Transcript City Investments

City Investments
Best in France
Case Study
Sept - Dec 2004
By: Ms. Khammar, Mr. Skibiski, Mr. Martini, Mr. Lang
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Executive Overview
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Company Presentation
Company Evolution
Company Services
Company Values
Company Clients
Why did it go to France
Constraints in France
Adaptation to France
Key Constraint Costs
Key Benefit Numbers
Essential Advice
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City Investments
City Investments is a Pan-European private investment and financial advisory
boutique in the fields of real estate, secondary private equity and corporate
structured finance.
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The company is currently staffed with 7 heads - 4 directors and 3 advisors
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Nationality of the 3 co-founders: Italian, German and British
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Company location: Paris
Note
Due to privacy reasons and along with its “discretion policy”, the company decided not to
disclose any financial information in this case study.
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Company Evolution
Practice Areas Extension
Legal Constitution
First Operations
2002
2003
2004
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Company Services
Real Estate
Private Equity
Corporate Structured Finance
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Company Services
Services:
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Real Estate
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Deal sourcing, selection and
structuring
Valuation, audit and due diligence
Purchase and sale negotiations
Financing arrangements
Transaction oversight and
facilitation
Portfolio analysis and optimization
Monitoring development and
repositioning programs
Investment and disposal strategy
formulation and execution
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Company Services
Services:
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Private Equity
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Portfolio and fund analysis and
optimization
Valuation of portfolios and
underlying positions
Acquisition and divestment of
limited partnership interests
Transaction coordination and
marketing
Risk assessment and new product
development
Evaluation of new fund offerings,
covering management,
strategy and structure
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Company Services
Services:
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Corporate
Structured
Finance
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Strategic analysis and business
valuation
Business acquisitions, divestments
and restructuring
Management buy-outs and buy-ins
Capital structure and dividend policy
Capital raising
Financial risk management and
hedging
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Company Clients
Main clients:
 Major financial institutional clients (BNL, Merrill Lynch, etc)
 Major private equity market operators (Sodipierre Finance, Toros
Capital, etc)
 Major Property Companies (Commerzleasing, Acanthe Development,
etc)
What are their expectations?
 Counseling in originating, structuring and executing cross-border
transactions
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Specific knowledge for the target market of interest
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Professionalism and competence
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Company Values
“City Investment aims to build lasting relationships rather than
maximize gains on transactions and believes that relationships can
endure only if founded on integrity. City Investment derives satisfaction
from devising effective solutions and stays with its client to see them
through to their strategic and financial goals.”
How do they fit with the french values?
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The company members are well acquainted with the french values,
given their Grande Ecole background education and the consistent
business experience gained in the country.
From the beginning “no cultural friction” has been experienced.
The perfect fit is further “guaranteed” by the newly acquired
managing director: Mr. Pierre Nollet.
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Company: a French presence?
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The company recently welcomed Mr. Pierre Nollet (french nationality)
as a new Managing Director
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The introduction of a french presence in the business partner’s base
was considered “crucial” in order to expand the practise areas and to
re-enforce the strategic network indispensable to succeed in the french
business arena
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Why is it located in France
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The growing business opportunity provided by the French Real Estate
market, which keeps on attracting foreign investors, was the primary
key to locate the company in France
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Proprietary deal flow into France through strategic relationships
provided by individual co-founders
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Priviledged networks of investors access
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2004: The Real Estate Market opportunity
Nationality
Product
Preferred location
Main investor
Average size
(E mill)
15
Open end funds and
special funds
65
Regions and Outer
Suburbs
Investment and private
funds
33
Office/Logistic
Paris 12/13 and
Regions
Private funds, insurance
and property
companies
39
Retail
Outer Suburbs and
Regions
Property companies
19
Office
Paris CBD
Investment and private
funds
51
Office/Retail
German
Office
North American
Office/Logistic
British
Dutch
Others (Middle
Eastern, Asia)
Western Business
District and
Regions
Property and insurance
companies
French
Paris CBD and
Western Business
District
Source:
Inflowing investments in Real Estate products break-down
Le Marche de l'Investissement (2004); AXA Reim Strategie d’Investissement 2004/05
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Did it consider another location?
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Managers at City-Investments did not initially consider any other
possible location given the French real estate brokering business
perspective…..
……however, when asked about the future, they do not exclude to relocate
should the business climate change or cost constraints become “too
suffocating” !
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Constraints in France
What are the principle constraints the company foresaw before going
to France?
 Bureaucracy
 HR costs in terms of labor flexibility
Did they discover any other?
 No efficient government help or assistance programme for junior
enterpreneurs
Which are the worst constraints?
 Bureaucracy is definitely the worst
How do these constraints differ with possible other locations?
 UK, Ireland, USA do seem to offer a more “business
friendly” environment for enterpreneurs
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Key Constraint Costs
What are the key costs of operating in France that are more or
less than operating in other locations?
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Corporate Tax, higher than other possible European
locations
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External consulting services, i.e. Legal assistance, higher
than other possible european locations
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Real estate is costly in the central Paris area
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Adaptation to France
What kinds of adaptations was/is the company making to its people
management systems?
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All the member of the team are to be proficient in French given the
high exposure to French business partners, therefore continuous
focused language trainings are provided
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Internal Communication Policies
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Compensation strategy constantly evolving in accordance with the
French constraints
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Key Benefit Numbers
What are the key benefits of being in France?
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Market potential
Central European location
Business platform testing possibility foreseeing the launch in other
European countries
Quality of life
Prestige of the location (Paris)
Excellent transports available (TGV infrastructure)
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Essential Advice
What advice do you offer to other companies in this sector concerned
about France as a location?
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Thorough Market Study via serious partners
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Building own consistent network of strategic relationships before
entering the market
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About the french environment: clear understanding of the “Rules of
the game” ....the french bureaucracy
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We Thank
Nicola Ciavarella
Managing Director
12, rue de la Montagne, 92400 - Courbevoie – Paris
Email: [email protected], Telephone:
Falk Wisinger
Managing Director
12, rue de la Montagne, 92400 - Courbevoie – Paris
Sam Samarasinghe
12, rue de la Montagne, 92400 - Courbevoie – Paris
Senior Director
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References
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Website: www.city-investments.com
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Internal reference: Mr. Nicola Ciavarella
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External reference: Paris Region/Regional Markets (1st q 2004),CBRE
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Appendix: Best in France questionnaire, www.bestinfrance.org
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Our Team
Maya Khammar
MBA 06
Gregory Skibiski
MBA 06
Piero Martini
MBA 06
Chuanfeng Lang
MBA 06