In February 2020, a social geographer at the University of Victoria was approached by one of the co-founders and managing partners of Raven Indigenous Capital Partners to develop an Indigenous impact measurement framework for the company. Raven Indigenous Capital Partners was founded in 2017 in Vancouver, British Columbia. The founders launched the Raven Indigenous Impact Fund to invest in early-stage growth businesses started by Indigenous entrepreneurs. The ultimate goal was to increase the well-being of Indigenous communities in Canada, but the fund had to demonstrate to non-Indigenous impact investors that they could target, measure, and report their social impact while earning an annual rate of return of 6-8 per cent on their investment. The social geographer faced two key tasks. She had to develop an impact measurement framework that combined Indigenous and non-Indigenous approaches to measuring social and environmental impacts. She also had to engage the Indigenous community in reporting on these outcomes.
In December 2016, the founder and chief executive officer of R3 was preparing for an offsite meeting, where his management team would debate what business model to pursue to extract the most value from the company's new distributed ledger product called Corda. Founded in 2014, R3 was a blockchain technology company with headquarters in New York. R3 was leading a consortium of over 100 banks, financial institutions, and technology companies to develop a distributed ledger technology that could meet the needs of the financial services industry. R3 had run a number of proof of concept tests of existing distributed ledger technologies with its bank members before deciding to develop an enterprise-grade distributed ledger from scratch. R3 was still privately-owned and controlled by the founder, but had financed its research and development by selling memberships in a joint venture to a consortium of over 40 banks. With Corda operational by mid-2016, the founder had to decide what business model to follow to monetize the investment in Corda. A second question was how to finance R3's future growth.
In 2016, Elixir, a financial technology start-up, was developing a social banking application to provide mobile banking to young adults and other underserved banking customers. Elixir had a social finance business model called MillennialMoney, where existing customers had an opportunity to earn referral fees by introducing new customers. For the banks, Elixir provided a novel marketing solution to attract millennial customers. As a technology company in the social finance space, Elixir could use the strategic and operational advice of an experienced banker to help turn this vision into a reality. One such banker had been in discussions with Elixir's chief executive officer and the chair of the advisory board. The banker had been conducting due diligence of the company all summer of 2016 and had even gone on sales calls in Malaysia to see what banks thought about Elixir. Now it was time to make a decision. Should he join the management team of Elixir and invest in the start-up?
In late 2003, the managing directors of Quantum Investors Inc., a private equity firm that specialized in distressed investing, needed to decide whether their firm should take action in the restructuring of Stelco Inc., a Canadian steel company on the verge of bankruptcy. Stelco had been unable to adapt to the changing dynamics of the steel industry, due to its high cost structure and low efficiency. Its share values had declined sharply and it had a deteriorating cash position. The managing directors of the private equity firm needed to decide on a potential approach to restructuring, including which securities to purchase, and a strategy for dealing with stakeholders to ensure a successful outcome for its investment.
This note discusses how to analyze a bank from the point of view of an equity analyst or investor. The note begins by reviewing the evolution of North American banks from narrow to diversified financial institutions and then describes the financial ratios used to evaluate a bank's operating and financial performance. The final section provides examples of these ratios applied to a North American bank, and a set of Canadian and U.S. banks.
The CEO of a failed bank in Iceland must address what went wrong and how he should go about restoring trust in the bank by customers, debt holders, fellow Icelanders, politicians and regulators. Crippled by the global financial crisis, not only did Iceland's banks default but the country itself was in danger of dissolution. This case examines the myriad reasons for the bank failure and subsequent nationalization, and provides an understanding of the complexity of a large bankruptcy.
Spin Master, a children's toy and entertainment company, was getting ready for an initial public offering (IPO). Its founders were weighing their options with regard to some core issues: What was the right positioning for Spin Master with potential investors? What was the right approach to valuing the business? How did that approach translate into enterprise value, equity value, and share price for the IPO?
In April 2011, a university professor of accounting and finance was examining the financial statements of Pangang Group Steel Vanadium & Titanium Company (Pangang), a leading Chinese steel manufacturer listed on the Shenzhen Stock Exchange. Pangang had a dramatic turnaround in its reported net income in 2010 with its share price rising over 60 per cent in a six-month period. The professor suspected that the controlling shareholder of Pangang - Anshan Iron and Steel Group Corporation (Ansteel) - had been manipulating Pangang's earnings to artificially inflate the stock price. The timing coincided with the expiry of put options awarded by Ansteel to minority shareholders as part of a restructuring. Was Pangang manipulating its earnings to influence stock prices? Was there sufficient evidence to expose the fraudulent scheme to the public or report the case to the Chinese securities regulators?
In January 2001, the chief executive officer (CEO) of Canadian Pacific Limited (CPL) was contemplating the future of his firm. CPL was one of Canada's oldest conglomerates with operations in railways, shipping, natural resources and hotels. Its stock market capitalization of CDN$13.5 billion reflected a conglomerate discount, estimated at 12 to 35 per cent of the value. In order to eliminate this conglomerate discount and maximize shareholder value, the CEO weighed the pros and cons of asset divestitures or spinoffs. Would it make sense to keep some of the related business together to preserve economies of scale and scope and to maintain synergies? What would be the tax implications of each option? There were numerous operational and legal implications to consider. Knowing he had to make a decision quickly, the CEO looked for the option that would unlock the most value for CPL's shareholders.
In mid-March 2011, the vice-chairman of National Bank Financial had to decide what price to recommend to his Maple consortium partners for the TMX Group Inc. (TMX). The TMX was the owner and operator of Canada's leading cash and derivatives exchanges. The vice-chairman was leading a consortium of Canadian banks that was planning an unsolicited bid in response to merger talks between the TMX and the London Stock Exchange Group. The case allows for a discussion of mergers and acquisitions and the factors behind merger waves, the mechanics of a hostile bid for a publicly listed company, the changing landscape for stock and derivative exchanges, the valuation of a target company, and the distinction between strategic and financial buyers. An Excel spreadsheet for students is available.
Senior management of a large stock exchange is reviewing a recent software problem that resulted in a botched opening for the initial public offering of a popular social media company. They are drawing up a list of recommendations on how to prevent this type of failure in the future, taking into account the needs of their various stakeholders, including customers, market makers, listed firms, regulators and shareholders. Overviews of the stock market, NASDAQ in particular, and the use of technology to trade stocks securely and quickly are followed by examining the aftermath of a delay in the correct trading of Facebook shares on its opening.
It was May 16, 2012, and the highly anticipated pricing of Facebook Inc.'s initial public offering (IPO) was underway. An analyst at CXTechnology Fund was preparing to speak to the lead underwriter about his final interest in the deal. The analyst had reviewed Facebook's phenomenal growth, its profitable business model and the competitive landscape for the social networking industry. The IPO appeared to be oversubscribed with heavy interest from institutional and retail investors alike, but the valuation seemed expensive, even by technology standards. The analyst needed to make a decision on whether to buy shares in the IPO or not. A spreadsheet for students is available, product 7B12N031.
On January 6, 2010, Stanko Grmovsek was sentenced to three years and three months in prison for making profits of an estimated US$9 million over 14 years based on insider tips from his best friend from law school, Gil Cornblum. Grmovsek and Cornblum had operated an illegal insider trading scheme from 1994 until 2008. Using his role as a corporate lawyer at various law firms, Cornblum had passed material non-public information related to 46 takeovers to Grmovsek, who then traded illegally using brokerage accounts located in the Bahamas and Ontario. On October 27, 2009, Grmovsek pleaded guilty to all charges against him in both Canada and the United States following a joint investigation by the U.S. Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC).