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• Article | Journal of Finance | December 2020

  Monetary Policy and Global Banking

  Falk Bräuning and Victoria Ivashina

  Global banks use their global balance sheets to respond to local monetary policy. However, sources and uses of funds are often denominated in different currencies. This leads to a foreign exchange (FX) exposure that banks need to hedge. If cross-currency flows are large, the hedging cost increases, diminishing the return on lending in foreign currency. We show that, in response to domestic monetary policy easing, global banks increase their foreign reserves in currency areas with the highest interest rate while decreasing lending in these markets. We also find an increase in FX hedging activity and its rising cost, as manifested in violations of covered interest rate parity.

  Keywords: global banks; monetary policy transmission; cross-border lending; Banks and Banking; Financial Markets; Global Range;

  Citation:

  Bräuning, Falk, and Victoria Ivashina. "Monetary Policy and Global Banking." Journal of Finance 75, no. 6 (December 2020): 3055–3095.  View Details

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• Case | HBS Case Collection | October 2020 (Revised October 2020)

  AfricInvest: A Pan-African Investment Platform

  Victoria Ivashina and Youssef Abdel Aal

  The case is set in December 2018, when Ziad Oueslati, co-managing director and co-founder of AfricInvest, a leading pan-African private equity firm headquartered in Tunisia, was reflecting on the future direction of his firm. AfricInvest started as a traditional small and mid-cap private equity fund, but over the years had expanded into multiple adjoined investment strategies. At the end of 2018, the team saw an opportunity in the venture capital (VC) space, but while some were adamant about the need to raise a VC fund, others were reluctant to add yet another strategy to AfricInvest's diverse investment strategies. The case presents a detailed insight into AfricInvest's journey from a $10 million Tunisian fund, to becoming a prominent regional player operating throughout the African continent with $1.5 billion of assets under management. Among other issues related to the firm’s growth, the case provides insights into the challenges of operating in such a wide and varied geography as the African continent. The case also offers details on their multiple investment strategies, ranging from small-cap SME focused funds, to sector-specific funds, cross-border funds, and private credit. The case explores the synergies and challenges associated with such a wide-reaching investment platform. This is described against the backdrop of the collapse of Abraaj, a leading emerging market private equity firm, in a scandal that shook the investment community in the region. The case also touches upon the role of development finance institutions (DFIs) as investors in emerging markets and the challenges of defining and measuring impact investing. The opportunity of launching a pan-African VC fund in the context of the recent collapse of Abraaj brings to the forefront several strategic questions for AfricInvest’s co-founders: Should they keep expanding into new strategies, or would it be better to roll back their existing ones to focus only on their flagship private equity funds? Were the synergies and opportunities that came from being a platform enough to offset the risks, or was their focus being spread too thin by operating numerous diverse strategies?

  Keywords: Finance; Private Equity; Venture Capital; Strategy; Governance; Financial Services Industry; Tunisia; Africa; Middle East;

  Citation:

  Ivashina, Victoria, and Youssef Abdel Aal. "AfricInvest: A Pan-African Investment Platform." Harvard Business School Case 221-037, October 2020. (Revised October 2020.)  View Details

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• Case | HBS Case Collection | September 2020

  Blackstone: Crocs Investment

  Victoria Ivashina, John D. Dionne and Terrence Shu

  This case follows Prakash Melwani (HBS MBA '86), CIO of Blackstone's Private Equity Group, and his teams’ investment in the footwear company Crocs. Instead of a traditional secondary offering, Crocs opted for a unique deal structure by taking Blackstone's cash in a private investment in public equity (PIPE) deal. During the Blackstone investment, Melwani and his team drastically reworked Crocs’ strategy. The case offers insight into the operational initiatives undertaken to revitalize the Crocs brand.

  Keywords: private investment in public equity; PIPE deal; Investment; Brands and Branding; Strategy;

  Citation:

  Ivashina, Victoria, John D. Dionne, and Terrence Shu. "Blackstone: Crocs Investment." Harvard Business School Case 221-023, September 2020.  View Details

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