Tag: Warburg Pincus

The first morning meeting on May 15 was at Warburg Pincus. Warburg Pincus is one of the top quartile Private Equity (PE) firms, whose value added is mainly from the growth of companies in which it invests. Firstly, he introduced the fundamentals of private equity. Basically, there are three stages of PE firms, which are venture capital, growth/development, and late stage. Warburg Pincus mainly invests in the growth stage. The return of PE is always from two factors—high leverage and fees. Additionally, as the industry becomes mature, the market is more and more specialized. By working for the whole portfolio’s good rather than the sector’s own benefit, Warburg Pincus manages to offset the disadvantage of specialization.

The second speaker was from Lepercq De Neuflize & Co. He started the presentation with a general introduction of the financial market and a quick survey about potential job positions among students. As finding a job is the very first thing after graduation, he quickly drew our attention. He then introduced two kinds of people: ones who are smart, and ones who have relationships. Focusing on these two kinds of people, he proceeded with lessons that are important all long a career path, and challenges that these people may face in the future. Also, he answered questions concerning career paths, and pointed out possible ways to get the dream job. Corporate treasury, though few of us considered it as a target job during the survey, became a new choice for us after the presentation. The speaker emphasized the importance of getting to know the industry sector and corporate treasury can provide experience and insights if you cannot find a better way.

The last speaker was Professor Steve Wood from Seton Hall University. He introduced public finance investment banking to us. He began with Simon Sinek’s simple but powerful model for inspirational leadership — starting with a golden circle and the question “Why?,” Steve encouraged us to find the root of a problem and think deeply. Firstly, we learned about the four borders of business, which are national laws, ethical moral standards, international law, and business best practices. Then we compared different attitudes about social contracts through the movie The Godfather. When it comes to national power and corporate power, we concluded that today’s global companies are super citizens by analyzing HNA Group.

Next, Steve shared a typical case with us: the City of Flint, Michigan’s Water Crisis. In April 2014, Flint decided to change its water source from Detroit to the Flint River to decrease government financial expense. However, the water contamination of the Flint River caused serious health issues for Flint residents. Officials failed to apply corrosion inhibitors to the water. As a result, there was a series of problems that culminated with lead contamination, creating a serious public health danger.

Finally, we discussed who was to blame in this event and discussed the many lessons we learned from this case. Actually, the root of this problem is that the structure of city-state-federal can cause overlapping and disjointed jurisdictions. The implementation problem made Flint residents have to suffer the pain of diseases caused by polluted water until recently, which reminded us of the great importance of public finance management.

Guest Bloggers: Siwei Chen, Mohan Hong, Chenyi Xu, Mengdi Zhang (GMF 2017)

This is a series of blogs chronicling the experiences of 42 Global Master of Finance (GMF) dual degree students during their two week immersion course in New York and Washington, DC. Each blog will be written by a small subset of students during their experience.

Our Global Masters of Finance class concluded our trip to New York on a beautiful day.  Before touring Wall Street, we had two speakers from the Private Equity (PE) sector and one from high-frequency trading. Their knowledge and experience impressed us very much and triggered our further interests in the industry and real business world.

Saw Mill Capital

First, Scott Budoff of Saw Mill Capital gave us a lecture about how different types of PE funds operate and the strategies they employ. To differentiate Saw Mill Capital from other PE funds, they focus on the lower-middle market, which means the business has $50 million to $250 million revenue.

Saw Mill also focuses resources on adding value to the company. Budoff believes this is much more important than the sourcing and transitioning of the deal. Budoff also talked about how to motivate people with a base salary and a transparent bonus system.

After the presentation, Mr. Budoff was kind enough to answer a specific question about how to motivate employees in a non-profit organization. He believed that they should screen out employees that work only for money and noted that the motivation should come from their satisfaction of doing what they really wanted to do. In the meantime, organizations should give an additional 10% bonus if the employees have really done a great job. Five minutes spent with Mr. Budoff helped solve a complex problem. It’s a wonderful experience with professionals from different industry backgrounds.

Warburg PincusThe next presentation came from Jim Wilson and Dr. Ruediger Stuecke from Warburg Pincus. Mr. Wilson not only gave us insights of Private Equity from a more comprehensive perspective, in terms of strategy, geographic and industrial focus, but also shared how Warburg Pincus operates on a global basis for sourcing deals, diversification, and risk management.

Mr. Wilson also offered advice on how young Masters of Finance graduates can differentiate themselves to get into the PE industry and stand out.

We also learned about Warburg Pincus’ portfolio composition and its identity as a growth-oriented investor, as well as how it generates value for investors. Lastly, he shared with us how Warburg Pincus formulates investment theses.

Goldman Sachs Logo

In the afternoon, we were honored to hear from Washington University alumnus, Mark F. Dehnert, BSSSE ’89, MBA ’89, who serves as  Partner and Managing Director in Goldman Sachs Execution & Clearing, L.P. He joined the Hull Group, now part of Goldman Sachs, as a Financial Engineer in 1992.

Mark dehnert DAA

Mark F. Dehnert, BSSSE ’89, MBA ’89 was honored as an Olin Distinguished Alumnus in 2015

Mr. Dehnert talked about the relationship between hardware and algorithm. Speed-oriented strategy would not last long; on the contrary, algorithms have the greatest influences on value creation. Obviously it’s better to take advantage of both in high frequency trading.

With respect to the phenomenon that issuing volume is increasing much faster than trading volume in China, Mr. Dehnert offered his comments that the Chinese secondary market is still illiquid, as companies could suspend themselves when the market is not doing so well.

At the end of the day, in order to give us an institutional taste of finance and America’s history of financial institutions, we were led on a walking tour of Wall Street to learn more about the iconic buildings. We were fascinated by the history as well as the architecture.

Day 5 - Wall Street Tour

Guest Bloggers: Siyuan Ma, Anqi Guo, Qinyu Pan, Jingbo Yang (GMF 2016)

This is a series of blogs chronicling the experiences of 41 Global Master of Finance (GMF) dual degree students during their two week immersion course in New York and Washington, DC. Each blog will be written by a small subset of students during their experience.