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Neeladrinath Sarangi @GrimMan 635
Posted 13 Jul '09
What I think the author is trying to convey is that the Chinese leadership will engineer an attack on India, to distract its internal dissidents. An attack for such puposes is typically a low intensity, localised military action cloaked as rebel strikes, work of sabatouers ..etc. It may also be...
What I think the author is trying to convey is that the Chinese leadership will engineer an attack on India, to distract its internal dissidents.
An attack for such puposes is typically a low intensity, localised military action cloaked as rebel strikes, work of sabatouers ..etc. It may also be created by an intentional airspace violation by military aircraft. The intruding aircraft does not respond to Indian airspace controllers and quickly gets back to the border before it is intercepted.

The objective is to allow the Indian government to know that the Chinese are behind it and that it is intentional. An government here will publicise the issue and seek an international mandate. This would happen over a few weeks, during which China's internal problems would be in the backburner and a surge of Chinese nationalism will keep the top circle in China in power. The junior and mid level leadership may infact not be supportive of the top at present, but an event like this will polarize the population there.

The "strike" will only last for a few days and may involve heavy collateral damage in the area. This is to ensure that everyone here takes note and the government at home is pulled up to act.
Other countries, relying on business with both countries will make some noises and the matter will die down after that.

I don't think that the author implies that China will launch a full scale war or a nuclear first strike.
GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 17 Jun '09
> Hi everyone, On LBO or IPO, i understand the question is why go for LBO when you can go for IPO? two things: 1\. IPO is a very lengthy process and often takes months to complete...by this time the merger may have fallen through. 2\. Secondly, LBO makes more sense to the acqui...
Hi everyone,


On LBO or IPO, i understand the question is why go for LBO when you can go for IPO? two things:

1. IPO is a very lengthy process and often takes months to complete...by this time the merger may have fallen through.

2. Secondly, LBO makes more sense to the acquirer as he himself does not need to pledge anything of his own. In a sense, he uses the target to finance the acquisition. Also, the Debt Equity ratio of the Acquirer may be low, in which case it can afford to take on some loan in its balance sheet.

KM.

Would like to add in here a point or two

1. LBO uses debt financing, which is comparitatively cheaper than equity financing
2. LBO takes the assets of the acquired company to be used by the acquiree, to raise loans for takeover/buyouts.. Its like "Bheeshma" telling Arjun the way to defeat him.


Disagree over one point in here.
In LBO's, you have a huge debt. if at that time, the profits dip, and that happens consistently, the company cannot pull out of debt and goes bankrupt. Happened for a series of Buyouts in the 1980's and 1990's coz of which LO's became infamous!
So its not a SAFE way to take over a company. High risks, high gains proposition.

PS: Ppl can read over KKR in Wikipedia. He was the pioneer for LBO's!


No offense, but some of whats stated is not entirely accurate. My understanding is so :
LBO does use debt financing. But it does not use the assets of the company being acquired for raising money. The assets of the company are owned by the company's shareholders and they will not agree to give it as collateral for a third party to acquire the company.

The money is raised by issuing high risk bonds. These bonds ("Junk bonds") do not guarantee payments but offer attractive interest rates. Without junk bonds, there are few options to raise money for an LBO. Few, if not none, banks and other conventional lines of credit will be willing to lend money to a PE/LBO firm to take over a company at a hefty premium to its current market valuation.

The premise of an LBO is to acquire an inefficiently run company or a company with diversified lines of business, by issuing cheap bonds, which appeal to certain institutional investors (who have allocated some capital in their investment portfolio to high yield debt), who then buy the bonds.
The proceeds of the bond sale are used to buy the company and remove the current management. In the normal scenario, the company's management itself advises the LBO firm on the company's business model, strengths and weaknesses. The acquirer handsomely rewards the old management team with large bonus payments/retirement packages.

Using the information and experience shared by the old management team and its own knowledge on the industry & financial management, the LBO firms appoints a new management from its own ranks, who are experts in restructuring businesses. The new team identifies business lines which are being inefficiently run and either improves performance with new measures or spins off the business line into another entity, which is sold later. In many cases, it does both : improves performance to an extent that makes the line profitable and then sells it to a company which is a player in that industry for a large profit.

An LBO is meant to clean large, diversified business into smaller, lean mean profitable companies. The US business landscape, was at the time littered with many such firms, which were inefficiently run with less than committed management. The LBO industry began in the late 1970s and ended around 1989, with the biggest LBO deal made till then - the RJR Nabisco-KKR deal of 25 billion USD. It also turned out to be KKR's most spectacular failure, earning negative returns and saddling them with massive debt. The could not improve RJR Nabisco's tobacco division and found no buyers. The deal hemmoraged their financials for a long time.

KKR created and brought to life the LBO concept. But without Michael Milkin's junk bonds, it is unlikely that LBOs would have taken off the way they did. MM had as much a role as Henry Kravis.

LBOs are an example where, a set of market conditions, goverment regulations (or lack of the same), ambitious, risk taking and intelligent entreprenuers create a new industry/new wealth. And just as the conditions that saw the LBO phenomenon wore away, so did the phenomenon. Which is to say that since 1988, we have not seen the frantic pace and large quantity and value of deals as that of 1980 to 1988.

LBOs were abused in the later half of their golden age. Since 1985, deals were made between managements keen on selling off the company in return for large compensation (at the expense of shareholder & employee interests), bond buyers eager for high interest debt and LBO firms focusing on simply stripping off the company to its nuts and bolts, selling it off for profits, rather than genuinely attempt to improve corporate performance, reduce waste and sell at a premium.

IPOs are not necessarily lengthy. Timing the market is the challenge. The IPO should ideally be when the market is most bullish and appetite for new securities is high. The motivations for an IPO and LBO are totally different. An IPO is to raise money for the issuing company's capital expenditures or for retirement of large debt. The LBO case has been discussed above.

In an LBO, the LBO firm is taking a lot of risk. But a good part of the risk is transferred to the bond holders as the bond agreements do not guarantee payments. Aside from the DE ratio, a company that generates large FCF is also fair game for LBO. (FCF - free cash flow). This number is more important than the debt equity ratio.
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GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 20 May '09
Arbitrage can and sometimes does exist in forex markets, though only for a couple of seconds. As mentioned by Vivek, dealers quickly close the gap. This is done b computer trading systems that have been programmed to do so. So an arbitrage opportunity closes in a couple of seconds as computers ac...
Arbitrage can and sometimes does exist in forex markets, though only for a couple of seconds. As mentioned by Vivek, dealers quickly close the gap. This is done b computer trading systems that have been programmed to do so. So an arbitrage opportunity closes in a couple of seconds as computers across the globe seek to profit from it.

But longer term arbitrage strategies are possible. Infact they are trading strategies based on breakdowns or discontinuities in the market. Although interest rate parity holds, an astute trader can go long on a currency with a borrowing (in a futures contract), expecting a fall in interest rates. If this happens, he can refinance his borrowing at the lower rate, while his returns are locked in the contract.

Not sure about this. Could be wrong. Just thought of sharing.
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GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 22 Apr '09
> Whatttt!!!! this is news to me : I'm sure a lot of thought must have gone in to making such a decision by Neel!! Nevertheless, aprreciated : Hope he does well there!! Congos to u bro!!! Thanks dude! Yes, it is an unexpected decision! :: It came as a surprise to me...
Whatttt!!!! this is news to me :

I'm sure a lot of thought must have gone in to making such a decision by Neel!!

Nevertheless, aprreciated :

Hope he does well there!!

Congos to u bro!!!


Thanks dude! Yes, it is an unexpected decision!
It came as a surprise to me coz I had calls from other places, which are ranked higher in surveys and was'nt keen on IFMR. Was not even sure if I'll go for the GDPI when I got the gdpi letter.
After a lot of research, I became convinced that its the best fit for me.
Firstly its a great place to do finance and has strong experience placing people in the financial markets and BFSI space.
That and other personal considerations (moving into finance after several yrs of IT exp..etc) made it the best choice for me.
There's a lot of great stuff that goes on there, but the folks there being modest and hospitable, dont make much noise about it.

Congos to the CDT as season 2008 closes. The stellar converts of Mave, My3, You (captain!), Roger that, George and the others speak for themselves and there's no need for me to make special mention of the same in my post.
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GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 12 Apr '09
> @ seniors I got an admit for PGDM(Regular).I am basically a biotech graduate but interested in finance.Moreover I graduated in 2008 and have a year gap in resume..No work experience.. I have two questions to ask 1.Will it a problem for me to secure placements in banks or financia...
@ seniors

I got an admit for PGDM(Regular).I am basically a biotech graduate but interested in finance.Moreover I graduated in 2008 and have a year gap in resume..No work experience..


I have two questions to ask
1.Will it a problem for me to secure placements in banks or financial companies.?
2.Will my year long gap in resume play spoilsport when i sit for placements?

Thanks.


I had the same apprehensions as you. Moreover, being in my mid 20s, was wondering if i will be accepted in the finance domain.

Spoke to a lot of people in the BFSI industry. There's no such restrictions. (i.e. prior workex/education being sufficient cause for rejection from BFSI)
However dudes who are nearing 28 to 30 may find it difficult to get profiles and pay meeting their expectations, which are naturally higher, considering prior workex in other fields. The 1 year gap may not even be noticed if your CV is good. Even if they do ask anything, you can say that you needed time to understand your priorities and interest. -ve marks will be given, only if the question is answered with fiction or insincerity.

I too don't have a finance qualification. Thats why am planning a finance MBA (2009-11). Being only 22, you have nothing to lose. But be sure that finance is for you and do great project work, which is what companies look at closely in placement. Aside from projects, having a solid knowledge in finance/areas in finance and getting it through to the interview panel is what matters in placements, I am told.
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GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 31 Mar '09
Not an expert, but have come across news pertaining to work done by IFMR research centers, trust and trust associations. The DSF course is new because micro credit and micro financing is yet to take off in a big way in India. Conventional lending models employed by banks (even thos claiming to wo...
Not an expert, but have come across news pertaining to work done by IFMR research centers, trust and trust associations. The DSF course is new because micro credit and micro financing is yet to take off in a big way in India. Conventional lending models employed by banks (even thos claiming to work in the micro sector) has not allowed micro credit to grow.

Securitization of recievables from micro loans though discussed, has not been implemented in India on a large scale. This is an established practice (securitization) in the US (also, given some blame for the subprime crisis). DSF will involve raising capital for micro credit via outside the established financial markets and conventional credit. If this takes off, job prospects will be great and you may lead a new revenue segment in the banking & FS industry.
IFMR trust has been doing some work in this area (quietly) for the past several years.
IFMR Capital, Equitas in deal for micro lending - Corporate News - livemint.com
http://economictimes.indiatimes.com/News/News-By-Industry/Banking-Finance-/Finance/IFMR-and-Equitas-complete-rated-securitisation-of-micro-loans/articleshow/4244976.cms

Pls note that this is my understanding only and may not wholly represent prospects at IFMR.

Selected for IFMR PGDM
GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 29 Mar '09
> Hmm..... I love buffet when he says forget Macro Economics and this is what i did while trying to evaluate IFMR as an option to invest.I took in to account what are probable risk and downside protection to same from view point that of investor, which MOU with ICICI verily provides(Though i ha...
Hmm.....
I love buffet when he says forget Macro Economics and this is what i did while trying to evaluate IFMR as an option to invest.I took in to account what are probable risk and downside protection to same from view point that of investor, which MOU with ICICI verily provides(Though i have not seen or read it ).

Secondly i doubt whether signing MOU is a norm with institutions in India.And on lighter note it is now HDFC which is largets PVT bank in india.

But yes it is interdependent world and ICICI is doing this for its own reasons and hope that it contine doing so without any restriction.And i think this also explain why the risk return relationship is not working that perfectly here(hope ICICI don't get in to trouble).

Thanks


I was'nt talking of the MOU. The corporate-institute relationship as a whole was what was touched upon. It may be in the form of an MOU or a less formal agreement. In IFMR's case it is an MOU.

Note my words "ICICI bank did not become the". Not "ICICI bank is the".
For a long time they were the largest bank.

Dude, Im into the financial securities line. So am not elabourating further on risk-return and other issues and leaving things at that. Happy investing. No hard feelings.
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GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 29 Mar '09
> I think ICICI thing do help as IFMR is not that established brand :: and it also provide protection to downward risk . And as like any investment ,people love to invest in undervalued scrips and here this ICICI thing also provide risk management which makes it more lucrative:clap: . So...
I think ICICI thing do help as IFMR is not that established brand and it also provide protection to downward risk .

And as like any investment ,people love to invest in undervalued scrips and here this ICICI thing also provide risk management which makes it more lucrative:clap: .
So dono hatho main laddu dikhte hai (atleast till now) .

And hope here Risk and Return funda is bit less working .

Thanks


Not able to understand your arguement. Any business school needs institutional backing structured as a trust with a board to get off its feet and manage the initial funding. And since the corporate is contributing to the trust in the form of financial assistance and management oversight, it would also like the reap benefits from its investments by picking talent from the institute and having a say in curriculum formation.

Take any private Bschool in India, read the articles of formation of the trust, lookup the financial numbers in its reports and you'll get what Im saying. ICICI did not become the largest private sector bank in India by agreeing to "guard the downside risk" of business schools.
GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 28 Mar '09
Well ur the real deal then! Am not the right person to suggest options, since I have never investigated them! Wish you the best for future efforts. On a different note, it is quite introspective to read the other posts in this thread post the subprime crisis. Written 2 yrs ago, so much has c...
Well ur the real deal then! Am not the right person to suggest options, since I have never investigated them! Wish you the best for future efforts.

On a different note, it is quite introspective to read the other posts in this thread post the subprime crisis. Written 2 yrs ago, so much has changed now!
GrimMan
Neeladrinath Sarangi @GrimMan 635
Posted 27 Mar '09
Attention: Dear puys, the selection list is out on the IFMR website. 13 waitlists for FE, 15 for DSF and 120 for PGDM
Attention: Dear puys, the selection list is out on the IFMR website.

13 waitlists for FE, 15 for DSF and 120 for PGDM