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An advisory company has to decide how to sell their client's hedge fund holdings in the secondary market, and thinks about their future. Shelley Capital was a a European advisory company operating in the hedge fund secondary market, a market that boosted in 2008 with the world financial crisis. Shelley had identified four final bidders for the $84.5 million portfolio of illiquid hedge fund holdings that one of their clients had commissioned them to sell and had now to decide to whom they should sell the holdings, if they should split up the portfolio, or if they should postpone the sale. At the same time, they needed to decide about their future business. The financial crisis was behind the exceptional growth of the hedge funds' secondary market, yet another crisis could follow and boost the secondary market again. What direction should Shelley take once the hedge fund industry fully recovered? But what if a second global crisis threw the hedge fund industry into disarray once again?

At a time of market turmoil, a university investment manager wants to unload the school's entire private equity portfolio, yet no public market exists, so the assistance of a partner at a PE firm is sought. This case provides an introduction to a range of secondary transactions and the valuation challenges that arise.

It supplements case UV5620

In 2010, Sino-Ocean Land Holdings Limited was a highly successful, large real estate developer based in Beijing, China. Sino-Ocean Land had three main business segments-property development, property investment/management, and other real estate related businesses. From 2005-2009, the company focused on becoming a leading regional developer with a multiproduct offering. That strategy was successful, riding the wave of spectacular growth in the Chinese real estate sector from 1998-2008, following a loosening of Chinese state real estate regulations. Although Sino-Ocean Land had gone public in 2007, its key shareholders were still state owned enterprises. The state maintained significant influence on the company and the real estate market, in general. The case explores the interactions between the company and the state, examining land acquisition, financing, and corporate governance. Following the global financial crisis of 2008, Sino-Ocean Land must devise a new five year strategic plan. CEO Li Ming must grapple with the changing market dynamics and regulatory environment, to decide the best course for the company. Key issues that he must determine are: whether the focus should be local or national; whether to continue with multiproduct offerings, or specialize in one product type; and whether to continue to pursue primarily development, or to shift to property investment and holding.

Spreadsheet Supplement for case UV2555.

Given widening bid-ask spread for a target stock, a small Australian portfolio manager considers front running the market makers by posting its own quotes inside the spread. Organized in a series of rounds, the case asks students to post bid and ask limit orders for shares. Each round allows orders to come in that execute against the limit order book, cash flow and end-of-round inventory to be calculated, and the market to revise the bid and ask quotes for the next round. This structure starkly illustrates the tension for market makers between bid-ask spread profits and inventory trading uncertainty.

In June 2010, Mingzhe Ma, chairman and chief executive officer of Ping An Insurance (Group) Company of China ("Ping An" or "the Company"), sat down with Sun Jianyi, vice chief executive officer and executive vice president at Ping An, to discuss the future direction of the Company. They would have to answer questions at the upcoming shareholder meeting about Ping An's financial strategy for diversification within China and globally. Ping An had been founded by Ma in 1988 and had since grown into China's second largest life insurer. While Ping An had achieved past success in insurance, it looked to expand its business going forward. Ping An's ambition was to transform itself into a global financial conglomerate, with banking and investment, as well as insurance operations. Ping An's recent efforts at globalization and diversification had been challenging. In a highly publicized transaction, Ping An made an untimely investment in Fortis, a large European bank which failed in the global financial crisis in 2008. Ping An spent close to 24 billion Chinese Yuan (RMB) or 3.4 billion U.S. dollars ($) on Fortis. In the aftermath of the Fortis acquisition, Ping An had halted overseas expansion and focused on opportunities at home in mainland China.

Corporate social responsibility remains a deeply controversial issue. Vermaelen proposes a creative way to finance CSR initiatives: through equity spin-offs that create separate alternative businesses funded by shareholders who opt in, knowing they may see lower returns but enthusiastic about the cause.

This case has two aspects. First, it provides a tutorial on the basic concepts associated with straightforward time-value-of-money scenarios. The topics of future value (FV) and present value (PV) are discussed and exemplified for both lump sum and recurring cash flow situations. In this vein, the derivation and use of four useful time-value-of-money reference tables are presented to highlight the underlying logic, connections, and mechanics of determining FVs and PVs. Second, this case provides students with several simple vignettes in which they can apply the foregoing time-value-of-money insights and techniques. The case can be effectively used in degree and nondegree programs, and it requires no additional reading materials. It is well suited for one 90-minute class period, and all or selected subsets of the vignettes contained in it may be assigned. A Teaching Note is available to registered faculty.

Warren Adams founded Patagonia Sur in 2007 as one of the world's first for-profit land conservation businesses. His goal was to purchase over 100,000 acres of land in southern Chile and to run a variety of sustainable businesses to generate annual returns for investors. Patagonia Sur planned to derive various streams of revenue from the land-including eco-tourism, sustainable land development, carbon credits, water rights and eco-brokerage-thereby giving a financial return to investors on top of achieving a positive environmental impact. By 2011, Warren had raised over $20 million from high net worth individuals and Patagonia Sur had over 60,000 acres in Patagonia under management. However, institutional investors seriously questioned whether Patagonia Sur could ever do more than break even on an annual basis. Further, they worried that in fact the risk of the investment went up significantly as the company spent both its capital and management time on so many different revenue streams. In addition, some investors felt that for-profit conservation was morally wrong. Warren needed to convince both individual and institutional investors that his vision would succeed in both generating returns and preserving the natural beauty of Patagonia.

After a two-year absence from the financial industry, Tom Henne evaluated his options and determined that he could exploit his knowledge of the inner workings of the pension fund business and start a new firm, Equinox Asset Management. Despite claims that many pension funds provided returns that did no more than mirror the average index, Henne believed his fund could beat the market or achieve alpha. He proposed that this success could be had by differentiating the Equinox fund in several ways from the typically large and well-branded funds of banks and insurance companies. Thinking he still had significant time to consider the details, Henne was surprised to receive a phone call from a local company wanting him to do a presentation on Equinox at its offices. Henne had only one week to decide the size of his fund, finalize his fee structure, identify his positioning and marketing strategy, and evaluate an appropriate client base. But most of all, he wondered whether the idea for his fund was even plausible.

Wall Street hedge fund manager Kim Meyer is considering investing in an SFA (slate financing arrangement) in Hollywood. Dave Griffith, a Hollywood producer, is pitching for the investment and has conducted a broad analysis of recent movie data to determine the important drivers of a movie's success. In order to convince Meyer to invest in an SFA, Griffith must anticipate possible questions to maximize his persuasiveness.

Spreadsheet Supplement for Product #KEL700

In 2002, Tyco International experienced a corporate crisis which put the conglomerate in danger of bankruptcy. The case follows how the company succesfully tackled a short-term liquidity crisis as well as the steps taken to establish a global treasury management structure to position Tyco going forward.

This is an international version of the classic ratio detective exercise that is found in many US-based textbooks and other case series. The objective is to initiate students into balance sheet analysis via the use of common-size balance sheets. The case helps students to understand how the economics of the firm are revealed in the firm's financial statements. Effectively employed, it can also teach students to think about the links between asset composition and financial structures, and how these relate to industry economics.

The case examines the issues faced by a hotel management and development company as it tries to increase the return to its shareholders. The firm’s major shareholders have commented that they believe the firm is currently under-valued, so management is considering several means of unlocking extra value. Due to difficult economic conditions resulting from the global economic crisis, there are many opportunities as well as many risks to the alternatives the company is considering. The case provides the opportunity to use several different valuation methods to determine if the company is, in fact, undervalued. It also leads to a discussion of several alternatives for unlocking value, including starting an active acquisition strategy or re-organizing the corporate structure with either an updated capital structure or conversion to a real estate income trust.

In July 2010, William Ackman, the founder of Pershing Square, is considering a potential new opportunity: the acquisition of the distressed Stuyvesant Town and Peter Cooper Village ("ST /PCV") complex. The property had recently been abandoned by its owners and had come under the control of CW Capital, the special servicer for the vast amount of debt that was in default. Any investment in a distressed property could be very risky and might require the company to seek protection in the bankruptcy courts. While the bankruptcy process was not new for Ackman, it could add significant complexity and unknown outcomes. Ackman must consider whether this is a worthwhile investment, given the ambiguous valuation and significant public scrutiny of any investment deal.

Venture capitalists Bill Campbell and Kipp Baratoff have a decision to make. They can either invest their hard-earned capital in one of two existing energy efficiency (EE) companies or create their own company that tackles EE market barriers in a novel way. Bill and Kipp must understand how EE companies operate and discover the nuances of the EE market to make their joint decision. This case explores tactics used by three EE companies to overcome market barriers and capture the tremendous financial potential of the energy efficient market.

When ChiNext opened in October 2009 as the second tier market of the Shenzhen Stock Exchange (SZSE), it aimed to provide Chinese entrepreneurs with equity capital and to facilitate the exits of venture capital firms and other investors which had previously relied on the New York, London, and Hong Kong markets for public offerings. A year into ChiNext's operation, Dr. Wei Chen, Chairman and founder of Oriental Fortune Capital, one of the fastest-growing venture capital firms in China, met with an SZSE research fellow to discuss how the rules governing the market might be adjusted to allow more firms to list and, more importantly, to improve efficiency and transparency in order to make ChiNext a better stock exchange.

This case is about a large U.S.-based manufacturing company considering if it should shift its production from China to India to maintain it global competitiveness, particularly for selling into the U.S. market. This case study examines in detail the recent (2003-2010) economic performance of India, including changes in government policies toward foreign investment in India. The case also reviews recent financial market and product developments in India. Finally, the case study also describes, illustrates, and applies a process of country risk analysis for foreign companies considering investment in a rapidly growing emerging market economy such as India.