Course 2017-2018 a.y.

20553 - FINANCE FOR THE GREEN BUSINESS AND THE CIRCULAR ECONOMY


CLMG - M - IM - MM - AFC - CLEFIN-FINANCE - CLELI - ACME - DES-ESS - EMIT - GIO

Department of Finance

Course taught in English

Go to class group/s: 31
CLMG (6 credits - II sem. - OP  |  SECS-P/11) - M (6 credits - II sem. - OP  |  SECS-P/11) - IM (6 credits - II sem. - OP  |  SECS-P/11) - MM (6 credits - II sem. - OP  |  SECS-P/11) - AFC (6 credits - II sem. - OP  |  SECS-P/11) - CLEFIN-FINANCE (6 credits - II sem. - OP  |  SECS-P/11) - CLELI (6 credits - II sem. - OP  |  SECS-P/11) - ACME (6 credits - II sem. - OP  |  SECS-P/11) - DES-ESS (6 credits - II sem. - OP  |  SECS-P/11) - EMIT (6 credits - II sem. - OP  |  SECS-P/11) - GIO (6 credits - II sem. - OP  |  SECS-P/11)
Course Director:
CLAUDIO ZARA

Classes: 31 (II sem.)
Instructors:
Class 31: CLAUDIO ZARA



Course Objectives

Sustainable business models and operations are increasing in importance within the economic system due to several constrains affecting the traditional “linear economy” paradigm. Starting as green economy/green business in renewable energy and other fields of application, they are evolving in more comprehensive models which are “circular” and which enter and replace linear business models in other key industries such as automotive, food, communication/mobile and real estate. Students who attend this course develop in-depth knowledge on business model structure and financial analysis regarding deal typologies applied to the green business and the circular economy.
  • How do sustainable and circular business models work in terms of technologies, revenue and margin models, sources and typologies of risk?
  • Which are the assets/projects’ financial needs and how does the financial system match them?
  • How do different financial capital typologies (debt and equity capital) combine in green and circular businesses?
  • Which are the deal typologies offered by financial investors?
  • What do financial investors ask to enter the deal, how do they value it and which are the target returns?

Course Content Summary

The course can be split in three parts.
The first part is focused on developing the main features regarding sustainable (both green and circular) business models, the opportunities offered and the impacts generated on the main business economics and risks.
The second part devotes attention to carrying out a comprehensive analysis of the areas, inside the financial system, that are mainly involved. Both financer and investor positions are analysed.
The third part develops a risk analysis, focused on this kind of deals, that underlines and supports the investment decision that must be taken by a financial investor.
The whole course is supported by examples, case studies and speeches from real experience and real investments.
  • Green business and circular economy: what they are and business examples.
  • Green business and circular business models: in what they differ from linear business models and how they work. Investment opportunities for outside investors. The concept of stranded linear assets.
  • Strategy and business plan for the green business and the circular economy: how does an investor look at an investment opportunity and how does he analyse its business plan?
  • Which are the financial actors and the deal typologies involved? Corporate lending, corporate finance, investment banking and asset management.
  • Sustainable investment key principles and their application considering some deal typologies.
  • Green and circular business models and their plans: how does it identify the competitive advantage in comparison with a linear business, how does an investor look at an investment opportunity and how does she analyse its business plan?
  • Project and business analysis: asset side and operating risk. Operating risk measures. Liability side and risk of default. Risk of default measures.
  • Debt capital deals: analysis of the risks and potential returns associated with the project, financial sustainability and how to measure it, risk for debt-holders (adequacy) and its measure.
  • Participants involved in debt capital deals: regulatory issues, rating assignment, contractual covenant and credit enhancement.
  • Equity capital deals: analysis of the risks and potential returns associated with the investment, equity risk and return measures.
  • Participants involved in equity finance deals: regulatory issues, term sheet and investment agreement, performance and IRRs.
  • The future of green business and circular economy: a perspective.

Detailed Description of Assessment Methods

For attending students
Final written exam.

For non-attending students
Final written exam.

Validity: both the programme and grades have validity for the current academic year.



Textbooks

  • A collection of chapters from a bunch of textbooks are distributed through the Library Course Reserve facility.
  • Slides, excel files, selected articles and other material are distributed through the course e-learning web site.
Exam textbooks & Online Articles (check availability at the Library)

Prerequisites

This course is also a quantitative course but it does not focus on either mathematical derivations or complicated statistical analysis. It does require some basics in mathematics and statistics for finance. Financial Mathematics, Accounting, and Corporate Finance are advisable prerequisites for Bocconi students. For Exchange students, having attended similar courses is suggested. You must have reasonable knowledge of the basics in financial mathematics such as the time value of money, NPV and IRR; the basics in statistics such as variance/covariance and probability distributions; the basics in accounting and finance such as being able to read and analyse the cash flows statement and to calculate the cost of capital under the CAPM theory.

Last change 27/04/2017 15:15