INDUSTRY: Financial Institutions
Client Profile
The client is one of the leading financial institutions that provides clearing and
settlement services for financial & commodity derivatives and securities transactions
in UK. It clears a broad range of asset classes, including securities, exchange-traded
derivatives, commodities, energy, freight, foreign exchange derivatives, interest
rate swaps, credit default swaps and euro and sterling denominated bonds and repos.
Background
Brickwork created an analytical model for the client assessing the opportunity of
maximum recoveries from the total debt. Our Analyst closely analyzed the client’s
transactional database, collection database, recoveries database, geo-demographic
database and consumer bureau database to provide the collection and recoveries analysis.
Brickwork Solution
The analysis and model involved extracting the information related to total debt
of the Company, Identifying the debt or customers profile that are likely to move
to recoveries based on their past credit history. We predicted the bad rate by decile
and the declies with the increasing risk were further classified into three categories
of recoveries: Illiquid Debt, High Commission Debt and Liquid Debt. For the illiquid
debt with low percentage of payers and low declie, immediate debt sale was recommended.
Moreover, the consumer falling in the medium range of percentage payers and true
declie were recommended placement with high-commission agencies. For the Liquid
Debt, where the probability of recovery was less, our analyst recommended a placement
with low commission agencies to retrieve the maximum debt at low commission cost.
Basically, Liquid Debt was suggested to be recovered on the best effort basis without
much scope and expenditure.
Impact: Client realized that customers with a particular age group
living in one bedroom or a two bedroom apartment are mainly in BAD collection. And
if the customers have a loan amount in a specific range, and the account age is
40 months as on date, they automatically goes into the recoveries starting from
41st month. The interpretation and the number crunching helped client to have a
focused approach towards realizing the maximum bad debts.
INDUSTRY: Business & Financial Services
Client Profile
The client is an Australia based market leading Specialist Fixed Income Firm. The
client provides capital market, fund management and advisory services to deliver
truly integrated financial solutions to its customers across Asia Pacific region.
Background
The client approached Brickwork India to offer assistance in writing credit research
notes on the fixed income products that they sell to their clients. The Client’s
focus is primarily in Australian residential mortgage backed securities (RMBS) and
bonds issued by Australian Corporations and banks. Some of the bonds were listed
on the Australian Securities Exchange (ASX) and other traded over the counter.
Brickwork India provided research assistance on these bonds and producednthe content
for publishing into specified templates. The client provided access to ABS perpetual
premium account to access the up-to-date information on the bond.
Brickwork Solution
Brickwork Analyst downloaded the Information Memorandum of the specified bond from
the ABS perpetual. Our team developed market commentaries on various RMBS specified
by the client.
Information Memorandum for each RMBS was thoroughly read to understand the overview
of the transaction, parties involved in the transaction, terms and conditions of
the notes, cash flow waterfall, prepayments rates, conditional prepayments, pool
history etc.
Furthermore, the latest information regarding RMBS pool summary, arrears history,
conditional prepayment rate, coupon rate, step-up date, step-up margin, weighted
average life, maturity date, collateral etc., were pulled out from the ABS perpetual
to present as a meaningful analysis.
The Credit notes also includes key credit considerations including RMBS ranking,
type of documentation, composition of the LTV backed by the impact, Cumulative losses
and lender mortgage insurer, details on excess spread, Uses and location of the
securities. The level of credit support, Liquidity support, call option, clean-up
offer details were also explained and provide under the research note.
Impact: The client was highly impressed with the Brickwork India
professional assistance and abilities. The notes helped the client reducing significant
research time and note preparation. Started with the pilot project of one report,
we by now already have written many reports for the Client.
INDUSTRY: Aviation
Client Profile
The client is a leading company in the Aviation and Communication Equipment Industry
in the U.S., providing design, production, communication, and aviation electronics
support for military and commercial customers worldwide. The company has a large
scale customer base varying from giant players like Air Canada and Air France to
tiny players like Sterling Airlines.
Background
The client was looking for a sound credit policy to analyze the vendors and provide
credit assessment for its customers in order to advocate a customized credit policy
for each of them. Management of debtors is a crucial area for any business and decision
of a credit policy is also very challenging.
Brickwork Solution
A very methodical approach was used to achieve the objective, keeping in mind the
uncertainties and wide variety of the customer base. Compilation and analysis of
financial statements backed by the study to understand the business and performance
of the industry as a whole were the key areas covered.
Tools used to measure the performance of the firms were:
Ratio Analysis: Calculation of all key ratios including Liquid
Ratios, Debt Equity Ratio, analyzing Working Capital and Cash Position
Comparative Analysis: Comparison of the performance with the past
and performance of the industry on key developments and future outlook: Understanding
the firm’s current and future directions.
Based on the above analyses, conclusions were drawn, about the trend set, current
performance, and future outlook of the firm and a credit policy (Conservative, Normal
or Favorable Policy as predefined by the client) was suggested on the basis of these
conclusions.
Our client was extremely glad with our comprehensive credit reports and has adopted
the credit policies suggested by us for their customers. 200 customers were analyzed
in a span of 8 months.
Impact: A well-designed credit policy helped the client in analyzing
more number of customers in a shorter span of time thereby saving critical time.
INDUSTRY: Real Estate
Client Profile
Client is a CEO of a real estate company with 20 years of experience who has also
worked in various real estate companies at top management levels in the U.S.
Background
Brickwork was approached to develop the idea of acquiring distressed condos in the
Miami market, which had suffered huge losses due to the downturn in the US housing
industry.
Renovating these condos and selling them at a profit once the market recovers was
his idea. Based on the research and development, the client also wanted a business
plan for the same.
Brickwork Solution
Brickwork analyzed the existing market & identified locations, where the client
can acquire distressed condos at a discount price. Based on certain macro-economic
parameters, it was found that some locations in the Miami market had the potential
to appreciate once the housing market starts recovering.
An analysis was made into the available sources of funds for the client in order
to carry out this business proposal. Based on this, it was suggested to the client
that he can raise an opportunity fund from high net worth investors, or investors
he had acquaintance with, through his years of experience in the industry. It was
suggested that the Condos could be rented out during the period of holding, to maintain
a constant cashflow from the acquired properties, which in turn will cover the operating
expenses of the investments.
The financial projections & valuation were worked on to highlight the financial
feasibility of the project to the investor community. A comprehensive business plan
was prepared on the lines of a private placement memorandum, in order to be presented
to the investor community. An analysis into the acquisition and disposition strategies
for the client was also looked into. The financial model also contained an evaluation
sheet which calculates the NPV and IRR for each acquisition based on factors like
acquisition price, disposition price, period of holding, etc.
Impact: The financial model helped the client in determining the
optimum acquisition price for the condos and also determines the feasibility of
acquiring a property on a particular price based on the NPV and IRR calculations.