EY on COVID-19 Pandemic: An Opportunity for Reinvention of Family Enterprises

Family businesses and SMEs face great challenges, as well as personal and financial losses, in these turbulent times.

On the flip side of the coin, the COVID-19 pandemic can also be seen as an opportunity to rethink business models and working practices. Family businesses values and special characteristics that distinguish them from other enterprises. Cohesion during the crisis is vital to sustaining what the family has built. They can emerge stronger — both as families and as organisations.

Research shows that 70 percent of family businesses fail to last through the third generation. But in Argentina, these enterprises have for many years supported a large part of the local economy.

From the point of view of relationships, this crisis is changing roles. Older family members had to stay at home to protect themselves and younger ones have had to take over the company obligations. Some, who used to undertake other ventures, are returning to seek a place at the core of the business.

This can cause strain, but with an effort to communicate and work together, family bonds and business can remain strong. Virtual meetings are an option to regularly discuss day-to-day challenges along with family-related issues.

This crisis could be the moment to evaluate the transition to the next generation. Do current family leaders need to remain longer than planned to steward the family business? Or should they make room for fresh ideas and untapped energy? The pandemic is an opportunity to teach future generations about core values and principles. It should be considered to what extent transition plans need to be put in motion, or on standby.

In the field of technology and communications, family enterprises were already undergoing certain changes related to digital and technological functions. However, they are now facing an unexpected situation that is forcing them to speed up the processes.

The crisis can also be an opportunity for family businesses to plan for sustained future development. This could be seen as an opportunity to review governance structures and policies. Sometimes, there is a logical resistance to planning for business families, which may even come from the family members themselves with the motive of not hurting anyone's feelings. But actions that might have seemed radical before quickly become insufficient to meet the current challenges.

It is a great opportunity to consider the protection of the family: to revisit any policies that have set in place, the shareholders agreements, the corporate structure, the existence of pacts regarding family employment.

The family can start thinking about the creation of formal documents to govern the relationships or create a single Family Office. The partnership with trusted advisors is important at this point.

Last but not least, founders may find an opportunity to revisit the strategy for the company, and how will the enterprise prioritises the needs of stakeholders. Recent surveys indicate that companies have reduced or shifted operating expenses to preserve cash, have cut dividends (or plan to), or are raising cash through new debt or equity.

Amid the strain of COVID-19, it’s wise to challenge business as usual and rethink company’s offerings. By transforming products into services, companies can better satisfy shifting customer demands.

To avoid higher purchasing costs, customers are trending away from product ownership and more toward services bought as and when needed.

Over 90 percent of technology companies are embracing subscription or consumption business models. In automotive, customers now have the option to subscribe to a car brand, providing them access to various models from that original equipment manufacturer rather than putting thousands of dollars toward a car at one time. Even in agriculture, farmers can now use livestock health tracking devices without purchasing them outright.

Although many companies have started moving toward subscription models, only 55 percent of them believe that they are ready for that transition.
Everything stems from the family business strategy if they consider adapting this approach. There are certain crucial areas of consideration: the business strategy, the go-to-market approach, the technology enablement, and the accounting and finance challenges.

Our recent experience in assisting family offices shows that, in inflexion moments as the one we are current undergoing, a holistic approach aimed at overseeing these different aspects and consequences. A careful analysis of the legal, tax and labor consequences of changes in the operating and business models is a key priority.

Families and family enterprises are resilient. Multi-generational family enterprises have faced difficult times in the past and, by working together, family-owned businesses will overcome the COVID-19 pandemic as well.

The last six months have forced them to step outside the comfort zone and consider unusual solutions. Each family needs to find its own response to the new reality after COVID-19. If the family enterprises focus on what they know, who they are, and the type of family business and values they want to preserve, the pandemic will certainly be a transformative opportunity.

About the Authors

[caption id="attachment_15880" align="aligncenter" width="269"] Author: Sergio Caveggia[/caption]

Sergio Caveggia is a tax partner currently in charge of Transaction Tax area in Argentina. He joined EY Argentina in 1994 and has developed expertise over 24 years in international taxation and merger and acquisition matters. Sergio is also focus on servicing clients in the Private Client Services (PCS) area. He is highly experienced in inbound and outbound investments, buy side, sell side and restructuring services within the Transaction Tax area.

Sergio has served in a variety of industries and has also been involved in many due diligence procedures performed in the past 20 years. He has given lectures in national universities and is a frequent speaker in tax seminars. He has also written several articles dealing with Argentina tax issues.

He is a Certified Public Accountant who graduated from University of Belgrano in Argentina. He obtained his Tax Specialist’s Degree at the University of Belgrano and has a postgraduate certificate in Business and Management from Universidad Catolica Argentina (UCA). He is also member of the Professional Council of Economic Sciences of Buenos Aires and the Argentina Fiscal Association.

[caption id="attachment_15881" align="aligncenter" width="268"] Author: Jimena Rocío García[/caption]

Jimena Garcia is a Manager currently working in the International Tax and Transaction Services (ITTS) and Private Client Services (PCS) areas in Argentina. She joined the firm in 2014.

She has extensive experience in social security & labor law buy-side and sell-side due diligence services in numerous companies in different industries. She also participated in the coordination of many cross-border engagements, dealing with foreign labor and social security legislation matters on each transaction. Jimena participates in numerous seminars related to payroll taxes and labor law matters.

Jimena is a Lawyer graduated in 2010 from UNLAM (Universidad de La Matanza). She is enrolled in the Bar Association of the City of Buenos Aires.


Development Bank of Minas Gerais (BDMG): Reference Point in Creation of Green Economy

The Development Bank of Minas Gerais (BDMG) was founded in 1962 and its main shareholder is the government of the State of Minas Gerais, Brazil.

[caption id="attachment_15885" align="aligncenter" width="900"] BDMG: Executive Board[/caption]

With a portfolio of more than 22,000 public and private clients, BDMG is present in the main regional economic chains, from agriculture, industry and commerce to technological innovation and renewable energy.

Its CEO, Sergio Gusmão Suchodolski, is vice-president of the Brazilian Development Association and former director of the New Development Bank. BDMG's activities are connected to the UN’s 2030 Agenda for Sustainable Development Goals, being one of the five Brazilian banking institutions which are signatories to the Global Compact.

This strategic north allows the bank to be a reference point in the financing of the green economy, and to work continuously in expanding its capacity of measuring the impact of the projects for society.

In 2019, BDMG offered R$1.3bn ($252m) in credit to companies of all sizes and municipalities, stimulating the creation of 22,600 jobs and the addition of R$974.6m ($189m) to the economy of Minas Gerais, the Brazilian state with the third-highest GDP.

[caption id="attachment_15886" align="aligncenter" width="900"] CEO: Sergio Gusmão Suchodolski. Photo by Marcus Desimoni[/caption]

With a regional performance and a global vision, BDMG is a partner of several multilateral development organisations, including IDB and EIB. In its focus, the constant search for the diversification of funding and attraction of resources aimed at the financing of sustainable development. In this context, and in line with the 2030 Agenda, the bank has steadily increased the availability of credit for initiatives related to clean energy, innovation and infrastructure, in addition to expanding specific programmes and lines for the valorisation of female entrepreneurship and for obtaining working capital by micro and small enterprises.

[caption id="attachment_15887" align="alignright" width="300"] BDMG: Headquarters[/caption]

At the same time, BDMG seeks to incorporate the trends of digital transformation to modernise its business model. In 2012, it was the first Brazilian public bank to have a 100 percent digital platform for easy service, without bureaucracy to the micro and small entrepreneur. In 2020, these advantages were extended to the state's municipalities, allowing greater agility in procedures of the contracted operations, aimed at sanitation works, renovation of public buildings (as health posts and schools), acquisition of machinery and equipment, urban mobility projects and energy efficiency.

Innovation is also present in BDMG through Hubble, which is a multisectoral hub based in the bank, the result of a partnership with LM Ventures and Olé Consignado Bank. Start-ups use technology intensively in an environment of exchange and connection: an opportunity for these entrepreneurs to grow, invest and bring new solutions, especially to the financial market.

Focused on promoting development for more than 30 years, BDMG Cultural Institute encourages development through art and culture. It promotes awards, and publishes notices that attract the participation of artists and projects that contribute to the strengthening of the culture of the state of Minas Gerais. In addition, it maintains an active programme in its art gallery. CSR is also integrated into the reality of BDMG. Its Employee Citizenship Institute (INDEC) technically and financially supports populations in situation of economic and social vulnerability. Projects are developed in areas of education, sports, culture, professionalisation, health and social assistance.

Learn more in its Sustainability Report: bdmg.mg.gov.br/report


World Bank Vice President for Europe and Central Asia: Interview with Anna Bjerde

[caption id="attachment_15891" align="alignright" width="367"] World Bank Vice President, Europe and Central Asia: Anna Bjerde[/caption]

Congratulations with your Mayday promotion as World Bank Vice President for Europe and Central Asia. Are you excited to lead the World Bank’s strategic, analytical, operational and knowledge work in the region?

Thank you! I am delighted to be returning to a region that I have spent a significant part of my World Bank career working on—notwithstanding the unprecedented and painful period that the world currently finds itself in. This is the fourth time I have worked in the Europe and Central Asia region. I first worked here in the early 1990s, then again in the late 1990s, and again about five years ago. It’s a region that is very, very close to my heart. In this role I am working very closely with governments in the region, as well as partners, to help our clients achieve strong development outcomes, with an immediate focus on addressing the health, social and economic impacts of the COVID-19 pandemic.

What is the World Bank doing in ECA in response to the COVID-19 pandemic?

The COVID-19 pandemic has left many countries battling severe health, social and economic impacts. We have seen a huge upsurge in demand for our support in the region. In the short-term, we are providing fast-track financing and policy tools to help protect people’s lives and livelihoods. In some cases, we have also restructured existing projects to quickly redirect financial resources to help countries mitigate this crisis. This has already benefited the Kyrgyz Republic, Tajikistan, Bosnia and Herzegovina, Moldova, Uzbekistan, Turkey, Georgia, and North Macedonia, and we are currently preparing support to several other countries in the region.

The fast-track financing is already paying for medical equipment, including test kits, respirators and ventilators, and strengthening the capacity of health systems, including training for health care workers. We have also focused on supporting social protection measures to protect the most vulnerable people, including those who have lost livelihoods and jobs. Going forward, we will continue to provide support to vulnerable groups affected by the economic impacts of the crisis, as well as assisting governments in the design and implementation of appropriate policy measures for economic recovery, ensuring our complete arsenal of financial resources, knowledge and policy expertise is used for maximum impact and strong country outcomes.

What personal experience and perspective do you bring to this challenge?

Over a decade ago, as a technical specialist with the World Bank, I worked with clients as the Financial Crisis was unravelling growth and prosperity around the world. That crisis spurred a significant increase in the World Bank’s assistance to countries, at both low and middle-income levels, and saw an overall increase in our support to countries. With the COVID-19 pandemic, we are looking at a much more complex crisis, comprising both demand and supply shocks: what began as a health crisis has quickly become an economic and financial crisis. In my experience, it is important to focus on helping countries as they come under severe fiscal pressures, while also ensuring targeted support to people and households vulnerable to losing their livelihoods, access to health, education and basic services.

You have worked in leadership positions all over the world. What are some of the similarities and differences between geographies when it comes to economic and sustainable development you can point to?

In the Middle East and North Africa region, where I worked previously, almost half the total population is under 24 years of age. By contrast, the Europe and Central Asia region has a significant aging population. This means different labor market policies, social protection schemes, and education and building of skills. But there are also many similar challenges across geographies. For example, the need to improve the business and regulatory environment for greater private sector investments and FDI, as well as the need to manage natural resources sustainably. I am especially concerned, however, about the deterioration in learning globally. The World Bank launched a Learning Poverty indicator last year that showed half of ten-year old children around the world can’t read and comprehend a relatively simple story. Many social and economic challenges transcend geographical boundaries.

How can you help push for inclusive growth in your new region?

This year – for the first time in over two decades – the extreme poverty rate will rise, reversing a trend that has lifted nearly a half billion people out of extreme poverty since 2010. Growth and poverty projections are now highly volatile and differ greatly across countries. Although we expect poverty rates to start to decrease again in 2021, recovery to pre-crisis levels might take longer. In addition to the World Bank Group’s rapid emergency response to save lives, our efforts are focused on helping client countries revive their economies. We remain committed to supporting reforms across the region and staying the course on critical issues such as developing human capital, addressing gender issues, promoting good governance and debt sustainability, and combatting climate change.

What areas of Europe and Central Asia will you support with World Bank finance and what industry sectors do you work in?

We work with over 20 client countries in the Europe and Central Asia region. Our support is broad, yet also prioritizes countries’ main development goals. For example, we are actively engaged in promoting human development, including health and education, building more responsible institutions, increasing private investment, improving service delivery, upgrading critical infrastructure, protecting the environment, and empowering marginalized groups. In addition to financing, the World Bank also provides technical assistance based on our global experience and facilitates sharing of knowledge and best practices among countries.

What are you doing to support the Banking Sector?

We are supporting client countries in implementing reforms focused on financial sector development. The goal is to preserve financial stability, ensure financial integrity and broader access to finance, improve financial infrastructure, and enable better access to finance for businesses and households. We are also supporting reforms in regulation and supervision, crisis management, recovery and resolution, and financial integrity. Our support to financial sector development has increased significantly to help countries with their COVID-19 crisis response.

What are you doing to support SME Finance?

We know that limited access to finance for small and medium enterprises (SMEs) is a persistent constraint for business growth and competitiveness. Ensuring greater access to affordable finance for SMEs has become even more critical during the COVID-19 crisis. We are currently preparing emergency response projects in Croatia, Georgia, the Kyrgyz Republic, North Macedonia and Turkey, which will facilitate financing from domestic banks to viable businesses that face temporary liquidity constraints and or had to shut down to follow social distancing guidelines. Maintaining access to finance for SMEs is essential to reduce job losses, prevent firm closures and bankruptcies, and soften the impact of the COVID-19 crisis on economies.

How is the World Bank investing in new energy infrastructure?

We are supporting client countries with both energy transition and energy security. A key priority is continuing reforms of energy utilities to enable efficiency and reliability in service delivery. We are also supporting the scale-up of renewable energy resources, as well as improving energy efficiency in buildings. In Ukraine, for instance, we have helped with the reform of the electricity and gas industries, and also the reform of energy subsidies, while ensuring that the poor and vulnerable are protected. In Uzbekistan, together with IFC, we are helping the government attract private investment in renewable energy as part of a broader reform of the energy sector.

Could you give some examples of disruptive and innovative technology which can contribute to socio-economic development and leap frogging?

Disruptive technologies are unlocking innovative solutions to a myriad of complex development challenges. In Europe and Central Asia, Estonia has become a digital powerhouse and was one of the first countries to adopt a national Artificial Intelligence (AI) strategy. Blockchain technologies are also widespread in ECA. Estonia, Georgia, and Ukraine have experimented with blockchain to set up land and real estate registries. In the battle against COVID-19, digital technologies are keeping businesses, governments and schools connected. In Turkey, for example, we are helping the government provide safe schooling through distance education to around 18 million students during the pandemic. In Kosovo, the government is investing in training youth to work online. And in Georgia, Moldova, and Armenia, we are helping governments define policies, regulations, and investment programs to close the broadband access gap, through innovative measures that crowd-in private investment.

How can your region recover from the pandemic economic outfall?

The COVID-19 pandemic is occurring at an already fragile time for the region. Our recent regional economic update forecasts that growth could rebound in 2021, but the speed of recovery will depend on countries’ ability to contain the pandemic and implement policies to support economic recovery. As many countries in the region are closely integrated into global and regional value chains, and rely heavily on trade, tourism and remittances, much also depends on how soon the rest of the world opens back up and recovers. In the interim, support to the private sector is critical. As I mentioned earlier, SMEs could benefit significantly from targeted government subsidies, business credits, tax cuts, or tax payment deferrals.

We are already seeing many countries take bold steps to arrest the spread of the virus and contain the economic fallout. The right policy decisions now can help minimize the human and economic costs of the pandemic and prepare for a faster recovery. Decisive policy measures that invest in health systems and provide safety nets for people, especially the most vulnerable, are absolutely critical.

About Anna Bjerde

Vice President, Europe and Central Asia, World Bank
Anna Bjerde became World Bank Vice President for Europe and Central Asia on May 1st, 2020. In this position, Anna leads the World Bank’s strategic, analytical, operational and knowledge work in the region. Anna has over 25 years of experience working in development in Africa, the Middle East, Europe and Central Asia, Latin America and the Caribbean, East Asia, and South Asia. Anna is a recognized leader in economic development, with a specific interest in inclusive growth and sustainable development.


BAWAG Group: Austrian Front-runner Bank Applies Compassion During Coronavirus Crisis

BAWAG Group AG is the listed holding company of BAWAG PSK. With 2.5 million customers, BAWAG PSK is one of Austria’s largest banks, operating under a recognised national brand.

It is headquartered in Vienna, Austria, with the main brands and subsidiaries easybank, easyleasing and start:bausparkasse in Austria. In Germany, BAWAG Group operates under the Südwestbank, BFL Leasing GmbH, Health Coevo AG and start:bausparkasse brands and subsidiaries with Zahnärztekasse AG in Switzerland.

BAWAG Group applies a simple, low-risk, efficient and transparent business model focused on Austria, Germany and developed markets. The bank serves retail, small businesses and corporate customers, offering comprehensive products covering savings, payment, lending, leasing, investment, building society, factoring and insurance.

BAWAG PSK products and services are available through online and offline channels. Delivering simple, transparent and best-in-class products and services that meet its customers’ needs is the consistent strategy across all business units.

Recent Developments

After a record year in 2019, with a profit before tax of €604m (up 6% vs. previous year) and a Cost-income ratio of 42.7%, BAWAG Group entered into the coronavirus crisis from a position of strength, having transformed the business over the years to be able to withstand economic downturns.

The group is working closely with various governmental bodies to tackle this public health crisis, supporting customers and the real economy, and protecting the franchise.

The managing board waived any potential bonuses for 2020, having already waived all bonuses for 2019. A special rewards-programme for front-line employees working in the branches has been instituted. It has not tapped into any government furlough, employee subsidy or special assistance programmes as the group considers that these are earmarked for those most in need.

Share buyback

A share buyback of €400m was completed in Q4 of 2019, the first of its kind in Europe.

On October 18, 2019, the European Central Bank approved a share buyback of up to €400m, which was then executed as a voluntary partial tender offer. In total, 10,857,763 shares were bought back and cancelled, equivalent to some 11 percent of the company’s shares outstanding at that time — a milestone across European banks.

BAWAG Group’s business model is based on the strategic pillars:

Core Market Growth

Foundation is Austria, with a focus on developed markets

Focus markets: DACH region, Western Europe and the US

Growth into current account market share entitlement of up to 20 percent in Austria, across core retail products

Growth drivers: partnerships and platforms, enhancing digital engagement, and pursuing earnings-accretive M&A, meeting the group RoTCE target of more than 15 percent

Focus on Customer-centricity

Build multi-channel and multi-brand franchise from branches-to-partners-to-brokers-to-platforms-to-digital products across the entire retail & SME franchise

Physical network focused on high-touch and high quality advisory

Leverage technology to simplify processes and reduce complexity

Enhance analytical capabilities to improve customer experience

New retail partnerships and lending platforms to provide 24/7 customer access

Efficiency Drive via Operational Excellence

BAWAG Group's DNA is to focus on the things that can be controlled: the “self-help” approach to banking

Simplify, standardise, and automate online and offline product offerings

Create frictionless processes: wing-to-wing digitalisation focus across the bank

Continuous optimisation of processes, footprint, and technology infrastructure

Embrace various forms of technological change that will transform banking

Secure Risk Profile

Maintaining strong capital position, stable retail deposits and low risk profiles

Focus on mature, developed and sustainable markets

Apply conservative and disciplined underwriting in markets the group understands best

Maintain fortress balance sheet

Proactively manage and mitigate non-financial risk.


From Law to Luring Investment:  One Man’s Determination to Demonstrate Benefits of an Unsung EU Destination

[caption id="attachment_15899" align="alignright" width="300"] CEO: Stamen Yanev[/caption]

Stamen Yanev, CEO of InvestBulgaria Agency (IBA) since January 2015, began his career as an attorney-at-law, specialising in the area of M&A and investments.

BA is a government organisation established to attract foreign investment. The goal was to assist project set-up and to ensure successful project development that would lead to employment, exports, and knowledge-transfer in Bulgaria.

“We help potential and existing investors explore the investment opportunities in Bulgaria and carry out greenfield investment projects,” said Yanev. “Our agency reports directly to the Bulgarian Ministry of Economy. As a government institution, we have direct access to all Bulgarian government and local institutions to facilitate the entry and development of business in the country.”

InvestBulgaria Agency’s services are provided free-of-charge. The firm offers detailed information about Bulgaria as a business destination and offers full information assistance. Also included in its services are site identification and selection, and support with applications for investment incentives. The agency links clients with suppliers and prospective partners, and directly liaises with central and local government, branch chambers, and NGOs.

IBA’s team has been recognised for its consistent dedication, and 2019 was a dynamic and productive year in attracting investment. Positive developments were implemented under the Investment Promotion Act (IPA) and 31 projects providing 2,858 new jobs were certified.

Investments are focused on the manufacturing, IT, mechanical engineering, electronics, chemistry, storage and warehousing sectors. The certification process has led to an expansion of business in Bulgaria, including attracting car giant Volkswagen to the country – underscoring the trust that investors increasingly have in the country’s business environment, says Yanev.

“This gave us a confidence that time when not only car parts, but whole vehicles, will be produced in Bulgaria is coming,” Yanev says. “In the past year we have recorded a huge growth in exports, which is mainly the result of realised production by foreign investors in Bulgaria.

“All parts produced for the automotive industry are exported, and 90 percent of the cars in Europe use parts produced in Bulgaria.”

There are 250 automotive sector companies in the country, with 65,000 employees. Last year, investments were made in areas of high unemployment, mainly in northern Bulgarian destinations such as Lovech, Botevgrad, Pleven and Rousse.

Helping to attract investment is the fact that Bulgaria is an EU country. “The tax regime, combined with the availability of skilled labor and the lowest operating costs in Europe, ranks us among the top destinations for business and investments,” says Yanev.

The InvestBulgaria Agency was unanimously chosen as a regional World Association of Investment Promotion Agencies (WAIPA) director for Eastern Europe.

Yanev’s professional trajectory developed via some of the world’s major international universities and consulting companies. He received a Master's degree in Law (cum laude) from the Sofia University “St Kliment Ohridski”.

Yanev specialised in European and English law at the University of Cambridge, and European Law at the ASSER College Europe (Netherlands), the University College London (UK), the European University Institute (Italy).

[caption id="attachment_15900" align="aligncenter" width="900"] InvestBulgaria Team[/caption]

E-mail: iba@investbg.government.bg | Facebook | LinkedIn | Twitter | Instagram | YouTube


UBS Group CEO Sergio Ermotti: The Man to Call in Troubled Times

[caption id="attachment_16326" align="alignright" width="238"] UBS Group CEO: Sergio Ermotti[/caption]

Named the most successful manager of a publicly traded Swiss company, parting UBS Group CEO Sergio Ermotti (60) deftly steered the country’s largest banking institution for nine choppy years. His was a ride that included the aftermath of a rogue trader affair which caused the resignation of his predecessor (and a loss of $2.3 billion), the tail end of the Great Recession, and now a pandemic. Along the way, Ermotti also had to contend with the unwinding of the Libor Scandal with UBS ultimately agreeing to pay US, UK, and Swiss regulators a grand total of $1.5 billion for its role in the manipulation of the benchmark interest rate.

Though an investment banker at heart, Ermotti pivoted UBS away from more risky endeavours to concentrate on wealth management, stemming the steady client outflow that had long plagued the bank. The strategy worked like a charm – particularly on the ultra-high net worth individuals and large family offices UBS sought to engage. Pre-tax profits swelled as did the bank’s share price.

However, Ermotti last year suffered his own ‘annus horribilis’ with investment banking languishing everywhere but in the United States as all remained eerily quiet on the mergers and acquisitions front and capital markets languished in a mind-numbing, and profit-eating, limbo. Not usually fazed easily, Ermotti nonetheless put UBS on an immediate crash diet, freezing new hires and delaying the implementation of IT projects for a cost saving of some $300 million – about 5 percent of total annual corporate expenses. A S1bn share buyback programme was put on ice as well.

To top off the dismal year, a French court imposed a €4.5 billion (€3.7bn in fines plus €800m in damages) on UBS for helping clients evade taxes. Whilst the lengthy appeals process works its way through the justice system, the bank has already set aside a €500 million litigation provision. The ruling cast a shadow over Ermotti’s tenure at UBS.

Still, after a most dreadful 2019, Ermotti could, and did, say that UBS remained one of a select few European banks with share prices trading above tangible book value – even after the stock price had dropped an unwarranted 29 percent in 2018.

More a crisis manager than a CEO on cruise control, Ermotti has displayed a commendable awareness of changing global dynamics, positioning and repositioning his bank to avoid headwinds and maintain the vast organisation on an even keel. That was no mean feat. The current pandemic has caused a dramatic increase in market volatility which, Ermotti said during a call with analysts, makes it rather difficult to see how things will develop for the remainder of the year.

Still, as a testament to his ability to weather successive storms, the UBS chief last year managed to extract a 10 percent increase in pre-tax profits at both the retail bank and the asset management division – boosting overall group profit to $1.4 billion – whilst revenues retreated slightly to $7.5 billion. However, analysts would like to see a performance improvement at the all-important wealth management unit which has suffered from sizeable withdrawals and a customer-driven shift to lower margin assets.

Using his lofty perch to voice his personal opinions on a range of topics, Ermotti periodically caused raised eyebrows such as when he lashed out in a surprisingly emotional manner at financial regulators trying to limit executive pay. He went as far as to suggest that their crusade is fuelled by ‘envy and frustration’. Ermotti also repeatedly wondered out loud why bankers are being targeted for scrutiny whilst executives in sectors such as private equity and tech are not: “People made a choice to do good for society while also getting their desired level of compensation.” He went on to suggest that executives in the financial sector would ‘do something else’ should their pay fail to measure up to their talent.

Though tipped as the ideal successor to UBS Group Chairman Axel Weber, Sergio Ermotti in March announced that he had joined the board of insurer Swiss Re and will succeed Chairman Walter Kielholz as of next year. His contract with Swiss Re does not allow for dual chairmanships.


BlueRock: Lasting Value — in Terms of Investments and Firm’s Policies and Management

Boutique real estate investment house BlueRock was founded in 2010 with just a handful of assets; today it has more than €1.2bn in AUM.

BlueRock is located in the heart of Zurich, and caters to the needs of high-net-worth individuals, family offices and institutional clients. Besides providing access to off-market properties, it accompanies investors throughout the process — from the very start.
Investment is possible across two funds and several joint-venture vehicles on a deal-by-deal basis. The company pursues commercial and residential strategies within Europe, with a strong focus on German real estate markets.

Over the past few years, European real estate markets have seen phenomenal growth and rates of return. The steady uplift of valuations led the company to develop concise investment guidelines for its clientele. A strong focus is placed on maintaining the excellent relationships it has with all stakeholders in the value chain.

BlueRock co-founder and managing partner Ronny Pifko believes that a key element in the company’s success has been collaboration with local experts in all transactions. It provides access to some unique properties and assures the ready identification of hidden values and potential issues.

"The steady uplift of valuations led the company to develop concise investment guidelines for its clientele. A strong focus is placed on maintaining the excellent relationships it has with all stakeholders in the value chain."

The company focuses on A- and B-locations in German markets, offering a formidable risk-return ratio for investors. Each investment undergoes a thorough due-diligence process, assuring value-add potential and security. Emphasis is also placed on good micro-locations, along with purchasing multiples that reasonably allow for future appreciation. BlueRock faces no liquidity pressure and processes just a few select investments each year. This has allowed some outstanding returns and attracted a steady client base.

Digitalisation complements BlueRock’s firm investment guidelines, and remains a key focus for the company’s future. In 2020, BlueRock group has invested in new software to build on strong client relationships and reporting processes. In the real estate market, where many investments are highly illiquid, the fast and reliable provision of information is something often overlooked. BlueRock group emphasises digital solutions that allow for the complete integration of all its investments into existing portfolios of family offices and banks. This allows for the investor or wealth manager to keeping a clear overview of investments and monitor any changes — while preventing outflows of assets.

Feedback has been consistently positive, and Pifko has seen confirmation of his belief that keeping up with the latest digital developments is crucial. Having grown rapidly, and organically, the company is increasing its focus to provide fresh investment solutions across the Berlin residential property market. The company has a long track record here, covering more than €200m in deal volume.

Legislation — such as the newly implemented rent cap and the Milieu Schutz protection — have disrupted the investment environment. Interesting opportunities for the mid-long term have arisen, with new developments at a low and a consistent demand for housing. The company is set to acquire assets below market value, unlocking potential value in conversions, such as the building out an attic floor.

Again, emphasis is on selecting respected local third-service providers with excellent knowledge of the market. With current property valuations still at pre-COVID levels, the company focuses on enhancing the value-chain. The strategy is projected to earn an internal rate of return of 20-25 percent at central Berlin locations.

BlueRock Group has surged ahead, and shows no sign of slowing down. Recent investments in technology and human capital — BlueRock recently hired Lukas Müller as director of business development — have set the company firmly on track for future growth.

The investment platform and current set up allow for a confident glimpse into the future, despite a challenging economic environment.


TRUMPF Putting ‘Adventure’ in Corporate Venture: Winding Path that Leads to Industry 4.0 Revolution

TRUMPF, family owned and founded nearly a century ago, is synonymous with innovation and a key contributor to the Industry 4.0 revolution.

TRUMPF Venture is the corporate venture capital arm of the TRUMPF group, and deploys a team with diverse backgrounds in engineering, physics, and finance. Managing director Dieter Kraft combines many years of experience in venture capital and business excellence, leading TRUMPF Venture as a fair partner and investor.

The company brings more to the table than just capital; it is an investor with an expansive network, deep domain expertise and proven skills in scalability. It has a pioneering spirit, and promotes developments that challenge existing business models.

This shapes concepts — such as Industry 4.0 — from the very start, and provides key impetus. TRUMPF supports promising start-ups keen to play a key part in shaping the industry of the future. Funded start-ups benefit from its investor relationships, rooted in technical expertise and market savvy, generating added value for its customers.

TRUMPF invests internationally, ideally in investor consortiums, with a focus on early stage financing — its sweet spot is series A — as lead and co-investor.

For a first fund of €40m, TRUMPF typically makes an initial contribution of €500,00 to €2m initially, establishing itself as a stable partner through future investment rounds.

In addition to a strategic fit, a risk-adjusted return on the capital provided is important. TRUMPF Venture strives for a minority interest, enabling start-ups to develop and grow.

TRUMPF looks for high-tech companies with complementary market and technology values. The criteria for an investment include an outstanding team, a business model that incorporates ground-breaking technology, and business innovations characterised by sophisticated selling points — ideally with initial turnover.

Additional requisites for investments are an experienced management team, scalability, and potential for sustainable growth and added value. With its network connections and industrial production experience, TRUMPF can help company founders to get started on the market, and to grow.

TRUMPF focuses on start-ups that will shape the industry of the future. It is happy to work on joint investments, providing expertise in technical due diligence and assisting the start-up team to overcome technical obstacles on the path to becoming a great scaling company.


Rubrics Asset Management: Core Values and Transparency Help Maintain Investor Confidence During Pandemic

[caption id="attachment_15909" align="alignright" width="300"] CIO: Steven O'Hanlon[/caption]

Rubrics Asset Management is an independent boutique investment manager, specialising in providing actively managed fixed-income strategies for institutional and private clients.

Since its inception in 2001 as part of a wealth management business, Rubrics has developed a process and delivered a track record based on the core principles of capital preservation and medium- to long-term return focus.

Rubrics’ portfolios are not constrained by benchmarks, which enables the investment to focus on areas of the global fixed-income universe that offer the most attractive risk-adjusted returns. Each of the products was developed within a risk framework designed to control volatility and limit drawdowns over time, delivering robust returns across a variety of market conditions.

The investment team places a strong emphasis on macro considerations as the ultimate drivers of risk and performance across each of the funds. Unlike bulkier, more benchmark-orientated strategies, Rubrics has demonstrated flexibility and conviction to position portfolios in line with the firms’ broader view and risk appetite. This has enabled the funds to deliver strong relative performance over time, particularly on a risk-adjusted basis.

Rubrics’ products cover the broad fixed-income universe, including worldwide government, credit and emerging markets debt, with each fund housed within an Irish UCITS umbrella. Hoping to build on this success, Rubrics has launched an Irish Collective Asset Management Vehicle (ICAV) and authorised a new fund to capitalise on higher yielding opportunities in the corporate fixed-income space. The fund is authorised as an Alternative Investment Fund (AIF), and is aimed at professional investors.

Rubrics prides itself on its ability to deliver an investment experience that differentiates itself from other (often larger) asset managers and ETF providers. In keeping with the investment philosophy of capital preservation and strong performance across the investment cycle, Rubrics Global Fixed Income UCITS Fund was a top performer in its peer group throughout the period of volatility caused by COVID-19, while other key investment offerings (Rubric's Global Credit UCITS Fund and Emerging Markets Fixed Income UCITS Fund) delivered similarly strong relative performance throughout a challenging period.

Also valuable during the pandemic, and fundamental to Rubrics’ wider offering, is its ability to remain accessible to clients to share market and macro insights, and to provide transparency on product performance and positioning. This strategy helped the company to maintain the investor confidence it has earned during a period of extreme market volatility.

[caption id="attachment_15910" align="aligncenter" width="900"] 10 Year Performance: Rubrics Global Fixed Income UCITS Fund vs Passive Fixed Income Strategy[/caption]


CORDET: Lending a Hand, Even in the Most Trying Times - Hallmark of an ‘All-Weather’ Attitude

Direct Dealing on the Rise

While the lending market has traditionally been dominated by banks, direct lending deals are growing swiftly across Northern Europe with 2019 seeing an all-time record of 484 European deals, a 13% increase from 2018. At the heart of this market is alternative credit specialist CORDET.

Founded in 2013 to fill the financing gap left by banks and traditional credit providers facing increased regulation following the financial crisis, CORDET is a specialist credit manager, focusing on direct lending to smaller mid-market companies. This typically includes firms with annual revenues lower than €250m and EBITDA of €2m-€15m, who are based mainly in the UK and Ireland, the Nordics, DACH, and Benelux.

[caption id="attachment_15913" align="aligncenter" width="900"] Fund II: Continuation of investment strategy[/caption]

The companies that CORDET supports are niche market leaders that focus on megatrends, such as technological change, the ageing population, or climate change. Most of its financings are event-driven, and funds are used for the purpose of acquisitions, growth capital, restructurings, refinancings or add-on investments.

Weathering the Coronavirus Storm

The current COVID-19 crisis has emphasised the growing need lower mid-market companies have for alternative solutions like CORDET. Traditional banks’ appetite for lending has decreased significantly — creating an opportunity for “all-weather” investors to step in and take a lead on financing.

“The COVID-19 crisis has accelerated the retrenchment of banks from the smaller mid-market,” says Jakob Lindquist, Co-Managing partner and founder at CORDET. “This provides increased investment opportunities for a direct lending investor like CORDET, which benefits from long-term committed capital.”

Strong performing businesses seeking capital to drive growth and value creation, need an investor that can provide structuring flexibility and react quickly to time-sensitive projects. In contrast to many lenders who have chosen to focus solely on their existing portfolios in the current challenging environment, CORDET has secured four new deals in the 10 weeks from April to June while continuing to support existing borrowers through the pandemic.

Sustainable Investing through the CORDET Circle of Competence

For institutional investors, CORDET offers bespoke, income-focused credit investment solutions with exposure to sustainable borrowers with low structural risk. The emphasis is on capital preservation and delivering attractive risk-adjusted returns, while minimising defaults. In order to do so, CORDET sticks to its circle of competence – investing in Northern European lower mid-market businesses in industries where CORDET has prior experience (Business Services, Consumer, Financials, Healthcare and Industrials).

A primary focus is on ESG, which plays an integral part in every credit approval process. As a signatory to the UN’s Principles for Responsible Investment (UNPRI), CORDET is committed to ESG principles and is in the top five percent of managers to gain, and maintain, a UNPRI A+ rating.

With Northern Europe a key region, CORDET has a long-established presence in these core markets including Stockholm and London. Strengthened by in-depth regional industry understanding, and strong on-the-ground local origination capabilities, CORDET seeks to establish lasting relationships with owners, management teams and advisers.

Experienced Team

Alongside focusing on investor relationships, the CORDET team draws on hands-on restructuring experience from the past to protect investors’ capital. “The high degree of experience in the CORDET team, which spans well over 25 years in many cases, is invaluable in assessing the current investment environment,” says Magnus Lindquist, Co-Managing partner at CORDET.

CORDET has four partners; alongside Jakob and Magnus Lindquist are investment professionals Christian Ovesen, head of investor relations, and Chris Birt, who is the COO. Both joined CORDET with significant experience in leveraged finance and bring origination expertise as well as extensive relationships with financial sponsors, intermediaries, and banks.

CORDET’s staff are grouped into teams: Investment, Risk, Finance & Operations, and the Investment & Credit Committee (ICC). There are 17 dedicated professionals in all, averaging 20 years of specialist industry and finance experience.

The team places a lot of emphasis on its independence. The risk team — headed by CCO John Sealy — gets involved in investments from an early stage, which allows potential opportunities to be independently challenged to ensure a robust approval process. Final investment decisions are taken by the ICC, which benefits from multi-cycle experience and an aggregate of over 170 years of formal credit and underwriting expertise.

As a testament to CORDET’s growing reputation and brand, the team was able to successfully complete 28 transactions across 16 borrowers within Fund I with a gross debt value in excess of €650m. CORDET is currently investing from Fund II and has so far completed 10 transactions with a gross debt value of €205m. The team co-invests with investors.

Outlook: Set Fair

While the global outlook remains uncertain as the world continues to grapple with COVID-19 and the economic fallout, Jakob Lindquist sees reasons to be positive. “The agility and flexibility of CORDET, coupled with our extensive experience means we are perfectly positioned to inject capital where it can be put to good use for the benefit of the businesses involved and investors.”

[caption id="attachment_15914" align="aligncenter" width="900"] CORDET: Selected transactions[/caption]


Fidelity by Name and United by Nature: A Company That Is ‘There’ For Its Clients

[caption id="attachment_15917" align="alignright" width="300"] CEO: Bilal Adhami[/caption]

No matter how complex the risk, UAE’s insurance company Fidelity United is there to provide best-in-class solutions and unified brand experience.

It begins by listening to corporate and individual clients’ needs and responding with tailored solutions. The firm has been recognised by partners and associates for its exceptional customer service and product development.

This underscores Fidelity United’s leading role in the UAE market. Served by a passionate and skilled team, the company takes pride in reflecting its core values of transparency and responsibility.

With the slogan “#BeConfident” taken to heart by all within Fidelity United, there is company wide commitment to achieving superior and sustainable profitable growth. It adopts effective risk management practices and always operates in an ethical and professional manner.

The Fidelity United business model empowers stakeholders, optimises company performance and innovation, and capitalises on the passion, knowledge and expertise of its employees.

CEO Bilal Adhami is a seasoned insurance professional with over 25 years of experience in the Middle East region and beyond. He joined the company as CEO in 2018, and his direction for Fidelity United brought in major transformation of digitalisation, in line with his vision of broker empowerment.

Through his expertise of defining, directing, and expanding insurance operations, the company underwent a restructure in underwriting, operations, distribution and other channels. It works diligently and uncovers new ways to drive profitability and increase market share.

This has marked a positive swing in financial results for Fidelity United. Adhami’s strategic and hands-on leadership has improved the performance of organisations, teams, and P&L (top and bottom lines), despite industry challenges.

Bilal Adhami began his insurance career at the ground level with AXA Insurance, and advanced to a variety of roles with multinational players such as AIG, where he held the roles of Regional Personal Lines Manager, COO of AIG Egypt, and Managing Director of AIG Saudi Arabia. He was also Head of International Business, Inward Facultative Reinsurance, and Commercial Lines for Oman Insurance.

Fidelity United believes that the success of a company is impacted by the sustainability and lasting relationships it has with its partners and clients.

The evolution of Fidelity United’s strategy two years ago within the Broker Management Unit comes from a carefully laid three-pillar platform.

The first pillar is the implementation of digitalisation and creating a roadmap to design its user-friendly online portals, tools and resources. As an insurance company, developing the broker relationships in line with digitalisation was a priority. “We now have successfully empowered our partners with online tools and broker portals,” said Bilal Adhami, “allowing them to gain access to our products, benefits and issue policies, with the ease of digital tools.”

The portals enable the brokers to issue policies through a secure payment gateway, making for spontaneous client service. “The portals were designed keeping insights and gaining feedback from our brokers,” Adhami explained.

The second pillar entails the services of professionals in the Broker Relationship Unit, known as Market Underwriters, who extend support to Fidelity United's partners. They are equipped with market and technical skills and enabled with specialised underwriting authorities to close deals brought in by brokers.

The third pillar constitutes of an in-house operations team, the backbone of the business, whose members are aligned with the company vision of customer-centricity. The groundwork is carried out to ensure a seamless, smooth and structure of service to the Fidelity United's brokers in record time.

“Fidelity United’s award for Best Insurance Broker Services Platform - GCC 2020 symbolises one of the milestones achieved during our transformation over the past two years,” says Adhami. “Another would be the successful implementation of our robust business continuity plan that has been a result of the agility of our business model, and the dedicated support towards our brokers to ensure zero defect and business as usual, no matter the circumstances.


Aby Lijtszain: Founded First Company at Age of 20 — and Hasn’t Looked Back

[caption id="attachment_15920" align="alignright" width="300"] Co-founder and Executive President: Aby Lijtszain[/caption]

Leading Mexican ground transport company Traxion offers a one-stop solution for cargo and logistics as well as contracted personnel and student transportation services.

Through these two complementary operating segments, it provides domestic and international transportation in a highly fragmented market. With a disciplined and targeted acquisition strategy and organic growth, it has built a platform with seven key brands.

The man behind all this is Traxion co-founder and executive president Aby Lijtszain, a distinguished Mexican entrepreneur with more than two decades of industry experience in the country.

In 1998, at the age of 20, he executed his first acquisition and founded Transportes LIPU, which today is the largest student and personnel transportation company in the country. Some years later, and with a vision of integrating a highly fragmented sector, he founded Traxion.

It is a story of proven growth; Traxion assembles large and highly recognised companies from the sector with a fleet of more than 8,100 power units and more than 15,000 employees. Traxion is the first publicly-traded company of the industry.

In just eight years, Traxion has evolved into the largest mobility and logistics company in Mexico, and consolidated as the pivot between the logistics and transportation industries, and the financial sector in the country, establishing the first such investment platform in Mexico.

Lijtszain has also executed and successfully integrated more than 15 M&A transactions and founded and sponsored several companies including a vehicle leasing firm aimed to government institutions, diverse advertising and marketing businesses, and a security company.

He holds a Bachelor’s degree in Public Accounting from Instituto Tecnologico Autonomo de México (ITAM) and earned a degree in Business Consulting from the same institution.

Through its diversified fleet of trucks, trailers and buses, as well as rigorous maintenance and replacement programs, Traxion is able to provide superior service throughout all of Mexico and arrange for forwarding service to the United States.
Its cargo and logistics segment provides domestic and international freight transportation services throughout the country and abroad.

“In addition to the 5,488 student and personnel transportation units, we operate one of the largest truck fleets in Mexico, which during 1Q20, consisted of an average of 2,130 power units,” says Lijtszain, “plus an average of 618 units of last-mile fleet. We operate one of the youngest fleets in the industry, with an average age of 4.4 years, compared with an industry average of 16.8 years, according to the Communications and Transportation Ministry of Mexico.

“We provide service offerings through our subsidiaries, including MyM, Egoba, Grupo SID, AFN, Bisonte, Redpack and LIPU. We maintain a degree of centralisation amongst multiple subsidiaries by promoting shared usage of terminals, maintenance facilities and a centralised procurement system, among others.”

This centralisation helps to generate efficiencies while allowing the flexibility to provide competitive pricing and boost profitability.

The streamlining of operations has been achieved by a combination of effective management and the deployment of new technologies, and Lijtszain is not done yet. “I see enormous opportunities to use disruptive technology to increase our market share even further. We have a five-year investment plan which is already giving us a return.”


Traxion: Mexican Logistics and Transport Titan that United a Fragmented Industry

Since its foundation in 2011, Traxion has evolved to become the largest and most important mobility and logistics enterprise in Mexico.

It was created with three main pillars in mind: diversification, discipline, and innovation. The idea was to consolidate a highly fragmented industry dominated mainly by family-owned and -operated companies, through an institutional platform.

In September 2017 Traxion conducted its IPO, listing its shares in the Mexican Stock Exchange, and raising funds to fuel its growth plans. Traxion has not only grown, it has managed to improve its margins and profitability.

Challenge has always been part of its history, and its seasoned management team, deep industry expertise and rock-solid business model have enabled the group to successfully navigate rough waters.

Mexico’s multi-billion-dollar transport and logistics industry accounts for six percent of the nation’s GDP, and that contribution is growing. Determined to realise the full potential of the country’s key strategic location at the crossroads of two continents, successive Mexican governments have funded and encouraged outside investment in a number of multimodal corridors.

While still works-in-progress, these corridors will ultimately create an interlocking network of roads and railways linking Mexico’s ports to its inland industrial parks and free trade zones, and Mexican transportation and logistics specialist Traxion is in pole position to benefit as the new roadmap takes shape.

The relentless surge in cross-border trade has boosted interest and investment in Mexico’s air and maritime transport sectors, of which road transport remains the most lucrative. Last year it represented over 90 percent of the industry’s total value, and Grupo Traxion is the fastest-growing and most dominant player.

While the industry as a whole has been increasing at a CAGR above six percent over recent years, that growth is nothing compared to the pace at which Grupo Traxion has been expanding its market share. Since it was founded eight years ago by executive president Aby Lijtszain, Traxion’s acquisition strategy has seen the company blossom into an organisation with 15,300 employees serving over 1,000 customers, and generating annual consolidated revenues of more than $600m.

“The idea behind Traxion was to create a one-stop shop for ground transportation and logistics that could meet all our customers’ requirements,” Lijtszain explains. “I chose the best companies in each market and integrated them into our platform.”

The strategy has been an undisputed success. The modest fleet of trucks that Traxion started with now numbers over 8,000, and by Lijtszain’s calculation, the company has grown 28-fold since its inception in 2011. “We are three times the size of our nearest competitor and we are the only company in the sector listed on the Mexican Stock Exchange with institutional investors as shareholders, and the highest governance and sustainability guidelines” he says.

Today, Traxion is the one-stop shop that Lijtszain had in mind when he set out. The best-in-class companies that he successfully targeted for acquisition include Grupo Sid, a leading national transport and logistics company with an excellent 35-year track record and solid customer base.

“Last-mile” specialists Redpack, whose fleet of 618 light units offers a range services from next-day delivery to less-than-truckload freight services. That allows its clients to truck-share and book as much or as little space as they need to transport their goods to every major city in the country. It also acquired other long-established brands such as EGOBA, the absolute leader in border transfer trucking.

Traxion is today one of Mexico’s most diversified transport companies, as well as its largest. By 2018, According to the IMF, Mexico’s per-capita income was about $20,600, putting it ahead of Argentina. Yet car ownership in Mexico remains relatively low, and the vast majority of its blue-collar workforce rely on public transport or company buses to get to and from their workplace.

Through its LIPU subsidiary’s centralised platform, Traxion provides personnel transportation not just to the large corporations who have historically been the main sponsors of company buses, but also to small companies grouped together in industrial parks and corporate hubs — as well as to resorts and hotels.

With the largest and most modern fleet in Mexico which presently amount to more than 5,400 buses, LIPU also gets students to schools and universities across the country.

Lijtszain continues to look for growth opportunities and in 2017 successfully completed a $220m IPO listing on the Mexican Stock Exchange.

Since then, the group has spent a further $370m on a combination of strategic acquisitions and organic growth. Traxion has also managed to increase productivity in its cargo operation where kilometer volume increased more than 21 percent since its IPO, and average revenue per kilometer improved by 10 percent in 2018 and six percent in 2019.

It provides contracted student, personnel and tourism transportation services to companies and private schools, primarily on a contracted or dedicated basis. It operates the largest bus and van fleet in Mexico, with an average of 5,488 units in 1Q20, and its service offering in this segment is provided through its subsidiary LIPU.


GoldenTree: Governance and Experience Equate to Winning Formula for Investment Firm that Boasts the Golden Touch

Asset management firm GoldenTree’s strong governance structure has been key to its success throughout its 20-year history.

[gallery link="none" ids="15929,15937,15931,15932,15936,15934,15935,15933,15930"]

GoldenTree is, and has always been, entirely employee-owned, with many of its 27 partners promoted internally. This ownership structure provides a strong alignment of interest with investors, and ensures a disciplined approach to capital raising.

The governance at GoldenTree is further exemplified by its executive committee, comprised of nine partners from across the firm. These members have worked together for an average of 13 years and meet regularly to formulate business strategy, discuss corporate governance, and review key areas of business from a management company and fund perspective.

GoldenTree is one of the largest independent asset managers focused on credit, with more than $30bn in assets under management. It has been managing assets on behalf of investors for two decades, celebrating its 20th year in business in 2020. It specialises in opportunities in sectors such as high yield bonds, leveraged loans, distressed debt, structured products, emerging markets, private equity and credit-themed equities.

GoldenTree by the Numbers

20-Year Track Record of Success
In 2000, GoldenTree was founded – based on the principles of fundamental value investing with a focus on a margin of safety and a “total return” approach. The investment process has been successfully executed across market cycles for two decades.

15 Years of Global Presence
GoldenTree expanded its global footprint with the opening of its European office in 2005. Over the past decade, GoldenTree has become an established and respected participant in European credit markets. It offers local expertise in corporate credit, structured products, trading, restructuring, sourcing and business development.

Over $30bn in AUM
GoldenTree is one of the largest independent asset managers focused on global credit markets. With expertise across areas such as corporate, structured, distressed and emerging markets, it is able to analyse a broad universe of opportunities.

Partners Promoted from Within
GoldenTree is owned by its employees and offers a clear path to partnership. This culture allows the firm to attract and retain some of the world’s most talented investment and business professionals.

An Experienced Team
GoldenTree has one of the most experienced investment teams in the industry, led by an executive committee with an average of 26 years of deep involvement in the investment field.

Over 250 Employees Worldwide
GoldenTree is headquartered in New York City with offices in London, Singapore, Sydney, Tokyo and Dublin. GoldenTree has had a physical presence in Europe for many years, and opened an office in London in 2005. More than 20 languages are spoken across the firm.

Over 50 Customised Accounts
GoldenTree is able to provide solutions to investors and offer customised accounts with individualised return profiles.

GoldenTree has invested globally since its inception in the US in 2000, and it established a presence in Europe in 2005. Today its global footprint includes offices in New York, London, Singapore, Sydney, Tokyo and Dublin.

GoldenTree is supported by a diverse capital base of institutional investors, including leading public and corporate pensions, endowments, foundations, insurance companies and sovereign wealth funds. GoldenTree continues to experience growth in its investor base due to its diverse platform and consistent performance.
GoldenTree is primarily focused on institutional clients, which make up more than 90 percent of the firm’s AUM. Its largest investor categories are public and corporate pensions, which collectively make up over more than half the AUM total.

GoldenTree was founded on the principles of fundamental value investing, with a focus on safety margins and a “total return” approach. The firm’s investments are designed to preserve and grow investors’ capital with a value-based approach.

With a challenging environment ahead, as the world responds to the coronavirus pandemic, GoldenTree’s dedication to its investors and employees is paramount. The company’s breadth and depth of expertise, strong governance structure and adherence to core principles allows it to navigate market cycles and deliver attractive results.

[caption id="attachment_15939" align="aligncenter" width="900"] Investor AUM breakdown is as of February 29, 2020. Excludes CLO vehicles assets under management. Endowment & Foundation also includes Private Bank. Asset Manager also includes Financial Advisor, RIA and Outsourced CIO. Other includes Commercial Bank, Corporate Treasury, Investment Bank and Sovereign Nation.[/caption]

Featured Team Members:

Founding Partner & Chief Investment Officer: Steven A Tananbaum
Partner & President: Christopher Hayward
Partner & Head of North American Bonds and Loans: Lee Kruter
Partner: Pierre de Chillaz
Partner, Head of Structured Products & Chair of Risk Committee: Joseph Naggar
Partner & Global Head of Restructurings and Turnarounds: Ted S Lodge
Partner & Head of Business Development and Strategy: Kathy Sutherland
Partner & Head of Trading: Deeb Salem
Partner: Steven Shapiro


Proud to be Part of Bermuda: Top Team Members of the BDA

CFI.co meets the team at the Bermuda Business Development Agency: Roland Andy Burrows (CEO), Paul Scope (BDA chair and chair of Willis Towers Watson) and Stephen Weinstein (BDA deputy chair and EVP and Group General Counsel, RenaissanceRe Holdings Ltd)

Roland Andy Burrows

[caption id="attachment_15944" align="aligncenter" width="900"] CEO: Roland Andy Burrows[/caption]

As CEO of the Bermuda Business Development Agency (BDA), Roland Andy Burrows advocates for the world-leading financial jurisdiction of Bermuda.

He wants to encourage further inward direct investment and growth, representing the interests of the public and private sectors.

Burrows joined Bermuda’s independent economic development public-private partnership in December 2018, after a stint as chief investment officer for the Bermuda Tourism Authority and 25 years in the financial services sector.

His time is spent driving plans to advance the island’s traditional and emerging industries. While Bermuda itself is of modest size, its appeal, connectivity and international profile is great, and offers global businesses an ideal base.

In support of the government’s drive to diversify the economy, the agency now proactively targets and attracts new business to the island from key international markets.

“We focus on the technology sector in addition to our historic focus areas of re-insurance and risk solutions, investment funds, asset management, trusts and private clients, family offices and infrastructure investments,” he says.

“Working closely with the business community, government and the Bermuda Monetary Authority, the BDA fulfils a unique role in facilitating an understanding of the needs and challenges that exist.

“We are able to leverage these insights to ensure Bermuda maintains its competitive edge over other international markets, and that as a jurisdiction we can resolve issues, respond to commercial trends and adapt to change expeditiously.”

Burrows sees the BDA’s achievements in assisting companies to set up — with a concierge service to streamline the process — advocating for the jurisdiction and progressing the island’s legislative framework as shared successes.

“The continued support of all our stakeholders is critical,” he says. “We benefit from the fact that the intellectual capital in Bermuda, and the BDA itself, is exceptional. We have a team of dedicated and qualified professionals, in addition to a network of world-leading stakeholders and a board comprising industry experts who volunteer their time and efforts.”

Paul Scope

[caption id="attachment_15945" align="aligncenter" width="1024"] Paul Scope[/caption]

Chair of the BDA board and chairman of Willis Towers Watson, Paul Scope, arrived in Bermuda more than three decades ago. He has been a board member of the BDA since its inception in 2013.

“From a professional standpoint, having arrived in 1983, I have seen first-hand the impressive development of Bermuda’s insurance and reinsurance market,” Scope says, “including its leadership in captive insurance and the ILS sector, whose global capacity Bermuda continues to dominate. While the cultivation of the global re-insurance market is without doubt a signature achievement, it is just one part of a highly diversified business ecosystem that continues to set Bermuda apart. Being across the breadth and quality of the jurisdiction as a whole is what makes the BDA’s work so valuable.”

Stephen Weinstein

[caption id="attachment_15946" align="aligncenter" width="900"] Stephen Weinstein[/caption]

Stephen Weinstein, deputy chair of the BDA and EVP and Group General Counsel of RenaissanceRe, has been a Bermuda resident for nearly 20 years.

“When it comes to responding to market dislocations with new capital, innovative ideas and speed to market, there is simply nothing in the world comparable to Bermuda,” he says. “I strongly believe the work of the BDA helps to ensure Bermuda remains the best jurisdiction in the world from which to match global risks and capital, with our unique blend of entrepreneurial innovation and fit for purpose regulatory oversight.

“Speaking from personal experience, supporting the BDA’s mission comes easily. I am a passionate believer in Bermuda’s value proposition to the global economy, and I’m proud to call the island home.”


Bermuda Retains Global Relevance in an Era of Change Thanks to its Position, Policies and Legislation

For decades, global businesses and investors have valued Bermuda for its political stability, robust and transparent regulatory environment, and its efficient capital regime.

It is underpinned by a 400-year-old English common law legal system, a business-focused culture and sophisticated infrastructure. It also has an enviable geographical location: Bermuda is just 90-minutes from New York and six hours from London. These factors have seen the Island develop into a blue-chip jurisdiction in the world of international commerce and investment.

[caption id="attachment_15950" align="aligncenter" width="900"] Bermuda: Royal Naval Dockyard[/caption]

The nimble, strategic and open-minded approach of the island’s government and regulators has allowed the island to swiftly adapt to the needs of business, maintaining Bermuda’s relevance in an era of fast-paced political, socio-economic and technological change.

International Business in Bermuda

Bermuda’s growth has been propelled by its cultivation and dominance of the global insurance and re-insurance market. The Bermuda re-insurance market is comprised of over 1,200 insurers, holding total assets in excess of $800bn. Gross premiums written by the Bermuda market in 2019 totaled some $150bn.

When it comes to re-insurance, Bermuda is top of the class. The island plays an essential role in the global risk-transfer industry.

• Bermuda is the world’s biggest captive insurance domicile
• It is the world’s single most important property and catastrophe (P&C) insurance market
• It is the global leader in the burgeoning Insurance-Linked Securities (ILS) market
• It enjoys full equivalency with the EU Solvency II regime for EU insurers, and is also one of only three jurisdictions to be granted Reciprocal Status by the National Association of Insurance Commissioners (NAIC) in the US.

The Bermuda market also has a proud track record of claims management: it has paid out more than $200bn to settle US insured losses over the past two decades.

While Bermuda’s re-insurance market is the jewel in the island’s crown, the business ecosystem is highly diversified. The island has long been a premier jurisdiction for investment funds, asset managers, family offices, trusts and other private client structures. Bermuda is also a popular domicile for companies listing on major stock exchanges, including the Nasdaq and the HKEX.

The island is now also rapidly evolving into a global leader in emerging technology sectors, including fintech and insurtech.

Fintech in Bermuda

In 2018, Bermuda became one of the first countries in the world to pass comprehensive legislation and regulations governing initial coin offerings (ICOs) and digital asset businesses. Modelled on laws already in place for insurance and investment funds in Bermuda, the Companies and Limited Liability Company (Initial Coin Offering) Act 2018 and the Digital Asset Business Act 2018 (DABA) — together with the more recently introduced Digital Asset Issuance Act 2020 — have been developed to attract quality start-up businesses.

Last summer, Bermuda’s proactive approach in this area caught the attention of the US Securities & Exchange Commission (SEC). SEC commissioner Hester Peirce commented that “Bermuda is one of the only jurisdictions to address the (digital) custody question in detail."

[caption id="attachment_15951" align="aligncenter" width="900"] Bermuda: Gibbs Hill Lighthouse[/caption]

Insurtech developments

Recent amendments to insurance legislation have paved the way for the island’s independent financial regulator, the Bermuda Monetary Authority (BMA), to create two innovation initiatives: an insurance regulatory sandbox and an innovation hub. The purpose here is to facilitate and promote the development of technological innovation in the insurance sector.

The regulatory sandbox creates a live environment where new technologies can be tested by a licensed insurer or insurance intermediary to a limited number of clients in a controlled way.

The innovation hub is open to other industry participants who want to receive regulatory guidance on standards and expectations related to new insurance technologies; it can be used by companies that ultimately intend to apply to gain access to the regulatory sandbox once their concept is sufficiently developed.

Participation has several benefits, one of the most valuable being the insight provided by the BMA from the outset. It provides real-time feedback on regulatory compliance, which ultimately facilitates speed to market for these tech developers.

Global Compliance Leader

With regulatory scrutiny on the rise across the world, the Bermuda Government, the BMA, and the Registrar of Companies (ROC) work hard to ensure the country remains at the forefront of regulatory and legislative developments.

In January and February 2020, there have already been two stand-out achievements.

In January, Bermuda was recognised as a global leader in the fight against financial crime by the Caribbean Financial Action Task Force’s (CFATF) mutual evaluation report (MER), which was subject to stringent review prior to approval by the global standards setting body, the Financial Action Task Force (FATF). Of the approximately 100 MERs published by the FATF up to January 31, 2020, Bermuda ranks first overall against the technical compliance requirements, and is one of only two jurisdictions (the other being the UK) with an assessed high level of effectiveness in relation to its risk assessment and domestic coordination mechanisms.

In February, Bermuda was placed on the EU’s white list of fully co-operative tax jurisdictions after implementing legislation to address EU requirements around economic substance, specifically in the area of collective investment funds.

These developments represent no small feat. They serve not only to reinforce the island’s globally respected reputation, but also continue to give Bermuda a competitive edge over other jurisdictions.

[caption id="attachment_15952" align="aligncenter" width="900"] Bermuda: City of Hamilton[/caption]

Business Development

Helping to support established sectors and develop emerging industries is the Bermuda Business Development Agency (BDA), an independent public-private unit established in 2013.

The agency serves to safeguard and enhance Bermuda’s world-leading business platform. It also offers a concierge service that acts as a single point of contact for new business, streamlining everything from networking with industry leaders to immigration applications and purchasing real estate.

The BDA directly connects prospective investors and international businesses with its network of contacts in industry, the government and the regulators, as well as professional service providers.


Yelo: Brighter Banking for the People and Business Community of Azerbaijan

[caption id="attachment_15956" align="alignright" width="300"] Yelo Bank[/caption]

Known from ancient times as the Land of Fire, Azerbaijan is a country at the nexus of Asia and Europe, bounded by Caucasus Mountains from the north and Caspian Sea in the east.

Azerbaijan is rapidly transforming from an oil producing country into a prominent oil and gas exporter, transportation corridor and a producer of fine and diverse agricultural goods. Massive investments in infrastructure and education have created attractive opportunities for developing various export-oriented industries.

The fast-changing economic environment makes it vital for financial institutions to be flexible and ready for change.

At the end of 2019, Nikoil Bank — one of the oldest banks in Azerbaijan — underwent a transformation and emerged with a new name and brand: Yelo. Its slogan is “brighter banking”, and Yelo Bank represents a refreshing break from the norm in the Azerbaijani banking market.

The stylised spelling of the English word yellow and the brighter banking concept symbolise a vibrant, innovative approach to banking services. Yellow is also the main colour chosen for the new corporate identity of the bank. As a brand identity, Yelo is all about creating a visual world that feels as relatable as it does aspirational: approachability, appreciating the value of customers and speaking with them on a plane of mutual respect.

Rebranding is more than just a change of name and corporate style. It involves deep transformation within the bank to build a new customer service model, a fresh corporate culture, boosted technological capacity and enhanced human capital.

Also important in the rebranding process was to build the new brand’s tone of voice to mirror its core values:

Put customers first

Serve with heart

Find solutions

Keep it simple

Work with a smile.

Mission and Vision

Yelo Bank is committed to its mission to contribute to the success of communities through digital ecosystems. The vision is to help the people of Azerbaijan to achieve more by refreshing their banking experience. Customer expectations, the global trend of digitalisation and increasing competition by internet giants have put pressure on the industry.

Yelo chooses to follow and ride that trend and put the bank in a leading position for digital and conventional banking services for the people and SMEs of Azerbaijan.

Key Drivers for Success

People are the key driver of the business, and a determined and agile professional team, united around management, was the first pillar of the strategy implementation.

Innovative technologies, carefully selected, adapted to business needs and developed to the point of excellence is the second.

The creation of a best-in-class customer experience to ensure critical mass of demand for the bank’s products — and the digital ecosystem — is the third pillar. Customer satisfaction feeds future self-propelling growth.

With a 26-year presence in Azerbaijani market, the bank has a great growth potential in retail, micro and SME segments. Yelo offers a full range of financial services to individuals, households and businesses. It strives to make all products simpler to understand, easy to approach and use, at to comprise everything the client needs.

This year, Yelo will introduce a new online banking service, internet banking for businesses and other innovative products.

Brighter banking and new corporate style has started to appear in the revised design of Yelo branches, which offer a new customer service model. Yelo appreciates the time of its customers and a current need for social distancing. The new branch concept has service zones for different transactions to make the customer service easy, fast, secure and friendly.

The bright modern design, with personal messaging throughout each branch, is aimed at a relaxed, positive and enjoyable experience for customers. The bank is renovating its new head office, which will welcome the Yelo team by the end of this year. The main goal is to make the Yelo community happy and productive.

Nikoloz Shurgaia, chairman of the board and CEO, said Yelo Bank is not just a new name, or a new colour. “It is a symbol of transformation, the work which has been going on for four years and which resulted in the bank’s move to a qualitatively higher level,” he said. “This became possible thanks to the dedication of the whole team. We are grateful to all members, and to the shareholders for their unwavering support.”

Shurgaia emphasises the input of Marina Kulishova, chairman of the board, in the transformation process. “The importance of her insightful support and inspiration to us throughout the rebranding process cannot be overstated,” he said.

He also expressed gratitude to the Winkreative agency which developed the rebranding concept. The London- and Zurich-based company has dynamism and an enviable track record working for some of the world’s most prominent brands.

“They did a great job for Yelo Bank,” said Shurgaia. “The Wink team understood the spirit of the bank, the idea behind the changes, and how the bank should position itself. It has reflected these in the new brand and corporate identity.”

The Yelo team is continuously transforming to provide the best possible service, inspired by the significance of the changes. “Brighter Banking is our new customer service model, built on the wholehearted contribution of each team member and a great teamwork,” said Shurgaia.

“With our dedication, Yelo will be a symbol of a modern brand, a beloved choice of the people and businesses in Azerbaijan.”

[caption id="attachment_15958" align="aligncenter" width="900"] Azerbaijan[/caption]


Simba Group: Simba’s Roar is Heard Across Nigeria, in a Variety of Sectors and Industries

[caption id="attachment_16012" align="alignright" width="300"] TVS King in Nigeria[/caption]

The Simba Group, founded in Nigeria in 1988, is a conglomerate with operations spanning Nigeria’s most dynamic economic sectors: agriculture, power, ICT, and transport.

Simba, in partnership with world-class organizations, has leadership positions across all five of its companies. Those companies share a common vision: to enrich Nigerian lives with innovative products and solutions.

The group relies on a “partner-centric” approach. Founder Vinay Grover recently described this process of selection and nurturing as the core of the organisation’s success over the past three decades. Its largest partner is the TVS Motor Company, part of the $8bn TVS Group, for whom Simba handles importation, local assembly, marketing, distribution and after sales service in Nigeria.

The company’s TVS King motorised tricycle is the clear market leader in Nigeria, with a commanding market share. TVS’ three-wheeler vehicle, a relatively new entrant in a category which has long provided vital last-mile travel solutions to people across the world, has enjoyed tremendous success in Nigeria. As a product, it has several advantages over the established traditional players. But what has propelled it to the leadership position is Simba and TVS’s emphasis on training across the ecosystem, and the presence of a spares and service infrastructure in every corner of the country.

The company attributes its success to the investments it has made in the long-term sustainability of the industry, by deploying hundreds of such spares and service centres — some owned by the company, and others via their distribution network — and the continued investment in infrastructure.
Simba also represents TVS for the sale of its motorcycles in Nigeria, which includes the TVS HLX – developed exclusively for the African continent, with modifications for each market. TVS Motor Company has sold one million TVS HLX motorbikes in Africa, and the vehicle was even featured on Amazon’s Grand Tour programme presented by Jeremy Clarkson and Richard Hammond.

Simba also partners with Luminous Power Technologies, part of the $25bn Schneider Electric group, for the sale of inverter solutions in Nigeria. The market-leading brand has established itself as a household name in the country, providing power back-up to thousands of homes and offices. It redeploys energy stored in batteries during power cuts, which are a frequent occurrence in many parts of the country.

Again, Simba attributes its success in the sector to its quality products, backed by reliable and accessible after-sales service. The Simba Service offering provides customers with 24-hour customer response via a dedicated online portal and call centre, across their distribution network.

[caption id="attachment_16013" align="aligncenter" width="800"] Luminous Inverters: Powering small businesses[/caption]

Also supported by Simba Service is another power back-up portfolio featuring inverter brand, Genus, and Kstar, a global Top 10 company manufacturing UPS systems. These specialised energy solutions have an automatic changeover feature which allows individual customers and critical power load functions, such as in hospitals, a seamless transition from one power source to another.

Also in the power portfolio is Sollatek, the country’s leading power protection device provider. Sollatek products ensure that electronic goods such as televisions, air conditioners and refrigerators are protected from poor power conditions. The devices ensure there is no damage to appliances, and no fire risk, due to electrical fluctuations.

Simba partners with Mahindra EPS, part of the $20bn Mahindra Group, for agricultural equipment and mechanisation. Mahindra Irrigation solutions deploy water to farmland through a scientifically designed network of pipes and emitters.

These solutions are complemented by the application of water-soluble fertilizers through systems known as “drip fertigation”. The company offers a full range of irrigation solutions, including drip irrigation, pressurised systems, and gravity-based systems, customised as per field requirements.

Simba is also a leading provider of B2B communication infrastructure in partnership with Avaya, the $3bn American multinational technology company. It focuses on unified communications, contact centres, and services. Simba is the only partner of Avaya with fully accredited engineers for APDS (Avaya Professional Design Specialist), ACSS (Avaya Certified Support Specialist) and ACIS (Avaya Certified Implementation Specialist) in West Africa.

Simba holds a leading presence in each of the industries in which it participates, and the group places an emphasis on the shared values of subsidiary companies and partners.

Head of strategy Kunal Grover recently noted how this forms the most fundamental part of the group’s partner-selection process. He credited the shared values system as a key competitive advantage, and attributed the group’s recent CFI.co award for Socio-Economic Value Creation in Nigeria to this.

Of particular note is Simba’s commitment to CSR. This was demonstrated during the recent floods in Kano State in Nigeria when the company distributed hundreds of rice bags to the victims of the calamity. The effort was commended by the Kano State Emergency Management Agency (SEMA). A key ongoing initiative is a commitment to women’s empowerment. Simba runs what it calls the Queen Riders programme, which trains women from under-represented backgrounds and gives them opportunities across the transport industry.

The Simba Training School, which conducts advanced mechanic courses, has provided training to women riders, mechanics and vehicle-owners, free of charge. It follows participation of the group in the recent conference at the National Centre for Women Development in Abuja, in which they distributed free bicycles to girl students.

As an organisation committed to sustainable development in Nigeria, Simba continues to invest in ecosystems within the various industries in which it participates. From training to knowledge transfer, the emphasis and investment on human capital development will, the company believes, continue to propel it further.


Etihad Engineering: One-stop Provider for Aircraft Maintenance and Engineering Consistently Delivering Excellence

Etihad Engineering, situated in Abu Dhabi at the very heart of one of the world’s most prolific aviation growth markets, is the largest commercial maintenance, repair and operations (MRO) services-provider in the Middle East.

[caption id="attachment_16126" align="aligncenter" width="900"] Etihad Engineering has carried out stripping, painting and livery application on more than 100 aircraft from all over the world - this special livery features Special Olympics athletes from the UAE[/caption]

It is one of the world’s leading MROs in terms of capabilities and global customer footprint. Etihad Engineering offers industry leading aircraft maintenance and engineering solutions on all major Airbus and Boeing aircraft types including the A380 and 787 Dreamliner, and more recently, the A350. The company is a member of the Airbus MRO Alliance, which aims to grow high quality services worldwide — and address the increasing demand for MRO services forecast for the next 20 years.

Etihad Engineering’s mission is to be a one-stop MRO solutions-provider, delivering reliable, quality performance and a superior customer experience with competitive economics. Its comprehensive range of services includes major structural repairs, cabin modifications and refurbishment, connectivity embodiments, aircraft painting, component repair and overhaul, as well as a wide array of design and engineering services.

The multinational team of around 2,000 people from more than 60 nations at Etihad Engineering delivers reliable support, ensuring every customer gets the highest quality of service, leveraging decades of hands-on experience and expertise.

Etihad Engineering has been strengthening its global reach in recent years with a portfolio extending beyond the Middle East across Asia, Africa, South America, Europe and Australia.

Key Facts at a Glance

Middle East’s largest commercial MRO

Capability for all major Airbus and Boeing commercial aircraft

The only MRO in the Middle East with both Part 21J and Part 21G approvals

In-house 3D printing lab

Onsite flammability testing lab

More than 25 international regulatory approvals

Multiple hangars, including paint hangars and one custom designed to accommodate up to three A380 aircraft

More than 500,000 square metres of site area adjacent to Abu Dhabi International Airport

Within a short period of time, Etihad Engineering has evolved to become a formidable global player in the MRO industry by consistently expanding its capabilities to include new platforms, streamlining its systems and processes, adopting new tools. It has expanded its geographical reach and established strategic partnerships with industry leaders from around the world.

Etihad Engineering has many firsts to its credit:

First organisation in the Middle East to be granted a Part21G Production Organisation Approval (POA) by the European Aviation Safety Agency (EASA)

First Middle Eastern MRO to receive EASA Part 21J Major Approval

First MRO in the world outside the Boeing network to fully strip and paint a Boeing 787

First MRO in the Middle East to carry out a heavy maintenance check on a Boeing 787

First airline MRO with EASA approval to design, certify and fly 3D-printed parts

The company has consistently demonstrated its commitment to excellence, something that has been acknowledged by stakeholders, customers, OEMs, partners, aviation authorities and the industry with international and regional awards and acknowledgements. i

To find out more about Etihad Engineering’s full range of services, visit etihadengineering.com and follow the company’s latest news and updates on LinkedIn at bit.ly/EYEngLinkedIn