World Federation of Exchanges (WFE): Encouraging Investment in Emerging Markets Hinges on Co-operative Effort

Emerging market exchanges and policy makers are keen to encourage international investors, who play an important role in the development of emerging economies’ public markets.

International investors can provide additional capital, enhance liquidity, promote greater competitiveness and adherence to standards of corporate conduct, and help to balance local retail and institutional participation. World Bank data estimated the level of net international portfolio equity inflows into emerging markets between 2000 and 2017 to be more than $955bn.

Established in 1961, The World Federation of Exchanges (WFE) is the global industry association for exchanges and clearing houses. Headquartered in London, it represents more than 250 market infrastructure providers, including standalone Central Counterparties (CCPs) that are not part of exchange groups.

"Exchanges and policy-makers can work together to ensure the creation of enabling investor environments that allow for the growth of different investor groups, which will, in turn, help emerging public markets thrive in the long-term."

Of our members, 37% are in Asia-Pacific, 43% in EMEA (Europe, Middle East and Africa) and 20% in the Americas. Nearly 70% of our members are located in emerging or frontier markets. Supporting the growth and development of these markets is a core strategic pillar and mandate of the WFE in a variety of forms, from conducting capacity building to leading business development workshops and undertaking market-leading research.

The WFE has an active Emerging Markets Working Group (EMWG) with 28 members, whose role is to develop relevant learning and information-sharing sessions for EM exchanges, and to propose EM-relevant research topics. Since the establishment of the group in 2015, the WFE has published four emerging markets-focused research reports, and this article focuses on the two most recent publications, from December 2018 and January 2019. These were interconnected reports on the relationship of international investors to emerging markets.

The WFE’s report Attracting International Investors To Emerging Markets – from December 2018 – identified the factors that seek to attract international portfolio investment into EM equities. The paper looked at foreign investment inflows to emerging equity markets, as well as foreign trading activity, and identified factors that are related to increases in both areas.

The report found that factors associated with increases in foreign investment inflows included:

Emerging market equity returns, with just a one-percentage point increase in domestic returns being associated with a $24.4m increase in monthly inflows;

Markets with higher corporate governance standards, with additional foreign inflows as high as $756m over the sample period; and

A country’s inclusion in the MSCI Index, the use of IFRS reporting, and requiring or encouraging English-language disclosure.

The report further discovered positive factors linked to higher levels of foreign trading activity, such as:

Larger and more liquid markets, with a one-percentage point increase in turnover velocity associated with a 1.3% increase in the value of foreign trading, and a 0.84% increase in the number of foreign trades;

Reduced trading fees; and

The introduction of market structure enhancements, such as the ability to short-sell and engage in securities lending and borrowing.

While the research observed a range of factors that benefit the development of emerging markets, it also outlined the factors that are associated with foreign investment outflows and can hinder the development of emerging market such as:

Emerging market volatility, suggesting that foreign capital tends to withdraw from emerging markets during periods of higher domestic market turmoil, consistent with the idea of a ‘flight to safety’; and

Explicit barriers to investment, such as the presence of restrictions on capital inflows, with markets imposing these restrictions seeing a reduction in inflows equal to $302 million over the sample period.

The report concluded with a number of actions that exchanges and policy-makers can take to enhance the attractiveness of their jurisdiction to foreign investors and traders. These include prioritising the adoption of high corporate governance standards, reducing or eliminating barriers to investment such as capital gains and dividends taxes, reducing or minimising costs of transacting in the market, and introducing market structure features, such as short-selling, and securities lending and borrowing.

A second, qualitative WFE report published in January 2019 entitled Investing In Emerging And Frontier Markets – An Investor Viewpoint followed on from the findings of December 2018’s quantitative paper. The second paper provided an understanding and analysis of the investor perspective by discussing what encourages, or discourages, international investors’ participation in emerging markets.

This report, written with the support of the European Bank for Reconstruction and Development (EBRD), aims to provide exchange operators, securities regulators and policy-makers with greater insight into the factors that drive investment decisions, as reported by investors. Given the contribution that international investors make to emerging and frontier markets – providing capital to the local economy, participating in risk sharing, and helping to reduce price volatility – a better understanding of investor motivation is key.

The key findings of the report were:

Financial returns are important, but the broader investment strategy will guide how they evaluate returns, and how they decide where to invest;

Smaller ‘frontier’ markets struggle to attract the same levels of attention as their emerging market counterparts;

Lack of certainty about ownership of shares would prevent investors from investing in a market;

Corporate governance (or lack thereof) was a particular challenge in emerging market investing, as was government interference, and, in some markets, the length of time it took to open investment accounts;

Liquidity was a concern, measured in different ways by different investors (e.g. at market level versus at individual stock level). Some investors required a minimum liquidity threshold to invest, whereas others adopted a long-term investment strategy;

The importance of market infrastructure features (including the presence of an electronic trading platform, ability to short-sell, presence of market-makers, and the ability to engage in securities lending and borrowing) varied across respondents. Notable exceptions were the existence of a delivery versus payment (DVP) settlement system, and the presence of global custodians; and

Environmental, social and governance (ESG) factors are important when evaluating investments. In some instances, poor ESG performance would deter investors, while others said they would engage with companies to look for improvement on relevant metrics.

The report concluded with recommendations for emerging market exchange operators and relevant regulators and policy-makers. These include:

Reducing the direct and indirect costs of investment (the time and effort required to open an investment account, and the costs of obtaining information);

Enhancing the corporate governance of listed firms and educating them about the relevance of ESG factors to their business, and by extension, investors;

Investing in market infrastructure enhancements to contribute to the improvement of the market over time; and

Developing the local investor base, including strong, local asset managers.

The findings of these WFE reports reiterate just how important and interlinked international investors are to the development of EM economies. Exchanges and policy-makers can work together to ensure the creation of enabling investor environments that allow for the growth of different investor groups, which will, in turn, help emerging public markets thrive in the long-term.

About the Author

[caption id="attachment_13624" align="alignleft" width="127"] Author: Nandini Sukumar[/caption]

Nandini Sukumar is the Chief Executive Officer of the World Federation of Exchanges (WFE), the global association for exchanges and CCPs. The WFE represents more than 250 exchanges and clearing houses globally, educating stakeholders on the vital role played by market infrastructures in the real economy, and as a standard setter, finding the consensus on issues among the global membership. Sukumar is Vice Chair of IOSCO’s Affiliate Members Consultative Committee and Chair of the AMCC’s DLT Workstream.

Sukumar has been CEO of the WFE since March 2015. Prior to this, she served as Acting Chief Executive Officer from November 2014, having been recruited by the WFE Board as Chief Administrative Officer in May 2014 to run the Federation on a daily basis and work with its global network of members as a proponent of the benefits of fair, orderly, public markets. Sukumar came to the WFE after a 14-year career at Bloomberg where she created, grew and ran their coverage of market structure, exchanges and UK regulation.

About the World Federation of Exchanges (WFE)

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE exchanges are home to nearly 48,000 listed companies, and the market capitalisation of these entities is over $70.2 trillion; around $95 trillion (EOB) in trading annually passes through the infrastructures WFE members safeguard (at end 2018).

The WFE is the definitive source for exchange-traded statistics, and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.


PwC: CEOs’ Confidence in Business Growth Dips as Global Economy Seen to Falter

[caption id="attachment_13628" align="alignright" width="300"] Author: Dion Shango[/caption]

CEOs around the world are less optimistic about the strength of the global economy than they were a year ago – and less sure of their organisations’ ability to grow revenues in the short and the medium term.

Those chief executives are less bothered by broad existential threats that topped the business agenda last year – terrorism and climate change – and more concerned about factors that affect the ease-of-doing-business in the markets where they operate. Also of concern are any factors that affect overall business confidence and willingness to invest.

These are some of the key highlights from PwC’s 22nd annual Global CEO survey of over 1,300 chief executives around the world, released at the recent World Economic Forum in Davos.

PwC has been conducting the surveys since 1997, and this year the study looked to the past and the future to analyse the predictive power of CEOs. It found a strong correlation between chief executives’ expectations for their own organisations’ revenue growth, and actual GDP growth the following year.

"CEOs’ revenue confidence can be considered a leading indicator of the direction of the global economy."

In other words, CEOs’ revenue confidence can be considered a leading indicator of the direction of the global economy.

The prevailing sentiment gleaned from this year’s survey is one of caution. In South Africa, economic and policy uncertainty have caused business leaders to ponder the prospects for future growth.

The unease about global economic growth is lowering CEOs’ confidence about outlook in the short term, with 35% saying they are “very confident” in their own organisation’s growth prospects over the next 12 months – down from 42% last year. In South Africa, only 18% of CEOs are “very confident”.

The same holds true for the medium-term (three-year) outlook; just 30% of South African business leaders (global: 36%) are “very confident” about their business prospects for growth over the next three years. North America, Central and Eastern Europe, Asia Pacific, and the Middle Est have all hit record lows. North America’s CEOs report the most radical loss of confidence; the overall lowest level reported is (as in 2018) in Central and Eastern Europe.

This relative pessimism is not that surprising, and most major economic models have adjusted their 2019 forecasts downward. In fact, many economists see a slowdown as overdue. In addition, international trade tensions, political upset and uncertainty, and stricter monetary and fiscal policy all play out differently – but with the same general results across regions.

Dramatic Drop

The US retains its lead as the expected top market for growth over the next 12 months, but there has been a dramatic drop in votes – from 46% in 2018 to just 27% in 2019. China saw its popularity fall from 33% in 2018 to 24% in 2019. As a result of the on-going trade conflict with the US, China’s CEOs have diversified their markets for growth, with only 17% selecting the US as likely growth leader – down from 59% in 2018. The other three countries rounding the top five for growth include Germany at 13%, down from 20%; India at 8%, down from 9%, and the UK at 8%, down from 15%.

South African CEOs named the US (25%) followed by China, the UK and Kenya (20%) as the most important countries for their organisation’s overall growth prospects over the next year. While most CEOs still believe in globalisation, they appear to be less interested in expansion outside their home markets. Instead, organisations are narrowing their focus and staying local.

Threats to Growth

As indicators predict a global slowdown, CEOs have turned to navigating the surge in populism in the markets where they operate. Trade conflicts, policy uncertainty, and protectionism have replaced terrorism, climate change, and an increasing tax burden in the top 10 lists of threats to growth.

[caption id="attachment_13630" align="aligncenter" width="887"] What do CEOs know about the future? How confident are you about your organisation’s prospects for revenue growth over the next 12 months? (summary change in CEO confidence). Source: PwC.[/caption]

While each region cites a different “Number One” threat, there is broad consistency in what keeps CEOs up at night. Policy uncertainty is among the most extreme concerns in every region, and ranks in the top three everywhere except North America (where it is number seven) and Asia-Pacific (number six). The availability of key skills makes the top 10 list in every region, and the top three in Asia-Pacific, Central and Eastern Europe, and Africa.

South African CEOs’ concerns around a broad range of business, societal and economic threats continue to increase. CEOs are “extremely concerned” about social instability (South Africa 68%; global 18%), uncertain economic growth (South Africa 68%; global 24%), populism (South Africa 55%; global 28%), exchange rate volatility (South Africa 49%; global 26%), and trade conflict between the US and China (South Africa 100%; global 88%).

Of business threats, 33% of South African CEOs (34% globally) said they were ‘extremely concerned’ about the availability of key skills, 38% (30% globally) cited cyberthreats, and 38% (28% globally) listed the speed of technological change as concerns.

Data and Artificial Intelligence

This year’s survey revisited questions about data adequacy first asked in 2009. It was found that CEOs continue to face issues with their own data capabilities, resulting in a significant information gap that remains 10 years on. Despite billions of dollars of investments made in IT infrastructure over this time period, CEOs report they are still not receiving the comprehensive data needed to make key decisions about the long-term success and durability of their business.

Leaders’ expectations have risen as technology advances, but CEOs are keenly aware that their analysis capabilities have not kept pace with the volume of data which has expanded exponentially over the past decade. When asked why they do not receive comprehensive data, CEOs point to the lack of analytical talent (global 54%; South Africa: 50%), followed by “data siloing” (global: 51%; South Africa: 63%), and poor data reliability (global: 50%; South Africa: 41%).

Eighty-five percent of CEOs globally (South Africa 90%) agree that artificial intelligence (AI) will dramatically change their business over the next five years. Nearly two-thirds (globally) view it as something that will have a larger impact than the internet revolution.

Despite the bullish view on AI, 23% of CEOs globally (South Africa 28%) have no current plan to pursue it. In addition, 33% globally (South Africa 32.5%) have taken a “very limited approach”.

Closing the Skills Gap

There is no quick-fix to close the skills gap that is worrying many chief executives. 46% (global, 38% South Africa) see significant retraining and upskilling as the answer, with 17% (South Africa 20%) also citing establishing a strong pipeline directly from education as an option.

What is clear is that governments and businesses need to co-operate to help their people adjust to the disruptive impact of new technologies, such as data analytics and AI. A culture of adaptability and lifelong learning will be critical to spreading the benefits of AI and related technologies throughout society. In addition, improved STEM (science, technology, engineering, and math) skills will be important in allowing people to perform the new roles and tasks that will come with AI and robotics. Soft skills like creativity and empathy will also be important in making people adaptable and employable.

As CEOs focus more on execution, search for revenue growth, work to address data and talent issues, implement emerging technologies, and seek to capture related benefits and value, they should not retreat from the broader conversation on establishing new societal frameworks to meet evolving human needs – and foster sustainable prosperity.

Every leader is affected by challenges, but no individual organisation in either the public or private sectors can tackle them alone.

About the Author

Dion Shango was appointed as PwC’s Southern Africa CEO on July 1, 2015 – the first black African to be appointed to the role.

Prior to his current appointment, he acted as Leader of PwC’s Energy, Utilities and Mining (EU&M) Group. He was recently elected as PwC’s new Africa CEO, with effect from July 1, 2019. Shango was voted-in in an electoral process involving some 400 PwC Africa partners across the continent. PwC’s Africa region extends across three market areas – Southern Africa, East Africa and West Africa.

Since being admitted to the partnership in 2008, Shango has led engagements on complex and multinational businesses and has serviced a number of listed clients, mostly within the mining industry. He has extensive experience reporting under IFRS, and of financial reporting in the mining industry.

In addition to this experience, Dion Shango has enjoyed exposure to other sectors and industries throughout his career by virtue of being involved in the audits of companies and organisations such as the South African Reserve Bank, Vodacom and Montecasino.

In recent years, his client base has included Exxaro Resources Limited, Harmony Gold Mining Company Limited and Sasol Oil.


The Importance of Promoting Financial Stability and Growth through International Regulatory Coherence

By Nandini Sukumar, Chief Executive Officer, The World Federation of Exchanges

[caption id="attachment_13648" align="alignright" width="415"] G20 Japan[/caption]

One of the World Federation of Exchanges’ (WFE) strategic priorities for 2019 is the issue of regulatory coherence. The primary reason for this is that the WFE and its members have witnessed how, in some cases, the implementation of G20 post-crisis regulatory reform has resulted in an unnecessary fragmentation of financial markets, and liquidity, on a cross-jurisdictional basis.

Achieving international regulatory coherence is important because financial markets are critical for economic growth and sustainable development. Cross-border regulatory co-ordination and deference to comparable standards improves supervision and reduces systemic risk. Fragmentation, on the other hand, adds costs, slows innovation, impedes competition, and reduces choice and risk diversification for investors. It entails cliff-edge effects in liquidity which could give rise to market dislocations. It may also lessen the resilience of financial markets, by isolating them from a more diverse array of participants which allows for risk diversification.

The global frameworks put in place by international standard setting bodies (ISSBs) should be capable of meeting the needs of different jurisdictions while upholding robust, politically agreed norms. While it is right that jurisdictions manage risks through rules tailored to the specificities of the local financial system, the means of doing this should be consistent with agreed global frameworks.

Even so, we observe a lack of coherence in the implementation of internationally agreed policy at the national level - including instances of proscribing foreign access because of line-by-line comparisons of legislation rather than an appropriately outcomes-focused approach.

We were pleased, therefore, to see that market fragmentation formed a key part of the agenda at the G20 Finance Ministers and Central Bank Governors Meeting (Fukuoka, Japan, 8-9 June 2019). Indeed, we believe the G20’s priority to address unwarranted financial market fragmentation is complementary to, and supportive of, post-crisis reforms.

As part of our advocacy efforts on this business-critical topic, we recently published a position paper on cross-border fragmentation arising from unjustified dissonance between jurisdictions’ financial services regimes.

In our paper, we called on G20 members to enhance transparency, engagement, and accountability via international standard setting bodies, as a means of creating more robust mechanisms to achieve international regulatory coherence. We proposed that the G20 takes the following actions:

Enshrining transparency and due process in an international agreement with a commitment to overcoming international regulatory divergence, avoiding regulatory competition, and censuring politically motivated dissonance;

Creating flexible new mechanisms for the escalation and resolution of regulatory dissonance;

Embedding international regulatory coherence in the mandates of national authorities;

Reporting by ISSBs on addressing financial market fragmentation; and

Enhancing dialogue between international standards setters, national policymakers, stakeholder groups and civil society through a structured framework.

The WFE believes that global regulatory coherence can and should be improved, both in substantive and procedural terms. It remains vital to the effectiveness not only of exchanges and clearinghouses but financial services more generally and the wider economy that they support. A significant role can and should be played by ISSBs, which already provide an outstanding forum for consensus on issues of customer protection, market integrity and systemic stability, all of which provide the bedrock for economic growth. Moreover, these bodies are well placed to address emerging trends, such as digital assets, as well as issues arising from traditional markets.

[caption id="attachment_13624" align="alignleft" width="124"] Nandini Sukumar[/caption]

Nandini Sukumar, Chief Executive Officer, WFE said: “We welcome the G20 focus on the topic of cross-border financial market regulatory fragmentation, under the Japanese G20 Presidency. The WFE believes that global regulatory coherence can and should be improved, both in substantive and procedural terms. It remains vital to the effectiveness not only of exchanges and clearinghouses but financial services more generally and the wider economy that they support.

“A significant role can and should be played by the international standard-setting bodies, which already provide an outstanding forum for consensus on issues of customer protection, market integrity and systemic stability, all of which provide the bedrock for economic growth. Moreover, these bodies are well placed to address emerging trends, such as digital assets, as well as issues arising from traditional markets.”

You can read the full WFE statement here.


Carlo Giugovaz: Thought-Leader Who Bets on Banking Industry Innovation

[caption id="attachment_13695" align="alignright" width="480"] CEO: Carlo Giugovaz[/caption]

Among the pioneers of the digital banking age and one of most recognised innovator and FinTech thought leaders in Europe.

He has more than 35 years’ experience in banking industry and started out on a new path – that of entrepreneur – by founding Supernovae Labs, a business accelerator for fintech start-ups and financial institutions.

Over the first years, Giugovaz has contributed to many high-profile companies, including PwC, where he held the position of senior auditor and senior consultant for more than eight years. He also worked as engagement manager during a five-year-stint with McKinsey & Company and as Esprit Projects Commissioner for the European Commission in Brussels.

Then came the banking appointments to Intesa San Paolo (individual marketing manager and strategic marketing manager), and UniCredit, where for more than 16 years he held positions including head of retail in the Central Region of Italy, head of UniCredit Direct Bank and head of multichannel banking (Italy and Central Eastern Europe).

Since 2017 Carlo Giugovaz has been hired by Efma as the Italy and Switzerland country manager, as director of the Fintech and innovation Council and as senior advisor for Efma Advisory Services. His position in Efma dovetails with his on-going vision of Digital, Innovation and Banking Transformation, as well as with his influential and mediation capabilities.

Giugovaz is now the CEO of Supernovae Labs, leading an international team serving some of most innovative Italian banks by choosing the best fintech ideas and solutions in the market to seize new business opportunities and close digital gaps. In three years, Supernovae Labs has created a selective portfolio of more than 110 fintech brand new solutions ranging from AI, big data, open banking platforms, to digital empowerment, data monetization, instant lending and deposits.

He has a passion for doing business. His distinctive strength is a blend of competences – strategy, marketing and sales, technology, finance and organization – seasoned in years of challenging projects and managerial positions. Over the course of his international journey, he has learned how to leverage technologies to respond to customers’ specific needs and acquired an in-depth digital know-how of banking industry.

Carlo Giugovaz is a leader who takes care in every aspect of his role, from problem solving, to commitment to success and people-management, from creative thinking, customer experience to calculating risks and impacts. He has spoken on a wide range of retail, banking and open innovation issues at global events and at MBA (Bocconi, Politecnico di Milano, Bologna Business school) devising a clear vision about forthcoming banking scenario and how to successfully compete within it.


Jakob von Ganske, Ph.D.:  Taking Strategic Steps — and  Keeping a Close Eye on Risks

[caption id="attachment_15669" align="alignright" width="280"] Head of Investment Consulting & Risk-Management: Jakob von Ganske, Ph.D.[/caption]

Jakob is Head of Investment Consulting and Risk Management, and a member of the Extended Management Board at Deutsche Oppenheim Family Office AG.

He has been working in the area of Strategic Asset Allocation and Risk Management as well as Manager Selection and Umbrella Funds Management for more than ten years and heads a team of four Quants with statistical and economic backgrounds. He has extensive experience in consulting institutional clients and foundations as well as high net worth individuals at Deutsche Oppenheim Family Office with, by now, several hundred individual consulting projects of varying complexity and wealth concerned. Jakob holds a PhD. in Finance from EDHEC Risk Institute, where he conducted research in the field of regime switching and big data algorithms.

“My life’s passion is financial markets, I work in financial markets all day long and when I come home, I spend most of my free time reading about market structures, economic history or econometrics,” he says. As such, his work in strategic asset allocation and fund of fund management is largely based on quantitative techniques and rooted in academic research. “The biggest part of investing is about how to deal with uncertainty. Fortunately, there have been a lot of very smart people over the last five decades who have set up lots of best practice principles on how to deal with not knowing almost anything about the future.”

PassivePlus, as he calls his investment approach, combines academic best practice with a decade of practical expertise and it is all about risk and uncertainty management. Before any investments are made, every client has to undergo an extensive decision making process, during which his required return and his risk tolerance are contrasted in order to find the strategic asset allocation that fits his preferences the very best. This includes liquid assets like stocks and bonds as well as illiquid assets such as real estate, private equity or venture capital, the empirical stylized facts of which are modelled with the help of sophisticated statistical models. “This is the step where only the client decides, while our function is to support him by developing quantitative expressions of his investment targets, risk aversion and loss tolerance. Strategic asset allocation is by far the most important step in the investment process, because it will determine more than 90% of the long term performance and the losses incurred if markets fall into some kind of crisis.”

Once this strategic asset allocation step is performed, Jakob invests in the allocation derived using either ETFs and passive funds or active funds. Most of the asset classes are invested using passive investments because in many markets, from an academic perspective, there is no evidence whatsoever, that passive investments can be outperformed. The best example is the US stock market. “There are, however, some few markets where Alpha is possible and managers can be found that have generated persistent value added, such as in emerging or European stock markets. We put a lot of resources and effort in differentiating whether markets provide Alpha potential or not.” Once Jakob and his team have identified markets where positive expected Alpha is realistic, their focus becomes diversification of the risks incurred when investing actively – most of which can be brought down to manager investment styles. “There are many reasons why funds outperform, but only few are replicable. Diversification of managers is key, because it means that we don’t need to be right about all the funds we chose, only about some, which statistically makes a very big difference. Diversification of managers also reduces cluster risks, avoids implicit style bets, and produces an attractive risk-return-profile relative to the strategic benchmark.” At the end, the PassivePlus proposition is to produce a portfolio which is as well diversified as possible, taking into account economic and financial risks as well as manager and style risks, while at the same time producing a small but consistent Alpha. “I believe that one has to invest a giant amount of work and sophistication in order to extract only minimal Alpha – that might not sound easy and fun, but it is realistic.”


Deutsche Oppenheim Family Office AG: Three Pillars that Ensure Solid Support at Leading Family Office

[caption id="attachment_15672" align="alignright" width="300"] CEO: Thomas Rüschen, Ph.D.[/caption]

Deutsche Oppenheim Family Office AG is one of the leading Multi Family Offices in the German market.

With roughly 80 experienced and qualified experts it offers comprehensive services around the organisation and management of complex private wealth situations. Created in 2013 through a merger of Wilhelm von Finck AG, Oppenheim Vermögenstreuhand and Deutsche Family Office GmbH, Deutsche Oppenheim builds on more than 30 years of experience in the family office business. Deutsche Oppenheim is 100% owned by Deutsche Bank, forms part of its Wealth Management business and today has offices in Grasbrunn near Munich, Frankfurt, Cologne and Hamburg.

Deutsche Oppenheim works with wealthy families, single family offices, foundations and smaller institutional clients. It is a multi-family office with an integrated portfolio management function, which gives all client advisors and relationship managers first hand access to capital markets expertise while at the same time guaranteeing independent and neutral advice regarding investment decisions and the selection of suitable asset managers.

The offering of Deutsche Oppenheim consists of three pillars: Wealth Strategy and Structuring; Capital Markets Solutions; and Real Estate and other Alternative Assets. Basis for this comprehensive offering is a state of the art reporting and controlling proposition which provides transparency across the entire wealth of a family including all asset classes, be it in the liquid as well as the illiquid space.

The Wealth Strategy and Structuring proposition consists of different components: strategic asset allocation advice, succession planning and the execution of the last will, asset-protection advice, the selection of platforms, advice around the creation and the set-up of foundations as well as office services. With regards to strategic asset allocation, we develop the investment strategy in close cooperation with our clients, determining the ideal risk-return profile while also taking into consideration the family's liquidity needs, resulting in a target allocation of the wealth across all asset classes, such as equities, fixed income, real estate, private equity, hedge funds, infrastructure, gold or cash. Our succession planning services develop a framework for wealth transfer to the next generations.
Asset protection comprises of different risk management tools to ensure that assets are safely organized to withstand emergency situations, fraud or other attempts from the outside to damage family wealth. We select the ideal platform as a vehicle for the family assets considering the family’s specific situation, determine the preferred asset class mix or the best suited governance structure, and provide independent advice and a neutral process for the selection of the best service offer. Some families consider the creation of a foundation, for example in cases when there are no descendants or when the family has identified a charitable cause to pursue. Deutsche Oppenheim supports such efforts by providing advice about the foundation’s creation and organisational setup as well as by supporting the ongoing activities of such an undertaking. If a family is looking for administrative support by delegating ongoing paperwork, Deutsche Oppenheim provides office services.

The second pillar of Deutsche Oppenheim´s proposition, Capital Markets Solutions, consists of an in-house portfolio management as well as three F.O.S. funds. Mandates are offered in a highly individualised composition, taking into consideration the specific expectations and investment ideas of a family. For over 10 years, Deutsche Oppenheim manages a large fraction of their client accounts based on ESG criteria and, with the ‘F.O.S. Rendite und Nachhaltigkeit’ fund, offers one of the leading ESG based public vehicles for foundations and similar investors. Recently the asset management proposition was extended to include an ETF based portfolio, which is increasingly attracting clients who seek an alternative to the traditional actively managed investment strategies.

As a family office, Deutsche Oppenheim provides neutral advice regarding the selection of the best asset managers for the highly individual investment strategy of each family. Manager selection forms an integral part of its offering, whereby the most suited asset managers are selected employing a well-structured and disciplined 'beauty contest'. The ongoing supervision of the selected asset managers is ensured by creating an adequate governance structure and verifying that investment guidelines are respected.
The third pillar, Real Estate and other Alternative Assets, complements the other two pillars and allows Deutsche Oppenheim to provide a truly comprehensive offering across all relevant asset classes. Given the low interest rate environment, illiquid asset classes have gained more importance in the asset allocation of wealthy families in recent years. By far the most important asset class for wealthy German families is German direct real estate. Often, a family prefers to own a single building on its own rather than sharing its ownership with others through fund structures. For this reason Deutsche Oppenheim has its own team of real estate experts covering the German market. For investment opportunities outside of Germany, Deutsche Oppenheim works with selected partners with specific expertise. For all other illiquid alternative asset classes Deutsche Oppenheim works with a network of specialised partners who can provide interesting investment opportunities for its client base. Areas of priority include private equity (through direct investments or fund structure), venture capital, infrastructure and impact investments - the latter growing in importance, particularly with the next generation of investors.

Each family is different and therefore has very specific needs, which are best addressed by a tailor-made combination of individualised services. Some families have their own single family office structure providing services in-house. In such situations, we can complement the capabilities of the single family office through the above mentioned services.

Wealthy families expect to be offered solutions at a very high quality standard. Our ambition for excellence drives us to offer the best solutions available in the market.


A Baptism of Fire: Turning £9m Losses Into £6m Profits With Dedication and Teamwork

[caption id="attachment_15675" align="alignright" width="300"] Managing Director: Caoilionn Hurley[/caption]

Co-op Legal Services managing director Caoilionn Hurley joined the firm in 2014 and took on her new leading role in December last year — the latest development in her diverse career history.

Having studied law, followed by a postgraduate degree in business, and then going on to qualify as an accountant, Hurley was selected for roles as chief financial, chief marketing and chief operating officer — as well as leading technology and people teams.

Her career started with Irish brewing company Guinness; she then moved to computer giant IBM, where she developed an abiding interest in technology. Further career steps included positions with the ExCel Exhibition Centre, Thompsons Solicitors, South Square Chambers and Slater and Gordon.

Hurley then moved to Co-op Legal Services to take on a role that was “the perfect blend of opportunities” for her: a commercial role in a business with a powerful brand. Her task was to turn the legal business around following annual losses of £9 million in 2013.

Hurley led from the front, putting together a highly skilled and capable team of legal and technology experts. Together they reviewed and re-engineered business processes, invested in technology and streamlined service delivery. Their efforts paid off; the Co-op is on-track to deliver a profit of £6 million for 2019.

A double coup for the team was the acquisition and integration of Collective Legal Solutions in 2016 and Simplify Probate last year — making Co-op Legal Services the UK’s largest probate provider.

One of Hurley’s key measures of success for the integration of these businesses was retaining almost all the existing team members. Her ethos is “people first”, and she admits to being obsessive about continuous improvement, technology and re-engineering working methods to meet client needs. “Everyone should be heard, everyone has something new to teach me,” is her view.

This mindset, shared by her leadership team, enables the retention and development of talented individuals and means the business now operates from five UK locations: London, Bristol, Manchester, Sheffield, and Stratford-Upon-Avon.

“We are a unified and aligned leadership team at Co-op Legal Services,” she says. “Sharing the same values and ambitions as a team makes it very easy to succeed together — we are proud of our track record of success, and we hope to build further on it.”
Caoilionn Hurley’s team continues to grow, leading a 600-strong workforce. They remain committed to building opportunities and rewarding careers for their teams, while relentlessly delivering expert, best-in-class client service.

The team recognises that Co-op Legal Services is only as good as the people who turn up every day and commit to working together, supporting each other through change, and delivering excellent service.


Dr Manny Pohl: A Survivor With a Cool Head and a Knack for Long-Term Investment

[caption id="attachment_15679" align="alignright" width="300"] MD: Dr Manny Pohl[/caption]

As a survivor of the 1987 stock market crash and the 2008 Global Financial Crisis, Manny Pohl has learned the importance of courage and staying true to core values.

When times get tough, the line between facts and feelings becomes blurred; personal conviction based on a core philosophy can help in these turbulent and traumatic moments. “I have found that when the dust settles, and we look back on these events,” Pohl says, “there is quite a thrilling tale — but only for those who stood by their convictions.”

At the core of his own values is the belief that the underlying economics of a business drives its long-term returns. In a nutshell, companies that are profitably growing their economic footprint generally represent better investment opportunities than those that aren't.

His preference is to invest in fewer companies which are well understood, rather than to take a chance on a large number of companies of which there is only a cursory understanding. As custodians of other people’s money, fund managers owe it to their clients — who have invested alongside them — to find opportunities in the best interests of all stakeholders. “It is better to sleep well than to eat well,” he says.

Athelney shareholders can be assured that returns will not be generated by speculation, and are made for the long-term, not for trading. Portfolios should be concentrated, as excessive diversification can be an excuse for poor due diligence.

The small-cap space continues to be a prodigious hunting ground for investors seeking attractive long-term returns. Athelney recognises this, with a stated intent of providing shareholders with prospects of long-term capital growth in quality small-cap companies, while maintaining a progressive dividend record. This is no easy task and Manny Pohl has been leading the charge with his team at ECP Asset Management to Redefine Active Investing.

While the active-versus-passive debate continues, and the focus of the industry has been on the fees paid rather than on the returns generated, the key issue to be addressed is manager skill. Picking quality investments trumps a broad portfolio and replicating an index. The acid test is longer-term investment performance — and the only way to sustainable growth is careful, considered and committed investment.

Active investing requires forensic research. Many factors need to line-up before a decision is made to invest in a business. A sound business strategy that is contextually relevant to the markets is vital, as is a durable business model with a Sustainable Competitive Advantage (SCA). Also important is management with demonstrated competence.

Potential, not just performance, must be evaluated. It’s important to understand the “narrative” of an investment and the numbers that support it. Investing on the narrative alone ignores reality, and investing in numbers alone ignores potential. The combination of these factors is needed to best capture long-term potential while ensuring a fair price.

To make long-term investment decisions with conviction requires deep understanding and a lot of unhurried attention. This means thinking as an owner, and not as a share trader. Time should be devoted to only the best ideas, which then need to be monitored and assessed through collaborative and discursive practices.

Investment management is more than just generating performance in excess of a benchmark. That is the core part of a mandate, but other qualitative issues are central to what should be done. One should recognise, for example, that capital allocation is a vehicle through which to drive change. “I have had the opportunity to demand specific standards of corporate governance,” Pohl says, “decide whether specific social and ethical issues are acceptable and, if they are not, to vote with my feet.

“For me, the integrity and credibility of any management team is a founding principle to our investment process. I need to trust that management has the best interests for all stakeholders at heart, and I need to have faith that they will make sound strategic decisions, and have strong experience and capabilities.

“As custodians of shareholders’ capital, we have an obligation to ensure that we are doing whatever we can to preserve that capital and grow it over time... Finding trustworthy, values-based management that align with my core values and beliefs will ensure above-average economic portfolio returns.”

As a champion for active investment, Dr Manny Pohl believes that it is important for him and others to outline some of the things that are crucial to good active investing.

Athelney Trust is a closed-ended equity mutual fund listed on the London Stock Exchange with investments in small and mid-sized companies across diversified sectors in the public equity markets of Britain. Dr Manny Pohl, as the Athelney Trust managing director, is responsible for managing the Athelney Trust investment portfolio. He is also Chairman of ECP Asset Management, the investment firm that has ranked among the top four fund managers in Australia over the past decade — often securing top place.


Euro Exim Bank: From Caribbean to World Stage, with Pride, Love, and Blockchain

Euro Exim Bank, headquartered in St. Lucia with a representative office in London, is an international financial institution serving corporate businesses around the globe, facilitating trade finance.

The company has made great strides in implementing blockchain-based technology into its trade finance platform, and has become an active participant with Ripple technology for real-time payments and reduced liquidity requirements.

It has been expanding its international teams and agent-partner network, and is establishing a representative office in India. The bank is also looking at supporting emerging market opportunities across the African continent, which is experiencing significant trade growth.

New Technologies
Trade finance, with its multiple documents, extended ecosystem, non-standard and diverse instructions, remains the best current use-case for distributed ledger technology. Euro Exim is on the case, refining its Simplex trade finance platform with underlying blockchain capability.

From a commercial perspective, key issues for trading nations remain. There are constant changes in regulation and compliance, lack of trust for emerging countries and companies, difficult and costly access to liquidity, and new fintech participants challenging traditional banks.

Market-focused IT resources and a tech-savvy management team have guided the development of the bank’s platform, supporting smart contracts and increased automation, assisting clients safely and effectively in markets where they were previously excluded or restricted.

Euro Exim partnered with Ripple, market leader in digital asset technology and providers of XRP cryptocurrency. The union began with xCurrent real-time payments, then the xRapid service was brought in, in record time.
The partnership has been beneficial. For many buyers, access to fiat currencies is costly and restrictive. With xRapid a buyer or seller in Africa can pay or receive funds in local currency with lower liquidity requirements. For buyers, local currency is exchanged into the XRP digital asset and remitted to their counterparty — who is paid in local currency. And all in real-time, with full audit and a guarantee of zero rate-change through the transaction, changing the dynamics of trade and providing competitive market inclusion.

The next step is to investigate the possibility of Ripple message formats to carry complex details of trade instruments, such as Letters of Credit and associated payment instructions, and facilitate guarantee-of-settlement and immutability for financial instructions.

Typical Clients
Euro Exim clients buy goods from China, India, UAE, Africa, South America, the Caribbean region and the Far East. Its supported deal values range from $100,000 to $5M, with clients importing goods such as garments, plastics, cars, non-perishable foodstuffs and machinery.

Due Diligence
Risk mitigation and compliance with regulatory obligations remains a priority, and the bank is mindful of constant changes in fianncial crime, sanctions, cyberthreat, PEPs and KYC/AML requirements, along with identity assurance to safeguard all parties in global transactions.

Conferences and Associations
On the international stage, Euro Exim provides keynote speakers and panellists at major international financial conferences, and thought-leadership articles. Events this year include GTR Conferences and Gulf Trade Finance. Euro Exim is a member of the ICC, and an associate member of the CAB (Caribbean Association of Banks).

The team
Kaushik Punjani
CEO & Director
kaushik.punjani@euroeximbank.com
Euro Exim CEO and director Kaushik Punjani has a unique understanding of technical and business requirements. He holds a BSc in Chemistry, and Pharmacy qualifications. Punjani has extensive experience in finance, with previous roles covering management and delivery of financial solutions at UK businesses.

As chairman, Punjani manages the board and regulatory administration, and oversees strategy and liaison with external auditors and regulatory agencies. He is the president of the Rajyapurohit Association of Brahmins UK. He has an active role in charity organisations in the UK and India, supporting the Asian Blind Association in London, and performs at concerts raising money for Great Ormond Street Hospital, a local Downs Syndrome Charity, the Cerebral Palsy Association of St Lucia, and the Montgomery Heights Children’s Foundation in Zimbabwe.

Graham Bright
Head of Compliance and Operations
graham.bright@euroeximbank.com
Graham Bright is head of compliance and operations, an experienced industry professional from a financial services and system-vending background. His extensive career of 35 years (including 20 years at SWIFT), covers industry utilities, regulators and specialist financial institutions in sales, support and consulting. He is a serving UK Justice of the Peace.

Formerly director of FSI solutions and strategy at storage leader EMC, he was subject matter expert on banking and investment management.

Prior to that, he was the principal consultant with The Realization Group, and business development manager at Actuare, a FIX/EMX/SWIFT/ISO messaging company for investment managers, corporates and the funds industry.

He is former managing director at Financial Tradeware Plc, leading integrated portfolio and trading system sales and consultancy requirements for discretionary fund managers and alternative investments markets (hedge and mutual funds).

Graham is a regular contributor to trade journals including Forbes, American Banker and has published articles in Financial Technology Press, CEO Insight, and The Financial Times. He is a regular panellist and keynote speaker at international trade industry conferences and will be a speaker at GTR in Singapore and TXF in Hong Kong.

Georgette Adonis-Roberts
International Legal Counsel
georgette.a@euroeximbank.com
International Legal Counsel Georgette Adonis-Roberts is responsible for leading legal strategy and structure in the EMEA and Caribbean regions, and providing oversight for the bank’s regulatory, compliance and cross-border functions.

She is a dual-qualified barrister with experience in the services industry, banking and trade finance sectors. She specialises in drafting legal documents, negotiating terms and conditions, assisting in the progression of commercial transactions and corporate governance. She holds an LL.B (Hons) and has been called to the Bar of England and Wales, and subsequently St Lucia.

Prior to joining Euro Exim Bank, she worked in private practice in St. Lucia with a cohesive team at Du Boulay Anthony & Co. She is also an Accredited Mediator in Civil and Commercial training and is adept in dispute resolution.


Wide Experience and Many Talents Make Grant a Ghanaian Treasure

[caption id="attachment_15685" align="alignright" width="300"] CEO: Yofi Grant[/caption]

Yofi Grant is a renowned Ghanaian investment banker with more than 30 years of experience in banking and finance.

Having served in various capacities in corporate finance, credit, marketing and investment banking, Grant has broad knowledge of African financial markets, and has cultivated strong relationships with international private equity funds, portfolio investment managers and brokerage funds. He was responsible for the development and implementation of AAF SME Fund LLC, one of the largest agriculture funds in Sub-Saharan Africa, and helped it achieve its first close of $30m.

Grant is a council member of the Continental Business Network of the African Union, which advises African governments on private sector finance and infrastructure. He has served in directorship roles in Databank Agrifund Manager Ltd, Databank Financial Services Ltd, and Databank Brokerage Services Ltd. In 2009, he was the executive director for Business Development for the entire Databank Group.

Grant was a consultant on finance and business for the Africa Asia Business Forum (AABF) organised by the UNDP, which ran workshops in 12 African and six Asian countries in 2002.

He is partner and co-founder of a number of companies, including investment advisory firm Grant Dupuis Investment Ltd, and Coldwell Banker Ghana, a company which holds the master franchise license for Coldwell Banker (of the Realogy Group in New Jersey, US, the world’s largest real estate organisation) for Ghana and Nigeria. Grant recently co-founded Praxis Fortune Calibre, a firm that offers business and investment advisory and consulting services across the continent.

He holds several supervisory board mandates in private sector companies in the telecommunications, commodities, and education sectors, and has held policy advisory roles for the government, particularly in private sector development. He was chairman of Ghana Telecom (One Touch), the Listing Committee of the Ghana Stock Exchange, and the Venture Capital Association of Africa.

Grant was also special advisor to the Minister for Private Sector Development, Ibrahim Mohammed Awal, between 2002 and 2006. He advised and assisted Awal with policy formulation and implementation, and assisted with achieving financing for private sector development projects.

Grant currently serves on the advisory boards of the Ghana Export Promotion Authority, the Ministry of Foreign Affairs and Regional Integration, and is a member of the board of trustees of the ACP Endowment and Trust Fund.

As the CEO of the Ghana Investment Promotion Centre, it is Yofi Grant's singular vision to make Ghana the “best place to do business in Africa”. He lives by the guiding principles of honesty, integrity and hard work. He also believes that everything is achievable with faith, will, desire and focus.


Private Client Holdings Management: Over a Quarter Century of Asset Management in Southern Africa

[caption id="attachment_15688" align="alignright" width="300"] Owners and Directors: Grant Alexander and Andrew Ratcliffe[/caption]

On the cusp of South Africa's move to democratic rule in 1990, Private Client Holdings (PCH) opened its doors in Cape Town, South Africa.

From humble beginnings as a corporate tax consultancy practice, the company has developed into providing a complex multi-family office offering. This offering spans a range of financial management solutions including asset management, tax and accounting services, as well as full spectrum of wealth and fiduciary management.

Owners and directors Grant Alexander and Andrew Ratcliffe saw a bright future for South Africa and founded PCH with the vision of becoming a leading boutique provider of wealth management services to high-net-worth (HNW) individuals and their families.

PCH focused on attracting entrepreneurs, high-earning executives and successful owner-managed businesses.

“During our 29-year history we have focused on being recognised as the pre-eminent provider of wealth management and multi-family office services in South Africa,” said Alexander, “and we have achieved this, with a growing client base and increasing assets under management year-on-year.

“We are proud to say we were pioneers in the introduction of multi-family office services and advice in the South African arena, which has paved the way for others in the industry to follow.

“We have remained focused on nurturing our clients’ wealth and we have solidified our offering based on a clear principle of goals-based wealth management, supported by great FinTech solutions. PCH continues to differentiate itself in terms of long-term relationships, and remains focused on our clients’ interests and goals.”

Ratcliffe advises that while riding out the volatility in the currency markets, PCH as a company is prepared for the big changes expected in the next phase of the country’s planned retail distribution review (RDR). “We have had extensive legislation implemented over the years, in-line with global standards, and the industry has raised the bar.

“RDR can only be a good thing and PCH is well positioned in the sense that our advisory, asset management, financial services and fiduciary entities are all separate companies that work together on demand.”

While much of PCH’s success has hinged on the effective implementation of business strategies, the company’s leaders remain mindful that this could not have been achieved without the support and efforts of the PCH teams.


SBM Securities: Major Changes and a Surge in Capabilities

SBM Securities Ltd, the stockbroking arm of SBM Group and one of the leading brokers in Mauritius, is undergoing a huge transformation.

[caption id="attachment_15691" align="aligncenter" width="863"] SBM Group Chairman: K.C. Li | CEO SBM (NBFC) Holdings Ltd: Kris Lutchmenarraidoo | Head SBM Capital Markets Ltd: Anoushka Bhuttoo[/caption]

With the various entities operating under the SBM Non-Banking Financial Cluster (SBM NBFC), the SBM Group has embarked on harmonising its structure within the new regulatory framework of the Non-Banking space.

With SBM Capital Markets Ltd established and the first Investment Banking License issued from the Financial Services Commission, the SBM Group will transform into a regional financial force serving the Indian Ocean and the Indian Ocean rim, and a key player in the Asia-Africa corridor.

SBM Group is one of the country’s most important banking and financial services institutions. With a market capitalisation of MUR18.2bn ($510m) at end of March 2019, the group’s holding entity, SBM Holdings Ltd, is the third-largest listed company on the Stock Exchange of Mauritius.

The SBM Group has been instrumental in laying the foundations of a solid Mauritian economy since its inception in 1973. Over time, as the financial needs of the population have evolved, the Group has introduced fund management, stockbroking, and registry through the creation of different subsidiaries.

In 2014, in line with international best-practice, the SBM Group separated its activities under different clusters: banking, non-banking, and non-financial.

Building from its strong franchise in Mauritius, SBM Group has started its African foray in May 2017 with the purchase of Fidelity Commercial Bank in Kenya. It further consolidated its Kenyan business in August last year through the acquisition of the carved-out assets and liabilities of Chase Bank Limited (in Receivership). This took SBM Bank Kenya into a strong Tier 2 position in the country.

In India, the SBM Group is the first foreign bank to operate under a Wholly Owned Subsidiary mode. The focus is to tap into the growing trade flows and investments within the Asia-Africa corridor.

Identified as one of the most promising clusters to bring a positive contribution to the bottom line of the group, the SBM NBFC has evolved and added the services of insurance agency, leasing, and factoring to the existing services: stockbroking, fund management, portfolio management services, registry, fund valuations, structuring and corporate finance advisory.

The renewed focus by SBM Management led to the establishment of SBM Capital Markets Ltd. It was the first entity to be granted an investment banking license by the Financial Services Commission.

SBM Securities Ltd will amalgamate with SBM Capital Markets Ltd. SBM Mauritius Asset Management Ltd will keep only its CIS funds and become a subsidiary of SBM Capital Markets Ltd while the pension fund management and portfolio management services will move to SBM Capital Markets Ltd.

SBM Capital Markets Ltd can operate as an investment bank, serving clients within the various banking entities of SBM Group. It is expected that the increased synergy and cross-selling will bring better value-added services to clients while improving the bottom-line.

The SBM NBFC cluster is capitalising on some key achievements over the past two years to bring its investment bank to new heights.

Key achievements include:
Lead advisor and arranger for listing of Depository Receipts of AfreximBank on the Stock Exchange of Mauritius (fund raising of $166m)
Advisor for set-up of SBM Mauritius Infrastructure Development Company Ltd, structured financing for Government and infrastructure fund (arranging $500m)
50 percent over-subscription for the capital raise for the SBM US dollar and Mauritian Rupee (MUR) bonds in 2018
Lead arranger and advisor for issue and listing of SBMH MUR1.5bn and $65M bonds
Lead arranger for MUR1.5bn Secured Notes Programme for Sugar Investment Trust.

Triple Whammy:
the People at the Top of Vibrant Group
Mauritian economist KC Li, the independent non-executive chairman of SBM Holdings, has held several prominent positions in the public sector.

He was advisor to the Minister of Finance and Chairman of the Stock Exchange Commission. He launched the first Unit Trust and the first property fund in Mauritius in 1989. Li was also board member of the State Trading Corporation, the National Remuneration Board, the National Economic and Social Council, and the University of Mauritius.

In 1992, Li started his own private consulting firm, and served as consultant to the United Nations Economic Commission for Africa (UNECA) and the UN Industrial Development Organisation (UNIDO). In 1993, he founded the Mauritius International Trust Co (MITCO), one of the first professional firms licensed to provide international tax and investment advisory services in Mauritius.
Li was also a member of the Parliament of Mauritius from 2010 to 2014, and sat on its Public Accounts Committee. He sits on the board of directors of several emerging markets and hedge funds, including private equity, infrastructure, and real estate funds in Africa and Asia.

He also sits on the board of the State Insurance Company of Mauritius (SICOM) and Afreximbank.

The CEO of SBM (NBFC) Holdings Ltd is Lakshmana (Kris) Lutchmenarraidoo. He is a seasoned banking professional with over 40 years’ experience across the banking and financial services sectors. During the 13 years (1973 - 1986) he spent at SBM, Lutchmenarraidoo held various positions across the bank, including branch manager, head of Internal Audit, and assistant general manager.

He then moved to occupy senior positions in prominent entities such as Mauritius Leasing Company, Mauritius Post, Mauritius Post and Co-operative Bank, La Prudence Mauricienne Assurances, and Mauritius Union Assurance Co. More recently, he was the group managing director at Phoenix East Africa Assurance Company based in Kenya, supervising operations there and in Tanzania, Uganda, and Rwanda.
Lutchmenarraidoo holds a banking diploma from the FinAfrica Institute in Milan, Italy.

The head of SBM Capital Markets Ltd, the investment bank of SBM Group, started out from a sales and marketing background. Reedhee (Anoushka) Bhuttoo joined the stockbroking world in 2006.

She is a director of the Stock Exchange of Mauritius (SEM) as well as a director of the Central Depository and Settlement Co (CDS). She was also the president of the Port Louis Stockbroking Association.

Bhuttoo holds a BA (Hons) in Economics (First Class) from the MS University of Baroda, India, which she attained following a scholarship from the Indian government. She also studied for the professional Post Graduate Diploma in Marketing from the Chartered Institute of Marketing, and is an Associate Member of the Chartered Institute of Securities and Investment.

A key milestone in Anoushka Bhuttoo’s career has been the structuring of, and capital raising for, the Afreximbank depositary receipts issue – a first on the African continent, whereby funds were raised in Africa, for Africa, by Africa. i


PetroRio: Strategy is How You Play the Game, but Determination Helps You Win

[caption id="attachment_15701" align="alignright" width="300"] CEO: Nelson Queiroz Tanure[/caption]

PetroRio, Brazil’s largest independent oil and gas company, went from a pre-operational concession holder to a high-margin cash-generating oil producer with a clear strategy: to acquire and redevelop mature fields, while generating funds to acquire new assets.

PetroRio was established in 2015 and made its largest acquisitions in late 2018 and early 2019. It now has a combined 70 percent stake in the Frade field in the Campos Basin, on the continental shelf of the State of Rio de Janeiro. The Brazilian company took over as operator of the producing field from US giant Chevron, which at the time was also the asset’s largest shareholder.

At its foundation, PetroRio set up a strong business development team of local and foreign professionals with wide international experience in mergers and acquisitions.

Led by CEO Nelson Queiroz Tanure, PetroRio set up an ambitious goal of increasing total oil production to 100,000 barrels per day. The company was determined to engage Frade’s interest holders and negotiated for months with two sellers. While remaining committed and dedicated to the transaction, PetroRio succeeded in purchasing the relevant Frade field stake.

The team used an innovative strategy to split the acquisition into different phases and include conditions to certain changes in corporate structure. It followed bilateral negotiations with the two parent companies as ultimate stakeholders.

In October 2018, PetroRio signed the acquisition of an 18.26 percent non-operator stake held by Frade Japão Petróleo, belonging to Japan’s largest oil and gas company, Inpex.

Three months later, in January 2019, PetroRio announced the acquisition of Chevron Brasil Upstream Frade, which held a 51.74 percent stake in the concession and operation of Frade field, bringing the total interest in concession to 70%. Brazilian giant Petrobras holds the remaining 30% non-operating interest in the Field.

In both cases, the tactical approach was to separately acquire subsidiaries (at a company level) that held positions in the concession and in the FPSO operating in the field, streamlining the process and simplifying Brazilian regulatory approval.

"The addition of these significant stakes in Frade is cash-accretive, reaffirms our strategy of growth through acquisition and redevelopment of producing fields, and represents a diversification of our portfolio and sources of revenue", says Tanure.

With the transaction, PetroRio will be adding to its production an excess of 14,000 barrels per day. In all, the company’s production will add up to 25,000 barrels of oil and gas equivalent per day — more than twice the production reported in December 2018 — making it the largest independent oil and gas company in Brazil.

In addition to expanding production, the business had an even stronger impact on the company's reserves, which increased from 26MM barrels — from the assets Polvo and Manati — to a total 87 million barrels of oil equivalent (including Frade).

From an operational standpoint, the proximity between the Polvo and Frade fields allows for relevant logistics synergies, in line with the company’s strategic pillar of cost-reduction. PetroRio’s management believes that the margins of assets currently operated by the company will increase significantly, leading to new levels of cash generation and funding capacity for other projects under negotiation.

The Frade transaction is a solid example of PetroRio's eagerness to grow. The company is in constant lookout for opportunities — in Brazil and abroad — that are in-line with its way of doing business. It has a strong track record of striving for excellence and operational safety, cost rationalisation, solid financial planning and the use of innovative financing instruments, such as the recent funding obtained from the Brazilian Innovation Agency (FINEP), from Chinese giant ICBC, and from global bank Citibank.

PetroRio’s CFO and Business Development Officer Roberto Monteiro explains, "We know we are on the right track. The company has been growing in a sound and sustainable manner while still having a very promising future. We currently have more accretive projects than our funding capacity can deliver”.

“The acquisition of Frade is an important step to further strengthen PetroRio's presence in the oil and gas sector”, says Monteiro. “We are very optimistic about the results that are yet to come."

PetroRio’s CEO, Nelson Queiroz Tanure, hints on new acquisitions. "We are always looking for assets which have, as main qualities, sustainability, organic growth opportunities, and attractive returns for our shareholders."

The company is preparing roadshows for US and European investors to gain support for new acquisitions and for investments to redevelop its producing fields through interventions and drilling campaigns. The focus is on increasing productivity and the economic life of fields such as Polvo and Frade, which have new drilling campaigns lined up for this year, 2020 and 2021.

The addition of the operating interest in the Frade field is fully aligned with the company's investment philosophy, which is centred in the acquisition of cash-generating, producing assets, and in the redevelopment of mature fields to extend their useful life. "We are pioneers of this strategy in Brazil,” says Tanure.

The company's senior executives and the business development and finance teams hope to announce updates to PetroRio's expansion plans in the near future.


Central Bank of the Dominican Republic: Dominican Economy Surges Ahead, Bringing Growth to Multiple Sectors

[caption id="attachment_15708" align="alignright" width="300"] Governor: Héctor Valdez Albizu[/caption]

In recent years, the Dominican economy has shown high growth rates in an environment of low inflationary pressures, which has allowed the strengthening of its macro-economic fundamentals.

Growth in economic activity has averaged 6.5% over the past five years — the highest in Latin America (LA), while inflation averaged just 2.2% over the same period.

The Dominican GDP expanded by seven% during 2018, driven by consumption and private investment, while year-on-year inflation stood at 1.17% at the end of the year. Good growth performance was accompanied by the reduction of "twin deficits" (the fiscal and current-account deficits in the Balance of Payments), reinforcing resilience to internal and external shocks. At the end of 2018, the non-financial public sector deficit reached -2.4% of GDP, while the current account deficit stood at minus 1.4% of GDP, below its historical average.

The good performance of the external sector has allowed the continued accumulation of international reserves, which closed for 2018 at all-time highs of $7.6bn, equivalent to a coverage of 4.4 months of imports. In addition, maintaining the relative stability of the exchange rate, together with low levels of inflation, has contributed to improving the competitiveness of the export sector in recent years.

The macroeconomic stability of the Dominican Republic, and the implementation of co-ordinated economic policies, have contributed to the perception of country risk (as measured through JP Morgan’s Emerging Market Bonds Index) of below the Latin American average since 2017. This is a reflection of international investor confidence in the fundamentals of the Dominican economy.

Another economic strength is a liquid, profitable and highly capitalised financial system. In this sense, the total assets of the system expanded by eight% during 2018, while the solvency index was more than 17%. It presented a return on equity (ROE) of 19.1% and average assets (ROA) of 2.3%, while the delinquency of the credit portfolio was just 1.6%.

In terms of this year's performance, economic activity expanded by 5.1% during the January-May period, associated with a moderation of private investment and framed by the weakening of the global economy that has been affected by uncertainty factors, such as trade disputes between major countries and geopolitical tensions in some emerging economies. On the other hand, inflationary pressures have been reduced during 2019, with year-on-year inflation at 0.92% in June, significantly below the lower limit of the target range of the Central Bank of the Dominican Republic (CBDR) of 4.0% to 1.0%.

In this context of moderation of economic activity and low inflation levels, the BCDR reduced its Monetary Policy Rate by 50 basis points in June, from 5.50% to an even five% annually, to drive domestic demand. The Monetary Board authorised the liberalisation of some DR$34bn ($670m) in legal reserve resources to be channelled as loans to productive sectors, including export, manufacturing, agriculture, procurement and construction of housing, commerce and small and medium-sized enterprises.

The implementation of these expansionary monetary measures will accelerate the mechanism for the transmission of monetary policy through a decrease in the interest rates of the financial system and the dynamism of private credit, which will help to boost economic growth around the monetary programme levels by 5.5%, in a context of price stability.

The immediate impact of monetary policy decisions has been reflected in a reduction in the interest rates of the financial system and the increasing dynamism of credit. National currency loans to the private sector grew by 10.4% year-on-year in June 2019, supported by the “multiplier effect” of the reduction in minimum reserve requirements. In particular, the expansion of private credit in national currency in June was influenced by year-on-year growth in the sectors of manufacturing (30.2%), consumption (12.7%) and home acquisition (11.9%).

In terms of outlook, both domestic projections and expectations of economic operators point to economic activity growth of around 5.5% in 2019 and converging on the potential of five% by 2020, remaining among the fastest-growing economies in Latin America. On the other hand, inflation is likely to remain low, closing this year at around three% and gradually approaching the core value of the target range of four to one% by 2020.

In the external sector, the current account deficit is projected to be around minus 1.5% of GDP for 2019, supported by foreign exchange-generating activities such as FDI, remittances and, to some extent , tourism. This would contribute to the relative stability of the exchange rate and the accumulation of international reserves, estimated to end the year at around $8bn. On the other hand, the process of consolidating public finances is expected to continue, with a primary surplus expected to be achieved during 2019, as envisaged in the National Budget.

The Central Bank is confident that the Dominican Republic will continue to show strong macro-economic fundamentals, supported by effective economic policies. In this sense, this institution continues to monitor the uncertainty factors of the international and domestic environment, being prepared to react in a timely manner to preserve macro-economic stability, and contribute to sustained growth in terms of the economy and social welfare.


Jamaica’s Largest Credit Union: Making an Impact with Financial Inclusion and Education

[caption id="attachment_15711" align="alignright" width="300"] President: Condell Stephenson[/caption]

The Community and Workers of Jamaica Co-operative Credit Union (C&WJ) started life in 1961 as Jamaica Telephone Company Employees Co-operative Credit Union Ltd.

Back then, the union had a membership of 135 and assets of a £1,766.23 (equivalent to USD 42,772 today). The institution has grown with the nation, through independence from Britain in 1962 and the ups and downs of the following half-century to become Jamaica’s largest credit union. Today, it has a membership base of more than 122,000, and assets of JMD 16.6bn (about USD 126m). This growth has been achieved with a model that offers premium financial services to under-served communities, partnering with members to make financial goals a reality.

Under the leadership of CEO Carlton Barclay, growth has continued — and the institution has entered a phase of unprecedented expansion. Barclay, appointed in January 2017, brought with him 25 years of experience in the banking and finance industries, having held senior positions at banks and building societies across the Caribbean region.

Since Barclay’s appointment, C&WJ has completed two successful mergers with smaller credit unions, facilitating the institution’s expansion into the island’s largely rural south-west. He is quick to note that these mergers were carefully calculated to support the credit union’s priorities. “A merger is really about providing better benefits to our members,” he says. “That is the bottom line.” Barclay has also led the expansion of the credit union’s services with online banking, increased ATM access, improved savings, and loan-protection insurance.

[caption id="attachment_15712" align="alignleft" width="300"] CEO: Carlton Barclay[/caption]

Carlton Barclay has also overseen the implementation of C&WJ’s Sharetec online banking platform, enabled by a partnership with US-based Bradford Scott Data Corporation. C&WJ has emerged as a trailblazer among Jamaican credit unions, providing clients with online loan application services, external funds transfer to other financial institutions, internal funds transfer and bill payments, as well as a mobile app for Apple and Android users. This is all in keeping with Barclay’s intention to secure an additional 15-25 percent of market share over the next five years.

Another key driver has been the credit union’s commitment to addressing social inequality through increased financial inclusion. It has adopted an innovative approach to meeting Know-Your-Customer (KYC) requirements, with a flexible approach to include rural dwellings that often lack street names and numbers. Its underwriting standards assess applicants’ demonstrated ability to earn, rather than depending on full-time employment status.

This means that members with more informal employment — such as micro-enterprise owners and smallholder farmers — have access to financing. C&WJ offers benefits that banks do not, and has opened its doors to unbanked communities. A good example is the Life Savings Insurance product that gives beneficiaries their savings balance and up to JMD 700,000 in the event of serious injury and death, and JMD 1.4m in the event of accidental death. This is possible because the credit union has taken out a policy with an international insurance company. Members with loans have a loan-protection insurance up to JMD1m in the event of death.

Given the emphasis placed on financial inclusion in the United Nations 2030 Agenda For Sustainable Development, C&WJ’s strides in this area are particularly significant. This kind of innovation provides a model for financial institutions across the globe.

C&WJ has demonstrated an on-going commitment to the communities where it operates. The institution invests in the future of its members and their dependents with a social outreach focus on education. In 2018 alone, C&WJ awarded more than JMD5m in scholarships, bursaries and grants. The institution granted JMD3m to students pursuing tertiary level programmes, and 95 scholarships and bursaries valued at more than JMD2m to children of members of the credit union. Services reflect this focus on education with the popular Educator Flex Savings Plan. With the goal of financial inclusion for all, the credit union supports members and potential members today for the benefit of future generations.

The governance structure of C&WJ comprises of a board of directors which consists of qualified, experienced and committed professionals led by president Condell Stephenson.

C&WJ is an example of how “doing good” can be good for business. Though this is a small organisation with limited reach, it provides a model of how financial inclusion and educational access can be expanded, contributing to the global goal of sustainable development.


Nalin Perera, Executive Director & CEO of eChannelling PLC Leading From the Front: Meet Sri Lankan Whirlwind Perera

[caption id="attachment_15715" align="alignright" width="300"] Executive Director & CEO: Nalin Perera[/caption]

Nalin Perera was appointed executive director on the Board of Directors of eChannelling PLC on September 20, 2016. His is one of the foremost names in Sri Lanka’s Mobile Telecommunications industry.

Aresults-oriented leader, Perera is the CEO of Mobitel, having completed dynamic stints as CMO and COO at the company. He has proven his leadership skills many times, steering both companies on a path of sustainable profits.

His mastery of brand management, product and channel development, as well as his human resource management skills, have lent him an enviable edge when it comes to creating a distinguished company’s portfolio.

One of his key “success mantras” is to be open to change and to remain agile, incorporating new trends and evolving products to suit customer needs in ways that exceed expectations. In his stellar career, Perera has won local and international recognition and reward for his companies, which has made eChannelling and Mobitel trusted and respected household brands in Sri Lanka.

An industry veteran, Nalin Perera has played a pivotal role in pioneer operator Celltel’s introduction of mobile services to Sri Lanka in 1989. He subsequently rose through the ranks in the Millicom Group to take the position of General Manager of Sales and Marketing.

Perera spearheaded the launch of the mobile pre-paid concept and its business model in Sri Lanka. He has been in constant pursuit of greater value for products and services, and has pioneered a host of value-added services and enterprise business solutions to elevate the local telecom industry to meet global standards.

Nalin Perera holds a Postgraduate Diploma in Marketing (UK) and is a Chartered Marketer (UK). He holds a Master of Business Studies degree from the University of Colombo. He is an avid sportsman and a prominent corporate personality. i


Secure, Transparent, and Efficient: Key Words for Blockchain-Driven Smart City

[caption id="attachment_13741" align="alignright" width="300"] Smart Dubai Director General: Dr Aisha Bint Butti Bin Bishr[/caption]

Blockchain may not hold all the answers, but Aisha Bint Butti Bin Bishr – the bold tech lady of Dubai – believes it could provide the bedrock of streamlined efficiency, transparent accountability and security that the Smart Cities of tomorrow will require.

Bin Bishr, director general of the Smart Dubai Office, heralds the disruptive tech behind cryptocurrency as the most direct path to solidifying Dubai’s reputation as the world’s benchmark Smart City.

“Blockchain has immense untapped potential for many different industries; ranging from healthcare to transportation to energy,” she says. “Dubai is the global leader in committing to adopt this transformational technology to ultimately improve the lives and happiness of its citizens.”

Blockchain’s record-keeping technology is the underlying source of security and accessibility that makes cryptocurrency so appealing. Blockchain technology knits blocks of digital information together in a chain of transparent, permanent, unalterable transactions, with each modification resulting in an additional link in the data chain. Bin Bishr aims to harness blockchain’s potential for intelligent urban planning and propel the city towards its objective: to become the first fully blockchain-powered Smart City in the world. Dubai is surging towards its targets.

“Dubai has established itself, and in record time, as a global destination for innovators and entrepreneurs in the Blockchain industry,” she says. “Guided by the vision of our leadership, the emirate has become synonymous with bravely embracing avant-garde technologies and utilising them to create an advanced, connected, and seamless urban experience for its residents and visitors.”

“Beyond this, Dubai is also acting as a pioneering catalyst and collaboration platform to innovations in blockchain technology and its application.”

There are several strategies in place to ensure Dubai maintains its momentum and vanguard position in the tech revolution. The city recently completed the first phase of a blockchain-powered paperless initiative aimed at aligning government services to a more modern model of convenience and mobility. The six government entities that participated in phase one successfully reduced their paper usage by 57%. Smart Dubai plans to completely transfer the city’s government internal transactions and public services to digital platforms by the end of 2021.

Aisha Bint Butti Bin Bishr celebrates the milestone. “The full digital transformation and elimination of paper transactions by 2021 is now closer than ever. The results we’ve achieved so far demonstrate that the transition towards a paperless government will reflect positively on the government services offered to people in Dubai, improving their lives in the process. This, in turn, brings us even closer to achieving our objective of making Dubai the happiest and smartest city in the world.”

The initiative promises to save residents, visitors, and the government hundreds of hours – not to mention more than 130,000 trees felled each year for paper pulp – which promise to boost the emirate’s competitiveness and stimulate economic growth.

To share the knowledge gained through Dubai’s tech transformation for the benefit of emerging Smart Cities worldwide, Smart Dubai has launched the Smart Cities Global Network. “At Smart Dubai, we firmly believe that embracing technology and embedding it in the very infrastructure of cities is at the core of smart city development. The Smart Dubai Office is extending its hand in partnership to all individuals and entities that share our passion for emerging technologies and encourage the exchange of knowledge and skills.”

The collaborations and partnerships arising through the Smart Cities Global Network underpin Dubai’s claim as the global hub of Smart City research and development. “It cements Dubai’s global prestige, and the city’s soft power that comes with knowledge, further transforming the city into a laboratory for experimenting with and implementing bold pilot projects and breakthroughs,” said Bin Bishr.

To attract tech talent to Dubai, she has extended an invitation to compete in Smart Dubai’s Global Blockchain Challenge. “To build a truly smart city we must establish and empower a holistic blockchain ecosystem,” she says. This includes building the advanced infrastructure for the technology to thrive, attracting talent and empowering start-ups to implement their innovations.

For the challenge, 20 shortlisted start-ups pitch their ideas at the Future Blockchain Summit to claim cash prizes worth a total of $45,000 – and the chance to implement their ideas in Dubai.