International Corporate Finance
- Main features multinational companies and explain why we should pay attention to international character of the company
- Key hedging techniques applicable to currency risk of international project
- How and when to use derivatives as currency risk hedging instrument
- The logic and the mechanism of raising the capital by multinational companies
- Be able to classify the risks of multinational corporation
- Be able to evaluate the currency risk exposure
- Be able to apply key asset pricing models to multinational companies
- Be able to describe the process of raising the capital by multinational companies and analyze different instruments of capital markets available for multinational companies
- Be able to take into account the international character of the business while making equity valuation
- Be able to value the potential investment projects of the multinational company
- Topic 3. Required return of multinational corporation. Cost of capital for international projects.Cost of capital: approaches applicable for multinational corporation. Integrated and segmented markets. Market segmentation factors. Instruments lessening the negative effects of segmented capital markets. Asset pricing models for multinational corporation. Contribution of Global, National & Industry Factors to the cost of equity. Emerging markets’ efficiency. Cost of equity valuation methods: classification based on transparency and market integration level. Local CAPM. Rene Stulz 1981 IAPM. Global CAPM: O'Brien, Stulz et al. (1999). GCAPM: limitations. Disadvantages of basic as- set pricing models. Godfrey – Espinosa Model (1996). DCAPM (2000) by Estrada. Cumulative method for return estimation. Cost of Debt of multinational corporation. Costs of Debt across Countries.
- Topic 4. Multinational Corporation in Global Capital Markets 1: Capital structure and Debt Capital MarketsOptimal Capital Structure for multinational corporation. Going below min WACC: theory. Tradeoff amendments for multinational corporation: Availability of capital, Diversification of cash flows, Foreign exchange risk, Expectations of international portfolio investors. Value of multinationality. When and how to go to international capital markets. Money vs. capital markets: lifecycle reasoning. Multinational corporation in international debt capital markets. Types of corporate debt financing instruments. Cost of debt depending on debt instrument. Direct vs. Intermediated debt. Bank loans and syndicated credits. Bonds with embedded options. Domestic vs. Eurobond. Financial and informational covenants. Russian companies in global debt capital markets: statistics, strategy and barriers.
- Topic 5. Multinational Corporation in Global Capital Markets 2: Equity Capital Markets.Motivations for Public Equity Offers. Public offerings: lifecycle reasoning. IPO motives: financing investments, transferring wealth from new shareholders to existing shareholders, increasing liquidity. Growth companies strategy for public offerings. Secondary shares public offering as a strategic step for stable companies. Some Evidence on Company’s post-IPO results. Designing a Strategy to Source Equity Globally. Scheme of Alternative Paths for a company in global capital markets. Foreign Equity Listing and Issuance. Alternative Instruments to Source Equity in Global Markets.
- Topic 6. International Projects: some valuation issues.Logical Value Creation Roadmap for International project. Choice of Real or Nominal cash flows for valuation purpose. Valuation in countries with hyperinflation environment. Discounting foreign cash flows converted to home currency. Discounting foreign cash flows with converted cost of capital. APV and WACC methodology for international projects: Theoretical view. Accounting for standard and non-standard risks. Currency beta. Currency risk influencing cost of equity in segmented markets. Country Risk Adjustments. Scenario analysis. Incorporating political, liquidity & familiarity risks. Country risk adjustment: Goldman model. What to do if spreads in USD are not available.
- Topic 7. Final case study discussion.Globalizing the Cost of Capital and Capital Budgeting at AES.
- Final exam (in the form of case study)
- Attendance of lectures and seminars
- Group in-class
- Home case studies
- Mid-term test
- Interim assessment (3 module)0.2 * Attendance of lectures and seminars + 0.5 * Final exam (in the form of case study) + 0.1 * Group in-class + 0.1 * Home case studies + 0.1 * Mid-term test
- Corelli, A. Analytical Corporate Finance / Angelo Corelli. – 2nd ed. – Cham, Switzerland: Springer Nature Switzerland AG, 2018. – (Springer Texts in Business and Economics). - Текст: электронный // DB Springer Books [сайт]. - URL: https://link.springer.com/book/10.1007/978-3-319-95762-3
- Corporate Finance: Theory and Practice / Pierre Vernimmen, Pascal Quiry, Maurizio Dal-locchio, Yann Le Fur, Antonio Salvi. – 5th ed. – Chichester: John Wiley & Sons Ltd, 2018. – 1010 p.
- Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann Le Fur, & Antonio Salvi. (2018). Corporate Finance : Theory and Practice. Post-Print. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.hal.journl.hal.02298273
- Multinational business finance, Eiteman D. K., Stonehill A. I., 2007
- Tse, T. C. M. (2018). Corporate Finance: The Basics. Abingdon, Oxon: Routledge. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1588504
- Wiley Finance : International Corporate Finance Jacque, Laurent L. John Wiley & Sons, Incorporated 2014 ISBN: ISBN number:9781118781869, ISBN number:9781118783696