Tag Archives: International Finance

Shopping Cart Melee

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Time: Saturday early afternoon at Wegman’s supermarket in Bridgewater New Jersey:

The Scene: Moms with tots scrunched up in carts surrounded and gradually disappearing  under bags of puppy litter and condiments and plastic sacs of Halloween gooey bars; matrons in motorized go mobiles charging through isles as if they were driving Formula 1 race cars at Le Mons in pursuit of the last case of green olives; dad’s wandering around scrutinizing shopping lists and inquiring of clerks “what is a Rutabaga and where is it?”

Kind of like the world economy right now. Confusion. Waiting to check out (vote in the Untied States). See what the grocery bill will be (the fiscal cliff for ordinary citizens).

Stuck in the mud

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We are working on a current project in Central Asia which proves that finance is not always the ultimate driver of a deal.

This project involves a mine in the middle of this particular country. Once we had gotten the specs of the product (being finance guys) we naturally started crunching return calculations.

Payback, IRR, Low, base, high scenarios. Running different debt equity ratios. You know the drill.

Then we turned to how do we get the commodity from the mine to a buyer?

OK, no problem. We send the stuff by rail.

“But” one of us asked “can we get the right type of railroad cars?”

Answer? Hopper cars. Always available?

Sometimes. During times of peak demand even leased cars seem to disappear when local companies need them.

Solution: Well let’s partner up with a local company. High five. Problem solved.

More number crunching ensues. Overlay world economic scenarios on top of project numbers. Still works. Wow look at those IRRs!

Now we are really enthusiastic.

Back to transportation. Railroad. Railroad cars. Local partner protects our interests. Product arrives at port. All problems solved…not quite.

What we had failed to realize is that the commodity we were loading at the port needed a deep harbor. A really deep harbor.This particular harbor was deep in only one respect…it had mud. Lots of it…and close to the surface of the water. In other words it was too shallow for our project.

My lesson learned…in a contest between Excel and mud…bet on the mud. Now we have brought in logistic partners. We will see if we can get a big ship (technical term) to be fed by shallow draft tenders from the shore and if we can get our project unstuck. Stay tuned.

Link

I had some email response to my post on Bahrain which focused on a business delegation to NYC but clearly also had to address some of the social issues in that country.

For a discussion of one author’s take on the effects of social media from a political perspective check out:

The Political Power of Social Media by Clay Shirky in the January / February 2011 issue of Foreign Affairs Magazine. His position is that the US should support Internet freedom and that we should not always expect immediate changes from social media in specific countries – it’s a process that helps build up a civil society and will lead to longer term gradual (months/years) changes. http://www.foreignaffairs.com/

I think that it all depends on the country and its social and historical heritage. As business people, bankers and lawyers we can often best help the average citizen through promoting the rule of law and by employing fair trade and investment practices that encourage local training and employment.Social media plays a role in this – but not the primary role. I view it as more of a potential catalyst for change as a reflection of the underlying day-to-day realities within a country. What do you think?

Met with Bahrain business delegation in NYC

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I recently attended a sponsored lunch in New York City with a government and business delegation from Bahrain. Since I was there quite early I spent about 20 minutes with Mohammed Bin Essa Al-Khalifa, the Chief Executive of Bahrain’s Economic Development Board. He is a graduate of American University and is a member of the ruling family. Given the recent issues in his country he was quite candid with me and then later in a public presentation to a small audience of about 40 people that the Government was taken by surprise by the impact of social media. Events as they happened were broadcast around the world and the Government appeared to have been wrong-footed and uncertain in its response. Nevertheless, it was clear that Sheik Mohammed was in earnest in his commitment to a continuing democratization of his country. He was also firmly committed to the United States as an ally.

The purpose of the lunch was to promote Bahrain as a place to do business and to create business. Dr. Esam Abdulla Fakhro, the Chairman of the Bahrain Chamber of Commerce & Industry pointed out that there were no taxes in Bahrain and that there were significant opportunities to joint venture with local entrepreneurs and family groups. One of these groups Al Zayani commercial Services S.P.C. was represented by Ms. Afnan Al-Zayani who sat at my table. Along with Ms. Vivian Jamal, Director of Business Development from the Bahrain Economic Development Board, we learned that women play a prominent role in the Government and business. I mentioned an angel investment group called Golden Seeds which is active in the United States in investing in women owned and led businesses and promised to connect Ms. Al-Zayani and Ms. Jamal to them.

One member of the audience Shihab Kuran, Ph.D and President and CEO of Petra Solar who is based in New Jersey has already been engaging with the Government in Bahrain and thought the process was advancing smoothly. Small and medium sized local business was represented by Nancy Ploeger, President of the Manhattan Chamber of Commerce. Ms. Ploeger indicated that a portion of her members were interested in international business but only a small percentage of them were taking advantage of the opportunities for doing significant business overseas. On an entirely different level I sat next to Mohamed Rasheed Almaraj, who is originally from Bahrain and now is an investment banker at Perella Weinberg Partners, the boutique investment bank. They are looking for large merger and acquisition transactions or financing opportunities.

When I worked in Bahrain in connection with providing financial consulting services to the Bahrain Financial Harbor and for projects involving a Bahrain real estate development company, I always felt that my colleagues were hospitable and eager to do business. My feelings were only reinforced by all the people I met at this lunch from Bahrain.