Continuous Professional Training (CPT) Series in Finance

Financial institutions face rapidly changing challenges arising from the growth of new financial products, financial innovations, new regulation regime and financial risk management.  This CPT series offer insight and perspective on new market developments by using case-study approach in each course.

 Private Equity and Venture Capital: Due Diligence, Negotiation and Exit Route
(Course Code: FN 60-053-12-06)        

(Speaker: Mr. Marvin Lai, Co-Chairman of the Venture Committee of Hong Kong Venture Capital and Private Equity Association)

Private equity has increasingly become a significant investment component of most institutional portfolios.  This course is designed to provide an overview of different areas in Private Equity and Venture Capital. Topics include company valuation, due diligence process, term sheet structure and conditions, typical exit routes, IPO strategies and etc.  Various case studies will be used to illustrate relevant topics.

Industry and Practices at a Glance

• Conventional funds in Hong Kong / China & Statistics 
• Typical Private Equity (VC) and Venture Capital (VC) IRR Expectations
• Standard VC investment cycle (Due Diligence, Term Sheet, Exits)

Due Diligence Process & Details

• The rationale
• Representative time frame
• Standard list of required document

Term Sheet Structure and Conditions

• Nature of term sheet
• Key considerations
• Types of instrument
• Typical terms
• Case: sample term sheet

Exit Routes & IPO Strategies

• Typical exit routes
• Exit horizon
• Trade sales and M&A
• Secondary buyout
• Put option (management buyback)
• Liquidation
• PE/VC in IPO (HKSE listing requirments, glance at global IPOs, key listing considerations, IPO players, IPO timetable, IPO execution process, after IPO, successful IPO requirements, cases)

 Convertible Bond: Is It a Saving Book or Lottery Ticket?
 (Course Code: FN 60-053-12-11)        

(Speaker: Mr. Raymond So, Former Executive Director and Head of Asian Convertible Bond Trading, Goldman Sachs, Hong Kong)

Due to the current macro environment in recent years Convertible Bond (CB) has earned its spotlight because of the product's unique hybrid characteristic of being interest rate and equity sensitive.  For a fixed income investor, CB can generate a stronger return with its equity sensitivity.  For an equity investor, CB can give a downside protection due to its bond yield nature. It is a product that covers the whole capital structure spectrum.  This course will provide a comprehensive overview of Convertible Bond.  Real world case studies will be emphasized. 

• Convertible Bond (CB) basic terms
• CB trading strategies, using other derivative instruments to hedge CB risk
• What are hedge funds doing?
• Who buy CB? Why do companies issue CB instead?
• Does capital structure arbitrage really exist?
• Convertible like Structures: Reverse convertible, convertible preferred stock, preferred stock and warrants
• Case study 1: Warren Buffett's investment technique in General Electric, Goldman Sachs and Bank of America
• Case study 2: A closer look into a few HK listed companies issuing CB: Country Garden, Wharf, LiFung 

 Case Studies in Option Trading in Current Economic Environment (Course Code: FN 60-053-12-12)        

(Speaker: Mr. Raymond Tsang, Managing Director, Head of Derivatives Trading, Asia Pacific, BNY Mellon, Hong Kong)

Options are getting more and more common these days especially in the investment world.  They exist in many different forms, embedded in different investment vehicles, in both the institutional world and the retail products.  This class starts with a basic overview of what an option is.  It goes through in a quantitative way how to measure the different risk parameters and some commonly used models in the industry.  Then some basic option strategies will be visited.  These include spreads, straddles, strangles, butterflies and other exotic options….  The class concludes with an overview of the current economic conditions and how investors can use options to express their investment views. 

Basic Definitions

• Calls and Puts
• Options features
• Options on various asset classes - warrants, equity options, FX options and others
• Options terminology

A Quantitative Approach to Risk and Leverage

• Greeks (Delta, Gamma, Theta, Vega and etc.)
• Profit and loss, payoff diagrams and calculations and analysis
• Black-Scholes formula: the inputs and the limitations
• Why options are used

Basic Strategies

• Common models (e.g. Black Scholes)
• Pitfalls of the model

 Options Investment Strategies

• Spread
• Straddle and Strangle
• Butterfly
• Collar
• Knock-in and Knock-out, Digital
• Exotic options
• Retail products – structured deposits, callable bonds

 Overview of Current Economic Situation

• Euro crisis
• US situation, fiscal cliff, election economy
• Asia/China and its potential/cooling off
• Practical use of options

Date, Fee and CPT Hours