetings at C-level. In overall, I think the biggest advantage of my internship was that it helped me understand the functioning of a bank-credit approval.

Why should you be interested in this post?

If you are considering a career in finance, learning about one of your fellow alumni’s first internship in the finance industry can be of excellent help. In addition, you’ll learn what’s to be expected for your first internship, that you cannot skimp on !

Useful resources

Société Générale Website

About the author

The article was written in February 2022 by Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023).

My experience at the Bank of Lebanon

December 14, 2021 by Jade RAKHA

My experience at the Bank of Lebanon

In this article, Jade RAKHA (ESSEC Business School, Bachelor of Business Administration, 2021) shares with us his experience at Banque Du Liban.

Banque Du Liban

Before the Central Bank of Lebanon was established in 1963, the Bank of Syria and Lebanon had the role of the central bank. For a period of 25 years, this commercial bank had the privilege of issuing the Lebanese currency.

All of the Central Bank’s expenses are paid by the government. However, 20% of its net profit is allocated to its general reserve, while the rest (80%) is for the state treasury. It is exempt from all duties and taxes and is not subject to the bankruptcy rules specified in the Trade Law applicable to banks. Nevertheless, the Central Bank is subject to the Trade Law in its relationship with third parties, it should conduct its operations and organize its accounts under commercial and banking rules.

Banque du Liban

The head office of the bank is divided into 19 directorates and 10 units. The Central Bank of Lebanon has 9 branches in different regions of Lebanon. The bodies established by the Central Bank are Supervisory Board, Special Investigation Commission, Higher Banking Authority, Capital Markets Authority, and MidClear.

The Central Bank has the power to issue regulations and to impose administrative penalties on all institutions under its control. It issues the appropriate regulatory texts to achieve its objectives. It has a special legal personality and administrative independence from the state. Its employees shall be appointed in accordance with the special law system specific to the institution and shall be subject to the Labor Law.

Moreover, the Central Bank of Lebanon enjoys financial independence, but with certain limits: all of its decisions should be approved by the Government’s commissioner, and the Governor shall submit balance sheets and operations reports yearly, to the Minister of Finance.

The Governor and his four deputies shall be appointed by a decree issued by the Council of Ministers upon the proposal of the Minister of Finance, every 6 years. They are obliged to work full-time throughout their tenure. The Governor has the widest powers to administer and operate the Central Bank of Lebanon. He is the legitimate representative of the Bank and signs all contracts and agreements. Concerning the Deputies of the Governor, they have no specific powers, but the Governor may appoint them tasks. In the event of the vacancy of the post of Governor, the First Governor shall assume office pending the appointment of an attractive governor. Such functions shall be assumed by the Second Deputy Governor in the absence of the First Deputy Governor.

The Central Council consists of seven members: The Governor as President, the four Deputy Governors, the Director General of the Ministry of Finance, and the Director General of the Ministry of Economy and Trade. It should be noted that the Director General of the Ministry of Finance and the Director General of the Ministry of Economy and Trade are not present as representatives of the Government but are present as themselves, which confirms the independence of the Central Bank of Lebanon in its decisions.

The Central Council has wide powers, since it determines monetary and credit policies, fixes the discount rate and interest rate of the bank’s loans, establishes regulations relating to bank operations, approves the balance sheet of the Central Bank’s expenses, and approves the establishment of banks and all private institutions to supervise the Central Bank of Lebanon.

As mentioned before, the Central Bank has the privilege of issuing the national currency. This privilege has been delegated to the Central Bank, which carries out this task exclusively under strict conditions and rules. The Money and Credit Law defines certain characteristics of the Lebanese currency but it has given the Central Bank the freedom to decide the size, texts, fees and other features of banknotes and coins.

To maintain the integrity of the banking system, the Central Bank of Lebanon takes all measures it deems appropriate to maintain the harmony between bank liquidity and the volume of credit in banks. Thus, it gives recommendations and uses the means that will ensure the conduct of sound banking work. This institution also acts as an adviser to the government, proposes measures it considers necessary for the economic sector and warns the government of operations it considers harmful.

My internship at Banque Du Liban

During this internship, I did not have any missions to do because it was not a practical internship, but more of a theoretical one: each day we had one speaker that came and presented the department in which he or she worked in so that we know the main tasks and roles the central bank has. I will not present all the departments of Banque Du Liban because that would take a lot of time even if it is very interesting. I’ll present some departments that are related to the financial sector and to the material that we tackle in the SimTrade course.

Directorate of Financial Operations

The general mission of the Central Bank of Lebanon, as stipulated in Article 70 of the Monetary and Credit Law, is to preserve the cash to secure the basis for lasting economic and social growth, including:

Maintaining the integrity of the Lebanese currency
Maintaining economic stability
Maintaining the integrity of the banking system
Developing the monetary and financial market
Developing and organizing payment systems and tools
Developing and organizing money transfer operations including electronic transfers
Developing and organizing clearing and settlement of financial instruments, payment and trading bonds.

Thus, the Central Bank of Lebanon is responsible for monetary management in light of economic and political developments, securing liquidity for the banking and financial system, and it is the last resort to lending banks.

Most of these goals are under the responsibility of the Directorate of Financial Operations at the Central Bank of Lebanon, in charge of leading Macroeconomic policies. It is at the helm of the Economic Legislation, as well as the Fiscal and Monetary policies. Being in charge of Fiscal policy means that this department should prepare the general budget, collect taxes, give tax incentive… As for the Monetary policy, it should maintain the integrity of cash as well as low inflation rates.

The Directorate of Financial Operations determines interest at the level of the financial market. It can define either the size of cash or interest on cash. This department can also influence prices in the financial market by affecting the level of the money supply. If it wants to reduce the interest rate in the market, it increases the amount of cash (increase the money supply). Vice versa, if it aims to raise the price of money in the market, it reduces the amount of cash (reduction of the money supply).

The Special Investigation Commission (SIC)

The Special Investigation Commission is in charge of Financial Regulation and Supervision, more specifically fighting Money Laundering and Terrorism Financing. It is composed of: The Governor of the Central Bank of Lebanon as President, a member of the Council of Ministers, the Chairman of the Banking Supervision Committee or any of its members, the Appointed Judge of the Higher Banking Commission or an alternative judge.

The Financial Intelligence Unit (FIU) is a national central unit responsible for receiving, requesting, analyzing and providing the relevant authorities with financial and other information concerning possible cases of money laundering and terrorism financing.

According to the SIC, Money Laundering is defined as “any act or attempt to conceal a source of funds or assets resulting from a criminal act”. The goal of money laundering is turning junk money into clean money. The different stages are placement, layering, and integration. This process has a lot of consequences: it increases the rate of crimes, it leads to the instability of the economy, it weakens the integrity of financial institutions as well as the social and economic structure.

The definition of Terrorism Financing according to the SIC is “financial support, in any form, for terrorism and those who encourage, plan or participate in it”. It aims to raise and secure funds for terrorism. The stages of financing terrorism are the collection, transmission, and use.

The mission of the Special Investigation Commission is to receive notifications and requests for assistance, conduct investigations into suspected money laundering or terrorist financing offences, determine the seriousness of evidence, and take the appropriate decision.

The Foreign Exchange & International Operations Department

The Foreign Exchange & International Operations Department is divided into 5 different divisions:

The Transfer Division
The Documentary Credit Division
The Back Office
The Clearing Room
The Communication Division.

There are different types of traders, like Forex Traders, Money Market Trader, Capital Market Trader, Commodities Traders, Derivative Traders…

The Forex market is the simultaneous buying of one currency and selling another. During our stay at the Central Bank of Lebanon, we got the chance to stimulate this process with Mr. Patrick el Hajj. This market has more buyers and sellers and daily volume than any other market in the world and takes place in major financial institution across the globe (daily turnover is about $5 Trillion). All information on Foreign Exchange can be found on a system called Bloomberg.

Financial Assets Authority

The Financial Assets Authority consists of two main sections: The Recruitment Section and the Contributions Section. The Recruitment Section should prepare daily reports on the Bank’s foreign currency reserves, sources and uses and monitors interest rates and amounts paid, and follow-up financial markets and global interest and study their effects on the bank’s investments. The Contributions Section is responsible for studying the financial situation of companies in which the Bank of Lebanon contributes or in which it represents the Lebanese state through general assemblies and monitoring reports, and preparing any reports or studies related to contributions requested by the Governor or the Central Council that may reach the Investor Information Statement (Prospectus).

The majority of the subjects mentioned in the session at the Central Bank of Lebanon were new to me, so I can clearly say that I gained a lot of knowledge from this experience and got access to information that can only be obtained from experts in the fields. I got the chance to get into the details of each department in the Central Bank, gaining knowledge of how it is divided, and how it works.

Personally, I gained a lot from this training. However, I admit I was expecting more work on the field than just theoretical sessions, and thus gaining more experience rather than knowledge. However, we had the spread of COVID-19 and the current economic situation in the country did not give us the chance to be able to visit the Central Bank and see how each department operates on a daily basis on the field.

Most speakers gave us great sessions and were able to convey their message properly. Nevertheless, if the schedule was a bit more appropriate, I believe we would have had a better experience.

Useful Resources

Banque du Liban

About the author

The article was written in December 2021 by Jade RAKHA (ESSEC Business School, Bachelor of Business Administration, 2021).

My experience at the startup BSD Investing

December 14, 2021 by Rohit SALUNKE

My experience at the startup BSD Investing

In this article, Rohit SALUNKE (ESSEC Business School, Grande Ecole Program – Master in Management, 2018-2021) shares his experience working in a startup and the evolution of his role and responsibilities…

About BSD Investing

BSD Investing is an independent research firm operating in the asset management industry. It primarily provides research and analysis on active vs passive fund performances for equity and debt funds present across the global financial markets.

The funds are domiciled in Europe (i.e., these are European funds investing in domestic and international markets) and span across 62 universes (i.e., global markets and investment styles).

Logo BDS Investing

The goal of the research is to provide BSD Investing clients with insights into the active vs passive performances and help them optimize the portfolio to get better risk adjusted returns.

The evolution of my missions

I started working at this startup in July 2019 in a small office in Saint-Lazare area in Paris, France. At the beginning, it was just me and two others, the founder, and her colleague. We started from scratch, trying to figure out the best data source to use, figuring out the process flow, the product and much more. After selecting Morningstar as our primary data provider, I began writing codes in Python to fetch the data, create our own portfolios and develop performance key performance indicators (KPIs) for those portfolios. Since we did not have any employee skilled in IT, I was the one who took charge of creating the entire IT architecture from data handling to reporting.

After working for about eight months, we hired our head of IT, and he took over the handling of the IT system and made it much more efficient. That’s when I got the chance to devote my entire focus in developing quantitative models and simulations for the performances of our portfolios.

I started off with researching various technical indicators that gave insights into the market performances and how active funds fared in comparison to passive funds. A major portion of my time was devoted to simulating portfolio performances using various indicator signals. The signals were basically an indication to increase or decrease the active allocation to the portfolio.

Apart from this, I helped a lot with creating marketing materials, conducting market research, interviewing portfolio managers to understand the asset management industry and their needs.

In addition, I work very closely with the IT head to implement our models and key indicators onto the website.

Active and Passive funds

The asset management industry is broadly divided into two management styles: the active style and the passive style. Both styles follow a benchmark that could be an index (e.g., CAC 40), or a combination of indices, or a new portfolio that represent the entire universe of financial instruments in the category that the manager wants to invest in (e.g., Emerging countries large cap ESG funds).

Passive style

The goal of the passive fund manager is to create a portfolio that tracks closely the chosen benchmark. But, since a benchmark consists of a large number of stocks, investing in all of them is not very feasible or cost effective. Therefore, the passive manager creates a portfolio using a smaller number of instruments that aims to replicate the returns from the benchmark.

A good metric to measure the performance of a passive fund is tracking error. It is the divergence between the fund returns and those of the benchmark. A low tracking error means that the fund is tracking the benchmark closely and thus is performing well. Since, a passive fund (also known as ETF or index fund) manager does not aim to outperform the benchmark, but just to simply replicate its returns. Therefore, passive funds charge low fees.

Active style

An active manager on the other hand aims to beat the funds benchmark through stock picking, sector rotation and/or other methods. He or she thus takes a larger risk than a passive fund manager and needs a lot more research, expertise, and management. Therefore, an active fund generally charges more fees than a passive fund. For example, among the France large cap funds, an average passive fund charges around 0.25% of fees, whereas an active manager’s fee may range from 1-2%, in some cases more than 4%.

Active managers are alpha seeking. Alpha is the excess return that an active manager generates compared to its benchmark. There are multiple ways to calculate alpha. One such way is using the CAPM model. We predict the expected return of the portfolio using the CAPM model. Subtracting this return from the active managers portfolio gives the alpha. A passive funds alpha is supposed to be zero.

Fund of funds managers create a portfolio of active and/or passive funds to meet their return and risk objectives.

Best style?

In the asset management industry, there is an ongoing debate about which management style is better and are the extra fees charged by the active managers really worth it?

In the US, for example, the active funds have performed very poorly as compared to the ETFs. Whereas, in Europe the performance was mixed and in Japan, the active funds performed better. However, these are the results over the entire period of 10 years. There have been many periods when the active funds outperformed.

Taking the recent example, after the Covid-19 pandemic, the markets went haywire. Since then, in most of the universes active funds have outperformed the passive funds. Therefore, higher returns can be achieved by understanding the markets and allocating the portfolio to the right management style at the right time.

My key learnings

Working in a startup is always challenging and the job comes with heavy responsibilities.

And although working in a startup sounds very interesting, most of the work during the very beginning is quite tedious when it comes to data handling. I spent a few months just understanding the data, checking for errors from the source, figuring out ways to deal with data errors and so on.

Once, I started working on the quantitative models and the simulations, I felt that my work has just begun. During this time, I learnt a big lesson regarding building quantitative models. I build very sophisticated models including machine learning models such as neural networks, gradient boosted trees and so on. However, despite the good results, I had to use simpler logistic models because selling overly sophisticated models would become very difficult.

People in the asset management industry need to know what the real meaning of the data is. And giving recommendations using a black box model does not make it very easy to understand the functioning of the model.

Working on the various indicators, trying to understand their correlations with active and passive fund performances gave me good insights about them. For instance, one good variable that works the best for me is dispersion. This is the standard deviation of returns among funds or stocks. During periods of high dispersion, I observed that active funds generally outperformed the passive funds. I saw a similar result during periods of high volatility. An explanation to this is that a high dispersion could signify a period of high inefficiency in the market, which the active managers could take advantage of. When markets are highly efficient, it makes sense to invest in ETFs, and reduce your costs. Whereas, during periods of high inefficiency, a good active manager could be worth the higher fees that he/she charges. As described above, since March 2019, the active managers have generally outperformed the passive funds across many universes. And this period is also marked with high dispersion and volatility.

In addition, we found that bear periods were more conducive to active outperformance, while bull periods were not. This can be understood since the volatility and dispersion is generally high during bear periods. However, periods after March 2019 were an anomaly to this, since although the markets are in a bull run, there is high dispersion and volatility, and the active funds are outperforming the ETFs.

Knowledge and skills required

For this job I had to have strong data skills, coding skills as well as sound knowledge about finance.
In addition, since I had little to no guidance in my role, I had to come up with my own tasks, define the product and its objects and then learn the essential skills to build it.

Therefore, there was a lot of market research, visits to stackoverflow, reading research papers, cold mailing portfolio managers and so on. Thus, project management and communication skills are essential.

Hard Skills

Python
SQL
HTML
MorningstarDirect
Capital Markets
Portfolio Management, Optimization …
Risk Management
Market Research

Soft Skills

Communication
Project Management
Leadership
Entrepreneurial Thinking
Ability to handle pressure
Dedication to your project and display of ownership

Useful resources

BSD Investing

Morningstar

About the author

The article was written in December 2021 by Rohit SALUNKE (ESSEC Business School, Grande Ecole Program – Master in Management, 2018-2021).

My experience as Consultant in Energy & Utilities at Atos Worldgrid

November 19, 2021 by Léopoldine FOUQUES

My experience as Consultant in Energy & Utilities at Atos Worldgrid

In this article, Léopoldine FOUQUES (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021) shares her experience as Consultant in Energy & Utilities at Atos Worldgrid.

About Atos Worldgrid

Founded in 1997, Atos is a French multinational firm specialized in information technology (IT), headquartered in Bezons, France. Member of the CAC 40 index, Atos has been positioned as a leader in cloud infrastructure, cybersecurity, and super calculator and operates in 71 countries.

As a leader in digital transformation, Atos supports its customers in large-scale industrial projects and covers a wide range of sectors: financial services and insurance, healthcare, manufacturing, public sector and defense, resources and services, and telecommunications and media.

Since 2010, Atos has specialized in a secure and decarbonized digital through the brand “Atos Worldgrid”. The purpose of Worldgrid is to offer an extensive ecosystem of technology partners and implement critical Information technology / Operational technology (IT/OT) convergence projects. It provides services along the entire energy value chain to over 250 clients worldwide, operating all the energy sources, as oil & gas, biofuels, wind, solar, sea, hydro, coal, and nuclear, and covers all the distributed grid, from the generation to the retail.

My experience at Atos

My interest in the technology field was further intensified during my studies at ESSEC by following the course on blockchain and big data. That is why I came to work for Atos, a leading IT group in the digital transition, for a two-year apprenticeship.

Working as Consultant in Energy & Utilities in the Atos Worldgrid entity, I became aware of the interest of science applied to ecology to address current challenges, particularly those related to the digital and energy transition. During this apprenticeship, I became familiar with a complex and fast-moving environment. I put into practice what I had learned since the beginning of my studies and contributed to many projects with a proven innovative dimension. Thus, I had the opportunity to work on a wide variety of missions. In particular, I conducted several studies on the energy sector, contributed to the design of commercial offers for startups, and developed a platform, in partnership with Méteo-France. These missions allowed me to put into practice my managerial qualities and my customer orientation. On the other hand, my curiosity, and my appetite for the subjects I studied led me to work on information systems and asset management for companies in the energy and utility sector.

Why is necessary to put digital into the energy sector?

Atos is one of the leaders in services for Smart Cities (intelligent and connected cities). The enterprise has a wide range of solutions for cities and local authorities, covering consulting, systems implementation, user-centered design and managed services.

During my internship I had the opportunity to work on many subjects that are part of Smart Cities projects. Furthermore, I became aware that digital was at the heart of all transformation projects.

For many actors, the Smart City will be the “natural” environment of the improved human being. Therefore, we intend to provide the city with digital knowledge and technologies. Faced with the need for a change in ecological strategy, the value of new technologies is becoming increasingly important in discussions. The conjunction of ecology and IT was also widely discussed at the Davos Economic Forum in January 2020. It is in this context that Big Data initiatives have multiplied.

In the emerging context of Smart Cities or connected cities in which uses are rethought and resources are optimized, Big Data is becoming increasingly important. Indeed, faced with the exponential volume of data produced by various actors, controlling it becomes an essential tool that cities must appropriate. The data would enable the development of new services for the city, optimize existing ones and reconcile citizens’ expectations with current policies. Finally, is the central element of the most innovative projects, and constitute most city modernization projects. These technologies open the door to new conjunctures and represent the foundation stone of the cities of tomorrow.

The valorization of this data is one of the main challenges for territories and leads to the rethinking of new tools. Thanks to the mass of data that can be collected, both public and private players can anticipate future innovations and developments and thus lead the city towards a sustainable and responsible approach. The use cases are many and are very often based on the triptych: mobility, energy management and street services, i.e. services for both local or national authorities and consumers.

At the heart of the connected city, the smart energy grids must learn to be resilient.

In order to succeed in the energy transition, the electricity system is undergoing considerable change: development of renewable energies, deployment of electric vehicles, the emergence of new use cases, etc. To facilitate this transition, the energy grid must become more efficient. But the smart grid is not born smart, it becomes smart. Atos Worldgrid aims to make its cities a reality. The solutions support governments in their mission to provide intelligent integrated services to their citizens and economic partners.

In 2010, The French Parliament adopted the Law on National Commitment for the Environment : The Grenelle II Law. The Grenelle II law includes energy and climate concerns in the French objectives, with the aim of reducing consumption and greenhouse gas emissions. In addition, the law accelerates the deployment of renewable energy. Among other things, the state is committed to building at least 500 wind turbines per year.

Faced with this development of natural energies, the question of grid stability becomes essential. Indeed, these weather-sensitive energies are not predictable, and a bad estimate of the production can lead to very strong price fluctuations and a shortage of energy. The renewable energy produced must be estimated accurately to avoid a large gap between the energy produced and the energy sold, as the energy produced is not linear. A financial imbalance has repercussions on the whole value chain, from producer to final consumer. To prevent producers from producing too much or too little or aggregators from disturbing the balance of the grid by buying too much or too little, tools must be designed. This is the main challenge for companies like Atos and to achieve a transition to renewable energy.

Source: Wikimedia

At the heart of these smart grids and this revolution, the deployment of smart meters, such as Linky, developed by Atos, is today an essential building block for the success of this transition. Installed directly in French homes, it measures the daily electricity consumption of the home and transmits this data to the network operator. Its advantages are numerous. Firstly, its scope is ecological since it facilitates the insertion of renewable energy sources into the energy network. By collecting information on household consumption, renewable energies are better distributed and optimized, which contributes to the flexibility and therefore the stability of the network. Also, the consumer is also more widely integrated into the process. With smart grids, it is consumption that adapts to production and thus gives the consumer a new role. The Linky smart meter is an essential building block in this logic.

To support the energy transition and encourage the massive integration of renewable energy sources and new uses of mobility, network infrastructures have had to adapt quickly. In addition to the new dimensioning of the network, which has become a smart grid, the digitization functions resulting from Big Data have provided optimization and control tools for better operational performance. These advanced models have made it possible to improve the observability and controllability of the network, for better control of renewable energy connections. Atos is active in this area. In collaboration with Méteo France, It has developed service platform that uses Machine Learning algorithms to estimate the production of renewable energy in detail.

What I learned during my internship

During my work placement I acquired certain consulting skills, and I also learned to work in a team and to manage teams, to lead working groups. I have acquired both managerial and technical skills.

Above all, I discovered a sector that was totally unknown to me. As I progressed in the missions, I became familiar with a specialized vocabulary and gradually understood the technical workings. This experience in a digital services company was very enriching, both personally and professionally, and gave me the desire to continue in this direction.

Useful resources

smartgrids Introduction aux smart grids

European Commission Smart grids and meters

European Commission Energy modelling

About the author

The article was written in November 2021 by Léopoldine FOUQUES (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021).

Working for a Private Bank

November 17, 2021 by William ANTHONY

Working for a Private Bank

In this article, William ANTHONY (ESSEC Business School, Global Bachelor of Business Administration, Exchange Student from the University of Bath, 2021-2022) shares his experience as a Sales & Marketing intern in a private bank.

The company

Union Bancaire Privée (UBP SA) was founded in 1969 by Edgar de Picciotto in Switzerland. With CHF 161.1 billion in assets under management, UBP is one of the largest private banks in Switzerland, as well as one of the best capitalised banks in the country. UBP specializes in the fields of wealth management on behalf of private and institutional clients. The bank’s head office is in Geneva, Switzerland, and it employs 1,827 people as of November 2021 according to LinkedIn.

Source: Union Bancaire Privée.

My internship at UBP

In the autumn of 2018, I worked in the Sales & Marketing department of Union Bancaire Privée (UBP), London. At the private bank, I helped support a multi-national team using my command of French on a daily basis, particularly as regards frequent communication with the UBP head office in Geneva. During this time, I also developed familiarity with the commercial applicability of SalesForce and LinkedIn, which allowed me to identify and send newsletters to potential clients.

While with UBP, I also helped organise a roadshow for departmental seniors and this allowed me to meet other company managers which developed my understanding of both finance and marketing within a client facing environment.

Key concepts related to my work

The Law of Averages

The principle holds that future events are likely to occur as to balance out past deviations from an expected average. For me this was important as it related to the likelihood that my leads (potential clients) would reply to newsletters and convert into clients. It also allowed me to manage my expectations and remain positive in an environment that required a strong willingness to succeed.

Work hard, play hard

One of the benefits of working in a client-facing role was that I often met prospective clients in social settings like restaurants, bars, or conferences. This was a fantastic biproduct of the team I worked with, which allowed me to learn more about the industry in a more informal manner. It also allowed me to witness first-hand the connections that I created between the bank and prospective clients. On a sidenote, all bills were also expensed to UBP which made the whole ordeal rather merry.

Money

“Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.” The quote by Franklin D. Roosevelt really echoes with me as through multiple internships and work placements, I’ve learnt that the people you work with and the genuine appreciation for the job you’re doing outweighs the benefits of a higher salary in worse conditions. From cleaning out storage rooms to drinking with clients at the Ritz, the enjoyment and passion for one’s work and comradery between colleagues affects my work ethic and drive to succeed. Money can rarely be the ultimate objective, it is a biproduct of a passion and acts as compensation for your time and expertise.

Useful resources

Union Bancaire Privée (UBP)

About the author

The article was written in November 2021 by William ANTHONY (ESSEC Business School, Global Bachelor of Business Administration, Exchange Student from the University of Bath, 2021-2022).

My experience as a junior audit consultant at KPMG

November 10, 2021 by Pierre-Alain THIAM

My experience as a junior audit consultant at KPMG

In this article, Pierre-Alain THIAM (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023) shares his experience as a junior audit consultant in the Audit & Consulting department at KPMG.

About KPMG

When we mention professional services networks, everyone is instantly thinking about the “Big Four”. During the last summer from May to July 2021, I had the opportunity to work in one of these companies, KPMG, as a Junior intern in Audit & Consulting.

KPMG’s letters are the sheer remnants of the company’s history. In March 1917, Piet Klijnveld and Jaap Kraayenhof created an accounting firm in Amsterdam called Klynveld Kraayenhof & Co. Then multiples mergers occurred and in 1979, Klynveld Kraayenhof & Co., McLintock Main LaFrentz from the United States and Deutsche Treuhandgesellschaft from Germany, formed Klynveld Main Goerdeler known as KMG. In 1987, KMG and Peat Marwick merged and had one of the biggest mergers at the time. Two of the biggest accounting firms of the 20th century chose to unify and ultimately formed KPMG as we know it today.

Nowadays, KPMG provides multiple finance services including mainly Audit, Management Consulting and Tax Consulting.

Source: KPMG

What I did during my internship

During my internship, I evolved in a global system. I tried to understand the rules and even complex expectations of a work organization. My goals were to adopt an action or work plan coherent with the challenges and success of the requested mission and work effectively in a multicultural and interdisciplinary team while communicating in a dynamic national and international environment. I had to focus on producing clear and well-organized working documents on various subjects (test on revenues, process of a system, bank reconciliation of two pension fund regimes for examples), that the highest graded employees like managers or even partners would review for the mission.

I was mainly involved in audit assignments. The activity entrusted to it was essentially the understanding of target companies: organization, processes, and risks. Then, the understanding of audit objectives and performing substantive controls to identify accounting anomalies, including fraud of all types. And last but not least, I had to understand and perform internal control assessment work. I did a total of four missions over three months, with a range from a national agricultural organization to an insurance and a pension fund.

What I learned during my internship

Throughout my time at KPMG, I learned that technical skills are not the most important skills needed to work in the audit sector. Of course, you need to master hard skills like knowing the basics of financial accounting, being able to find the equilibrium of a balance sheet or having solid foundations on Excel. Nonetheless, there is a big “relational” aspect of the job. Since you are almost always with new people and colleagues, soft skills are definitely required. If you find a way to show your ability to communicate with other people, it always results with a better quality of work for you and the people involved in your mission.

When working in the audit sector, I think there are three principal aspects you need to focus on: logic, flexibility, and tenacity.

Logic

That may sound surprising, but logic is the most important quality you will need. When we talk about audit, people instantly think about big formulas, accounting and working on numbers all the time. This vision is quite wrong, I know for a fact that audit is mostly a process. A process is the description and assessment of the procedures for granting aid to customers: monitoring of their activities, the respect of accounting procedures and the identification of the various risks and controls implemented. You need to ask yourself a lot of questions related to the activities of the company you are working with. The aim is to identify the risks, assess them, define control measures, and simulate different scenarios of incidents to be analyzed: basically, it is called risk management. For example, if you work with Orange on their mobile services, you will first ask them how they make money from this activity. If they tell you each call is counted as a transaction, we will try to know how they make sure a call is counted. Then if Orange answers us that they have antenna A that conveys information to antenna B, KPMG will then investigate the risks of this method and how it can be the cause of a loss of money for the client company. This example is very specific to a certain type of firm, and it directly leads us to the second quality you need to succeed: flexibility.

Flexibility

At KPMG you can work in every field you can imagine and in any country in the world. My first mission was in a pension fund for employees of a bank group, my fourth week I worked in an insurance company and the week just after I worked in a logistics company. Lastly, my final mission was in a company for the support of the rural development of a country.

As you can see, we jump from one subject to another pretty quickly. Versatility is key because you never know what you are going to work on and where you are going to work at. If you don’t like to disrupt your habits, the rhythm of a consulting firm will promptly become fiendish for you. The bright side of this atmosphere is that it constantly stimulates you intellectually and you are always learning. Working in this type of company is extremely formative, but it comes with its advantages and disadvantages, metaphorically it is a double-edged sword, and you will either love it or hurt yourself if you find the correct way to handle it or not. And this is precisely why tenacity is essential to stay on the course.

Tenacity

Sometimes the work can be hard, and you have to try a lot of ideas until you find a solution. This can be even more difficult when there is tension with the management of your client company. Some people are really tough to work with and they just don’t want you to succeed because it will be at their detriment. Therefore, you need to have good communication skills while standing strong in your positions and not letting people walk over you.

The threat cannot only come from the clients but from your own colleagues. Most of the people are benevolent, but it is a dog-eat-dog world and not everyone can get to the top.

Useful resources

KPMG

About the author

The article was written in November 2021 by Pierre-Alain THIAM (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023).

My experience as a credit analyst at Amundi Asset Management

About Amundi

My apprenticeship

Missions

Required skills and knowledge

Three key financial concepts

Credit ratings

Credit spreads

Duration and convexity

Related posts on the SimTrade blog

Useful resources

About the author

My internship experience at Little Friends for Peace

Little Friends for Peace

My Internship Experience

Knowledge and skills needed

What I learned

Financial Concepts

Why should I be interested in this post?

Related posts on the SimTrade blog

Useful resources

About the author

My professional experience as an intern at Caisse des Dépôts

About the company

What is SSE?

My role and personal missions

During the creation stage

During the development stage

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

General concepts

Impact contract

Circular economy

Transition to a local, sustainable food system

Useful resources

About the author

My professional experience as a business developer at AJISO

Presentation of the organization

My role

My personal missions

Required skills needed

Concepts

Village Community Bank (VICOBA)

Economic benefits from VICOBA Bank

My takeaway

Why should I be interested in this post?

Related posts on the SimTrade blog

Useful resources

About the author

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

Oaklins Atlas Capital

My internship at Oaklins Atlas Capital

Skills needed

What I have learnt from the internship

Key concepts related to my work

Mergers and acquisitions

Tender Offer

Proxy fight

Why should I be interested in this post

Useful resources

Related posts on the SimTrade blog

About the author

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

Deloitte

My internship at Deloitte

Skills needed

What I have learnt from the internship

Key concepts related to my internship

Due diligence

Why should I be interested in this post

Related posts on the SimTrade blog

Useful resources

About the author

Mon expérience en contrôle de gestion chez Chanel

Présentation de l’entreprise

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

Compétences et connaissances requises

Autres articles sur le blog SimTrade

Resources utiles

A propos de l’auteure

Mon expérience de contrôleuse de gestion chez Edgar Suites