THE UNIVERSITY OF HONG KONG School of Economics and Finance

Transcription

1 THE UNIVERSITY OF HONG KONG School of Economics and Finance MFIN 7025 Entrepreneurship in Finance: Hedge Funds, Private Equity and Venture Capital (MFIN 7025 Venture Capital, Private Equity and Entrepreneurial Finance) GENERAL INFORMATION Instructor: Mr. Henri Arslanian Office: Room 902, K.K. Leung Building Office Hours: By appointment TA: Mr. Heng Geng COURSE DESCRIPTION This course provides students with the foundations and practical knowledge enabling them to launch and manage their own entrepreneurial venture including a hedge fund, private equity, venture capital or asset management firm. Taught as a combination of practical classes and guest lectures by industry professionals, the course covers the entire fund and business launch spectrum including fund structuring, investor capital raising, investor due diligence, regulatory, tax, governance, fund terms, private placement regulations, market trading rules, service provider selection, counterparty selection, employment matters, real estate, technology, operations, etc. The course also covers the investor landscape and investor lifecycle from early stage investors to institutional capital raising from global family offices, fund of funds, endowments, private banks and pension funds. We also cover the ongoing management and deal making of such funds from angel and venture capital early investments to private equity deals and exits. The course also discusses the global trends and industry institutional best practices, the customs and usage in the industry as well as some of the future trends, including FinTech and cybersecurity, and their impact on the industry. This is a very practical course with a heavy emphasis on the latest industry trends and best practices rather than theoretical concepts. COURSE LEARNING OBJECTIVES (CLOs) 1. Acquire practical industry, financial and entrepreneurial knowledge and skills enabling students to launch, manage and successfully grow their own firm. 2. Understand the latest industry best practices and institutional investor requirements that enable a student to successfully launch and manage a fund. 3. Understand the investor landscape and the investment lifecycle enabling a student to successfully grow its fund. 4. Understand some of the latest developments and trends impacting the industry and the related opportunities.

2 COURSE LEARNING OUTCOMES Course Learning Outcomes CLO1, CLO2 CLO1, CLO2. CLO3, CLO4 CLO1, CLO2, CLO3, CLO4 Aligned Programme Learning Outcomes PLG1. Acquire quantitative techniques of finance PLG2. Acquire advanced knowledge of financial products PLG3. Apply and integrate the skills and knowledge in the finance profession PLG4. Inculcate professionalism COURSE TEACHING AND LEARNING ACTIVITIES Course Teaching and Learning Expected contact hour Study Load Activities (% of study) T&L1. Lectures and Class Participation 36 64% T&L2. Final Project 20 36% Total % Assessment Methods Brief Description (Optional) Weight Aligned Course Learning Outcomes A1. A2. Class Participation Final Project - Presentation 15% 40% COL1,COL2,COL3,COL4 COL1,COL2,COL3,COL4 45% COL1,COL2,COL3,COL4 Final Project Business Plan A3. Total 100% *Please see Appendix 1 for more details STANDARDS FOR ASSESSMENT Course Grade Descriptors A+, A, A- B+, B, B- C+, C, C- D+, D Strong evidence of superb ability to fulfill the intended learning outcomes of the course at all levels of learning: describe, apply, evaluate, and synthesis. Strong evidence of the ability to fulfill the intended learning outcomes of the course at all levels of learning: describe, apply, evaluate, and synthesis. Evidence of adequate ability to fulfill the intended learning outcomes of the course at low levels of learning such as describe and apply but not at high levels of learning such as evaluate and synthesis Evidence of basic familiarity with the subject. F Little evidence of basic familiarity with the subject. COURSE CONTENT AND TENTATIVE TEACHING SCHEDULE

3 Class Topics 1 Monday May 11th Class Introduction Chapter 1: Starting a Fund in Asia: preliminary decisions Chapter 2: Timetable: what, where and when? 2 Wednesday May 13th Chapter 3: Where to set-up your fund management business? Chapter 4: Regulatory Considerations: do you need a license? *Speaker: Ernest Ng, CIO, Sumeru Capital 3 Monday May 18th Chapter 5: Fund Structuring Chapter 6: Management Company Structuring *Speaker: Jim Singh, COO, BFAM Partners 4 Wednesday May 20th Chapter 7 Angel Investing, Venture Capital and Fintech *Speaker: Melissa Arbour, Founding Partner, Arbor Ventures 5 Wednesday May 27th Chapter 8: Fund Term Considerations Chapter 9: Fund Governance *Speaker: Phil Tye, Chairman AIMA Hong Kong Chapter and Fund Director 6 Monday June 1st Chapter 10 Private Equity: from deals to exit *Speaker: Justin Dolling, Partner, Kirkland and Ellis *Speaker: Philippe Espinasse, Author and Consultant "IPO: A Global Guide" 7 Wednesday June 3rd Chapter 11: Capital Raising: putting together your fund raising strategy *Speaker: Simon Squibb, CEO NEST Investments Chapter 12: Office Space and Premises 8 Monday June 8th Chapter 13: Systems and Technology Considerations Chapter 14: Operations *Speaker: Elaine Davis, COO, Nine Masts Capital Ltd Chapter 15: Disaster Recovery/Business Continuity 9 Wednesday June 10th Chapter 16: Service Provider Selection Chapter 17: Human Resource Considerations *Speaker: Elaine Davis, COO, Nine Masts Capital Ltd *Speaker: Steve Bernstein, CEO, SinoPac Solutions and Services Ltd 10 Monday June 15 Student Presentations *Speaker: James Shipton, Executive Director, SFC 11 Wednesday June 17 Student Presentations 12 Monday June 22 Student Presentations

4 REQUIRED/RECOMMENDED READINGS & ONLINE MATERIALS Due to the very practical nature of this class, there is no mandatory or required textbook. Most of the information that will be provided is not available in any type of books or publications, thus the importance of being active, listening and taking notes during the class. Most if not all of the information needed to complete the final project will be discussed in class by the instructor or the various guest speakers. Thus the importance of being present to every class and being active. A list of online resources is set out for students if they want to learn more about a certain topic but such reading is not mandatory. COURSE POLICY Class Conduct Students are required to attend all classes on time. The class will feature about a dozen high profile guest speakers that are donating their spare time to come and speak to us so please ensure you are on time. This class is very practical. Most of the information that will be provided is not available in any type of books or publications, thus the importance of being active, listening and taking notes during the class. Please ensure that your mobile phones are turned off and please refrain from sending text messages or s, playing games or visiting social media sites during class. It is disrespectful to your fellow students and to your instructor. In case you have to leave the class early, please inform the instructor before the class begins. Please sit near the door and exit quietly. Respect your instructor and your fellow students. Be considerate to others. Academic Dishonesty The University Regulations on academic dishonesty will be strictly enforced! Please check the University Statement on plagiarism on the web: Academic dishonesty is any act that misrepresents a person s own academic work or that compromises the academic work of another. It includes (but not limited to) cheating on assignments or examinations; plagiarizing, i.e., representing someone else s ideas as if they are one s own; sabotaging another s work. If you are caught in an act of academic dishonesty or misconduct, you will receive an F grade for the subject. The relevant Board of Examiners may impose other penalty in relation to the seriousness of the offense.

5 Appendix 1: Final Assessment Details ASSESSMENT 15% Class Participation This class is an interactive class. Class participation will be measured by (i) how active you are in class (eg asking questions to the guest speakers, questions during class) and (ii) your attendance. 85% Presentation of Start-up Business (composed of 40% class presentation and 45% business plan) This course will provide you with all the essential knowledge enabling and empowering you to launch your own fund. Over the course of your Masters in Finance and your career so far, you have probably seen opportunities that are not properly captured by the market? You have spoken with some classmates about starting a business together? Or you have thought about leaving your employer and starting your own firm? Well this is your chance! Composition: Exactly like a real entrepreneurial start-up in groups of 3 or 4 people.you have full flexibility and discretion in forming your team. Please send the details of your teams at HKUMFIN7025@gmail.com by Monday June 1 st Format: You need to put together (i) a business plan that provides all the required background to your idea and (ii) a marketing pack that you will pitch to the class Guidelines: As is the case in real life, you have a lot of flexibility. You can set-up either a hedge fund, private equity fund, venture capital fund, real estate fund, social impact fund, a FinTech fund, etc. I will not judge the investment merit of your fund. For example, I don t judge the investment opportunity of whether you set up a Greater China Equity long/short fund or an European distressed fund or a ASEAN focused social impact fund. You could even decide to set-up a real alternatives fund like a fund investing in premium whiskeys, collectible wines, watches, diamonds, stamps, art, etc. I am fine with the underlying assets as long as you believe that there is an opportunity and that you can pitch it! What I will focus on is that you have taken the right approach on how to build your fund management business. However, you need to ensure that the idea is not completely stupid and makes commercial sense to the extent that you can convince potential investors. For example, if you are launching a fund that will invest in diamonds, you need to show me why you believe there is upside in the diamond market (eg size of market, increasing demand, limited supply, etc) Feel free to come and discuss your business idea with me if you are not sure. Whilst you have a lot of liberty and flexibility, there are basic guidelines that I still want you to follow and there are 2 main deliverables. a) Business Plan Every new business start-up starts with a business plan and that is also the case for start-ups in the fund management industry. In practice, this document is not shown to investors but is rather put together by the founding team in order to have a clear idea of what are the goals of the business.

6 The business plan will include some of the information that will be presented to the investors in the pitch book but will contain more detail and information that does not need to be shown to investors in the pitch book (eg budget). In practice, there are often many versions of the business plan (eg need to be submitted to the regulator when applying for a license, to the immigration department for visa purposes, to counterparties, etc.) but this is the business plan that you and your team will put together to decide what the business will look like. There will be a lot of overlap in the business plan and the marketing pack. Often the marketing material will contain the information that is provided in the business plan but with a marketing and sales angle and without giving as much details. For example, I would expect that your business plan include the following: What are the objectives of the new business? Overview of the business activities Investment Strategy Investment/Asset Management Process Portfolio Construction Instruments to be traded/investments to be made Risk management Non-investment considerations Fund Terms or other investor relevant information for investors Corporate or business shareholding structure Offices Team, org chart and duties and responsibilities of each team member Budget Any other item you believe is appropriate. Obviously, the above will vary depending of the characteristics of your fund and, most importantly, your strategy. For example, the non-investment or risk considerations are very different whether you are launching a hedge fund or an art fund. The fund s liquidity will vary enormously whether you are launching a private equity fund or a long only fund investing in large cap listed stocks. Once again, simply include the elements that you believe are relevant to your fund. I suggest you have a solid draft of the business plan first before starting to put together the pitch book as most of the items in the pitch book will be included in the business plan. Grading: The business plan will count for 45% of your final grade. It is broken down as follows: 10% - presentation and structure 20% - Investment Considerations (eg Strategy, Portfolio Construction, Risk) 30% - Non-investment Considerations (eg governance, structuring) 20% - Business and Capital Raising Considerations (eg fund terms, capital raising strategy) 25% - Start-up Considerations (eg budget, real estate, talent retention) Submission Date: Needs to be received by 8:00am HK time on Monday June 15 th You will lose an automatic 10% per day late. Submissions need to be sent by to HKUMFIN7025@gmail.com b) Marketing Pack and Class Presentation

7 The second deliverable you need to prepare is the investor marketing presentation or the pitch book as it is called in practice. This is the presentation a fund manager will use when going to see potential investors to pitch them. It needs to be punchy, easy to understand, comprehensive, well presented, etc. You need to prepare this pitch book which you will pitch to the class. Content: There is no minimum number of slides but should reasonably include: Fund Name Description of Fund s objectives, strategy and investment guidelines Biography of Portfolio Managers and org chart of team Investment opportunity or context Description of Investment Process Description of investor fund terms (eg management fees, performance fees, redemption frequency) Description of fund structure (eg jurisdiction, fund governance, regulatory) Risk limits (will depend of strategy but for example if max % in a certain stock, country or sector) I am giving you flexibility on what other type of information you can include (eg information on opportunity set, why a certain sector is attractive, why your investment process is different). You really have to approach this as if you were going to raise capital with this pitch book. Put yourself in shoes of the investor and ask yourself what other information they would reasonably need before writing you a big cheque! You can find dozens of examples of such pitchbooks online via a simple Google search. Time: You or your team will have 15 minutes plus a quick Q&A to pitch to the class. The class will vote at the end of each class on whether they would invest or not in your fund. Deadline: To be handed to me in hard copy the evening of your class presentation and in soft copy anytime leading to your class presentation. Grading: This pitch book and your class presentation will count towards 40% of your final grade. It is broken down as follows: 20% - Quality of pitch (eg how persuasive, concise) 20% - Quality of pitch book (eg easy to understand, clear) 10% - Professionalism (eg professionalism in idea delivery, presentation) 20% - Structure (eg order in presentation, flow) 20% - Commercial Acumen (eg addresses aspects required by investors) 10% - Student Vote