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Doran Doeh Managing Partner of SNR Denton

Doran Doeh Managing Partner of SNR Denton Manages the Moscow Office and coordinates the CIS Practice 25 th November How he developed commercial awareness over his career. How the City Works. Graham Price, CAS Editor of Newsletter Ben Doeh , CAS Head of Events. The Basics.

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Doran Doeh Managing Partner of SNR Denton

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  1. Doran Doeh • Managing Partner of SNR Denton • Manages the Moscow Office and coordinates the CIS Practice • 25th November • How he developed commercial awareness over his career.

  2. How the City Works Graham Price, CAS Editor of Newsletter Ben Doeh, CAS Head of Events

  3. The Basics • Entering the City • Your First Deal! • Basic overview of different areas of City finance and how lawyers are involved.

  4. What We’ll Cover • Initial Public Offerings or IPOs • Equity Finance, and Debt Finance • Investment Banks’ role in Equity Finance • Sovereign Debt, and Bonds • Derivatives • Asset Finance • Mergers and Acquisitions • Private Equity

  5. Public v Private Companies • A public company allows members of the public to buy its shares. • A small but significant minority (BP, Vodafone, Marks & Spencer) arelisted, allowing their shares to be publicly traded on stock exchanges. • A private company is any company that is not a public company.

  6. Only two types of money • Equity • Shares (capital growth / loss) • Dividends (discretionary share of profit) • Debt • Loan / Bond (return of principal) • Interest (set rate)

  7. Equity • Raising money through the issuing of shares • Equity is risk capital. • If the company goes bust, investors lose what they put in. • Additional equity can be raised through a further rights issue. • A rights issue is often underwritten by an investment bank. • The first offering of shares to the public is called an IPO.

  8. Initial Public Offerings or IPOs • ‘Going Public’, ‘Floating’, ‘Doing a flotation’, ‘Listing’ ‘Doing an IPO’ • Terms for when a private company decides to list on a stock exchange. • A stock exchange is a market where companies list shares to be bought and sold. • In an Initial Public Offering, companies issue new shares to raise money on a stock exchange.

  9. The Old London Stock Exchange

  10. Mergers & Acquisitions • The bread and butter of corporate work! • A company can grow by taking over another company. This is called an acquisition. • SAB Miller is acquiring Foster’s. • Microsoft has acquiring Skype. • The company (the bidder) will make an offer for the target company, persuading the target shareholders to sell their shares. • When two firms decide to merge, obviously that’s called a merger. • E.g British Airways & Iberia = IAG

  11. Hostile Takeover • If the Company (the Board) does not want to be taken over, the bid is hostile (contested). • Offer put directly to shareholders • The takeover will be judged by the City Takeover Panel. • Companies often perform rights issues to raise money for a takeover. • E.g. Kraft and Cadbury

  12. Private Equity • Private Equity is a deal where the bidder is not a company but a fund. • This money is put together by an investment bank or specialist private equity house. • Private equity houses can buy shares in a public company, causing it to become private again. • These are public-to-private deals, done by private equity lawyers.

  13. Debt • The traditional way of raising finance! • Debt finance is usually taking out an overdraft or a loan. • Often, companies get a bi-lateral loan from the bank. The bank is lending the company money (bi-lateral between one bank and the company). • Bond transactions can also be made to raise debt finance (see later). • Often where companies are highly leveraged, it’s for tax purposes.

  14. Commercial Banks v Investment Banks • The banks that underwrite share issues are called investment banks (although they don’t actually invest themselves). • Commercial banks lend money. • Banking lawyers advise on loans.

  15. Sovereign Debt • Governments also use debt finance. • They can’t issue shares so they can’t raise equity finance. • Tax and borrowing is how they raise money. • Sovereigns borrow from international capital markets.

  16. Bonds • Governments also raise money by issuing bonds (a debt instrument). • A bond might be for say £1 billion, repayable in 20 years, paying 4% interest. • Bonds are broken into small tradable amounts. • Capital markets lawyers work in this area.

  17. Derivatives • Derivatives are financial instruments (swaps, options, futures) derived from equity and debt. • Options (shares) and bond futures (debt) can be traded. • Don’t panic – we’ll explain this in more detail later in the year. • Derivatives lawyers deal with this.

  18. Project Finance • Project finance uses debt to fund infrastructure projects • E.g. In energy, health, transport and education. • Building pipelines, hospitals, railways and schools. • Many of these deals are PPPs (public-private partnership) or PFIs (private finance initiatives) because they are public sector projects funded in the private sector.

  19. Asset Finance • Asset Finance is when banks buy something and lease it to a company. • E.g. A big ship of aircraft. • It’s cheaper than borrowing by a loan as the bank owns the asset so it feels more secure.

  20. Our Role • Advising and assisting the company e.g. • Due Diligence. Due diligence is making sure that statements a company makes about itself are true. • Advising on underwriting agreements. • This work is carried out by Corporate Finance lawyers.

  21. The End!

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