30173 - CORPORATE BANKING
Course taught in English
Go to class group/s: 31
Class-group lessons delivered on campus
Students are expected to master topics covered in basic Accounting courses.
The crisis of 2007-2008 shed light on the diminished importance of deposit taking institutions and capital markets role in funding. On one hand the operations of other players, who were able to structure an alternative credit system – usually called the “shadow banking” system - allowed those in need to opbtain funding. On the other hand, the lack of adequate regulation on the shadow banking system participating institutions fostered the crisis itself. While the crisis called its importance into question, shadow banking importance has since returned to its pre-crisis peak . At the heart of the system there are investment banks (IBs). Besides their traditional role as advisors in M&A transactions, IBs provide sponsorship, services and funding to the complex legal entities that comprise the shadow banking system. On top of that, they are key participants to the financial markets' workings as they supply liquidity through trading and asset management and support firms that intend to employ it to obtain funding. Hedge funds and private equity funds are also important players in both arenas. Due to their role in today's financial landscape, the mission of the course is to understand the above financial intermediaries' production process and organizational structure, also framing their historical evolution over time.
Starting from the analysis of the financial needs of the firms, the course describes the ways in which intermediaries create value through their advisory and capital deployment activities. The first (and main) section is specifically devoted to investment banks, depicting their organizational structure and the services they offer in the security issuance, M&A, sales and trading, research and wealth management businesses. The second part deals with hedge funds, private equity funds and focuses on LBO deals valuation. Case discussions will be used to have the students undestand the complexities of the intermediaries' operations.
- Describe Investment banks, hedge funds and private equity funds operations;
- Explain how the above intermediaries offer and price their services;
- Identify the synergies between different businesses and the advantages in offering them separately or as part of a package,
- Illustrate the functioning of the tools they apply when performing their activities;
- Identify the limitations of the avove tools and their impact on the intermediaries' behavior.
- Analyze the tools that investment banks and private equity funds employ when they advise their clients/define their acquiring strategy and choose the appropriate ones
- Plan an acquisition and an LBO by drawing up the various steps it encompasses
- Apply the techniques depicted in the course to evaluate the most appropriate behaviour
- Simulate the possible results under various scenarios hypothesis
- Face-to-face lectures
- Guest speaker's talks (in class or in distance)
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
- Group assignments
Cases are included in the course materials. Their content and the main concepts they help uncover will be part of the exam questions.
In order to foster class participation in their discussion, before the relevant lecture I provide the students with a guideline so that they focus their reading towards the main points and do not waste time on details.
To incentivize an accurate preparation to the discussion, each case will be part of an group assignment.
Depending on the situation in December, one additional case might be part of the lecture by an invited speaker.
Exercises will be illustrated in class and then additional examples will be given through the course Blackboard.
1 hour closed book final exam consisting of multiple choice and open-ended questions, group assignment and class participation.
The exam and the assignments are meant to establish and verify if the students are able to identify and distinguish:
1) the features of Investment banks, Hedge funds and Private equity funds operations;
2) the critical aspects of the above firms management;
3) the suitability of the above intermediaries offer to the needs of their clients
at a general level and by applying the theoretical concepts covered during the lectures to real cases discussed with their peers.
Specifically, the general exam open questions section aims at assessing if the students are able to identify and adequately apply:
1) the features of various tools used to analyze financial investments;
2) the methodological implications of choosing among the above ones;
exploiting not only the specific techniques learnt during the lectures but also their knowledge about the characteristics of the specific services that the intermediaries offer and their implications on the intermediaries operations.
“Investment Banking, Hedge Funds and Private Equity”, by David P. Stowell, 3rd edition, 2017, Academic Press, Elsevier Inc. is the reference book. Lectures slides will be provided as well.