“ The Making of a CFO”

“ The Making of a CFO” Sources of Finances October 11th, 2013 Mumbai

Role of a CFO • Primarily responsible for financial planning, record keeping and financial reporting • Ensure all financial reports are accurate and completed in time • Significant role in the strategic business decisions to be taken by assisting the CEO • Overseeing operations, many times directly handling procurement • Manage and materially support information technology, investor relations, lenders relations and joint venture managements • Responsible for managing the financial risks, cost controls, and maintaining liquidity • In the Course of Financial Management, undertakes a lead role in resourcing funds

Source of Financing • EQUITY • Mezzanine Debt / Quasi Equity • DEDT

Source of Financing in a PPP • EQUITY (including quasi) • GRANT • DEDT (including mezzanine)

Parameters for mix and raising • DEBT : EQUITY – 2 : 1 • Period of funds • Cost of funds • Marketability of instruments • Ratings – • Rating of the debt • Rating of equity

Equity Financing • Proprietary Funds • As Solitary investments or in Partnerships • Public Funds • As listed companies on SEs, • As trusts – Charitable or Business • Private Equity Funds

Public Funds • Listing • Could be done at various exchanges like BSE, NSE, AIMS, International Stock Exchanges in forms like GDRs / FCCBs • Charitable • By building corpus by way of donations and grants • Business Trusts • Private Equity Funds

Listings • IPOs and FPOs • Appointment of Merchant Bankers • Preparation of the Red Herring Prospectus • Identifying anchor investors • Issue opening • Periodical compliance with SEBI and the Exchanges

Business Trusts • Significantly gaining popularity • Presently destination is Singapore • Debt and equity funds are replaced by Trust Funds • Contributors to the fund are long term investors with expectation of fixed yield

Business Trusts • Business Trust (BT) offers investors an option to invest in cash-generating assets (including infrastructure assets, real estate, transportation assets, etc.) • The main parties involved in a BT structure are the BT, unit holders and Trustee-manager (TM) • TM is both the trustee and the business manager. • BT is a “pure” cash flow structure • Certainty on distributing cash flows • A yield play valued by cash flows plus growth • Unlike a company, accounting profits are not required to make distributions to unit holders • Established BT regime - There are numerous listed BTs on SGX in various sectors (including Property Trusts, Shipping Trusts, & Infrastructure /Port Trusts) Sponsor Investors >=26% <=74% Investment in units of BT Distributions Management fees Trustee Manager BT Management Service Ownership of assets (vested in Trustees) Cash flow repatriation Dividend/ interest/ etc 100% SPVs Fees Sponsor Asset management Revenues generated from asset Asset

Private Equity • Private equity is a collective investment scheme which are typically limited partnership funds with a general horizon of 10 years • Looking for a return of 15% - 22% • Exit options • Appointment of Merchant bankers • Process of Valuation • Term Sheet • Appointment of Diligence teams • Appointment of Lawyers • Signing of Share Holders Agreement • Compliances of Conditions precedent

Debt • Short Term • Working Capital Loans • Commercial Papers • Long Term • Term Loans • Mezzanine Term Loans • ECBs / FCCBs • Debentures • Bonds • Take out finance • Credit Enhancement Schemes

Rule of the Game • Promise Less • Deliver More

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“ The Making of a CFO”