Business

Initial Public offering

CREATING ONE’S OWN CURRENCY is the motivation for every company to go public. In order to fund internal and external growth, to diversify the future sources of finance and to strengthen the financial structure of the company, that ideology is most essential. When a company is listed on the stock exchange, it results in tradability and liquidity, allowing the previous shareholders to exit, realizing the gain on the capital. It also adds a value for the company which will be useful for the future success plans. On the strategic level the IPO will enable the company to cleanse its strategies and make the focus clearer in its activities. It also increases the visibility of the company and its credibility too. This ultimately makes a difference from the competitors. However, an IPO changes the way a company operates. Corporate governance has to be refitted, support functions must be professionalized and financial announcements must be made crystal clear. Only when these information are withheld, a negative result will be derived on the share price, which will be greater when the news leaks out in the market.

Sandy Campart is a lecturer and researcher. He is a member of the Centre of Research for Economics and Management (CREM), part of the French National Centre for Scientific Research (CNRS). M. Campart is director of IUP Banque Finance Assurance de Caen – a finance school in Normandy – and author of “If we dared to invest in the stock market”. The ideas of implementing IPOs and the benefits are discussed by him in this article.

In the year of 2019, the new emerging companies saw a rise in the share price by almost 13 per cent on an average especially the IT and Software companies have performed their best with an average of 40 per cent rise. The stock market performances of SmileDirect (dental aligners), Peloton (exercise bikes and fitness) and even Uber proved to have increased number of investors for their exaggerated levels of profitability. But Uber’s price has been disappointing lately, after the latest presentations were below the expected rates of the investors. The second Quarter of the year brought a turnover of more than 5 per cent lower than what was expected. The Profit was 53 per cent greater than expected, Uber’s CEO, Dara Khosrowski, told his emplyoees that the teams were too large to be compatible with the pace of growth needed.

WeWork is the most noticeable example of the current inability to differentiate between a unicorn and a chimera. Investors have to learn on how to fight those attractive equity fairy stories and envision beyond the ground-breaking nature and rapid growth of a concept. Cash flow, debt level and governance remain key policymaking factors. In the WeWork brochure, the word “technology” seems to repeat itself for more than 120 times. This method of repetition is being used to propose that old-style assessment models should not apply to this business. WeWork is more of a assets developer with an advanced business model than it is a technology company.

Business

LexisNexis risk solutions study reveals sharp rise of financial crime compliance costs

Decision makers inside banks, investment firms, asset managers and insurance firms identify the drivers impacting financial crime compliance. LexisNexis® Risk Solutions revealed that the results of its annual True Cost of Financial Crime Compliance Study for the U.S. and Canada. The total projected cost of financial crime compliance for the region is approximately $49.9 billion. The survey illustrates the sharp increase in financial crime compliance costs.

The study projects the average annual cost of financial crime compliance for U.S. financial institutions with $10 billion. Pandemic Continues to Spur Growth. The pandemic continues to negatively impact compliance operations. Sixty eight percent of U.S. respondents report longer times required to complete due diligence. Fifty five percent of U.S. respondents report reduced productivity compared.

More U.S. financial institutions now rank real estate and hospitality as top money laundering risk segments. Crime involving digital payments, trade-based money laundering and money mule schemes are on the rise. Digital currency is a growing problem for Canadian firms. Crimes involving digital payments have the greatest impact on compliance costs. Cryptocurrency crimes have the greatest impact on compliance costs for Canadian firms. The survey results demonstrate that financial institutions are battling a broader set of issues.

Survey respondents indicate that a lack of current and extensive data tops the list of Know Your Customer (KYC). Leslie Bailey, vice president of financial crime compliance strategy for LexisNexis Risk Solutions stated that the study shows clear linkages between the pandemic, digital crime and increasing regulations. Hence, financial institutions need to prepare for expanded compliance obligations and risks from emerging financial crime. Bailey added that digital transformation is a game-changer for financial crime compliance operations.

This will require a sophisticated approach that incorporates insight into digital behaviors. This study surveyed 145 decision-makers in the U.S. and Canada. Responses were collected in June 2019, August 2020 and June 2021. Organizations such as banks, investment firms, asset management firms and insurance firms. The total annual cost of compliance across firms was calculated using survey data. The spend amount was generated by multiplying the average percent allocated to financial crime costs.

Business

COP26 delegates agree on need to deliver on $100 BLN climate finance pledge

Delegates heading to the COP26 U.N. climate summit in Glasgow. These delegates agreed that they must deliver on the $100 billion per year pledge. COP26 president Alok Sharma said that, it is to help most vulnerable nations for tackling the climate change.

After many days of meetings at the pre-COP26 climate event, which happened in Italy, Sharma said that there was a consensus to do more. Which is to keep the 1.5 degrees Celsius target within reach, adding more needed to be done collectively in terms of national climate plans.

The COP26 conference in Glasgow aims to secure more ambitious climate action. This is from nearly 200 countries, those all that have signed the 2015 Paris Agreement for limiting the global warming, well below 2.0 degrees Celsius. And to 1.5 degrees, above pre-industrial levels.

Business

City’s exposure to Evergrande is very minimal-Hong Kong finance Chief

Hong Kong’s exposure to debt-laden developer China Evergrande Group is very minimal at 0.05%. This is of banking assets, South China Morning Post reported, citing the city’s finance minister. Financial Secretary Paul Chan told the newspaper that it is very minimal and won’t cause them any systemic risks. He added that he had arrived at the conclusion after a recent audit of the local banking sector’s exposure to the company.

Chan also said that the Hong Kong’s stock market was inevitably subject to some volatility. This is amidst a recent mainland crackdown on some industries. But still he believed any setback would be temporary. With liabilities of $305 billion, Evergrande has sparked concerns its cash crunch could spread through China’s financial system. This may reverberate globally and that is a worry that has eased with the Chinese central bank’s vow, to protect homebuyers’ interests. Evergrande has missed two bond interest payments. Bondholders have said this and its offshore debt, amounting to about $20 billion, trades at distressed levels.