Our Target Customer Market For Un-Rated Bonds/Commercial Paper Issue
The nature of a capital markets advisory assignment undertaken by us is driven by the need of a business owner /management of a viable business with strong business fundamentals requiring corporate finance services to fund ongoing business operations or growth opportunities. The need for financing arises because of lack of access to bank debt or equity financing due to tight monetary and credit conditions or other macro economic considerations beyond the business owners control.
Our target corporate customers are companies with strong business fundamentals. Companies with strong business fundamentals will be companies with proven management operating in markets that have allowed the companies to grow in the past. Management will have identified markets for the company to continue growing in the future or has previously demonstrated abilities to migrate to new but related markets through existing business competencies to enhance profit margins. These un-rated and un-listed companies need access to capital to generate cash flow.
Clients will need collateral in the form of land, incomplete real estate or revenue producing assets (e.g. power plants, rented properties etc) to undertake collateralized debt funding in the form of commercial paper/bonds. If the company has collateral to cover loan principal and our analysis shows that the client’s business model allows for loan principal and interest repayment, a case for un-rated commercial paper/bond issue exists. Commercial paper is an alternative to bank borrowings and selling equity as crucial funds to survive and grow via high yield commercial paper/bonds is introduced to the company.
In addition to our role as consultants in the past, partnership with an international broker allows us to offer business owners, transaction distribution capabilities in the form of buyers for un-rated commercial paper/bonds offering a timely product for business owners in China. We expect to complete a US$20 million fund raising assignment for a privately owned Chinese company by end 2005.
This alternative approach allows us to bring very cost effective investment banking services to middle market business owners who would otherwise lack access to a genuine service provider, be put off by high front end exploratory costs for exploring capital market alternatives or ignored by larger investment banks.