Internship Report in Department of Corporate Finance

About the Company:

Elixir Securities Pakistan (previously Indosuez W.I. Carr Securities) is one of the main, independent boutique Investment Banking & Capital Markets Advisory firms in Pakistan, established on account in 1994. They are a Corporate Member of the Pakistan Stock Exchange Limited & Pakistan Mercantile Exchange Limited and duly Licensed & Regulated by means of the Securities and Exchange Commission of Pakistan and Pakistan Stock Exchange Limited. Their predominant commercial enterprise sports consist of Investment Banking Services covering Strategic Advisory masking Mergers & Acquisitions, Debt & Equity Capital Raising, Sovereign & Privatizations, and Corporate Finance & Restructurings. Their Clients encompass the Government of Pakistan, Foreign & Domestic Financial Institutions (Banks, Asset Managers, Insurance Companies, Sovereign Wealth Funds, Pension Funds), Multinational & Pakistani Blue-Chip Corporates, and HNWI’.

What is Investment Banking?

Investment Banks are Non-Banking Financial Companies (NBFC) and are regulated by Securities & Exchange Commission of Pakistan (SECP). An NBFC is a financial institution that doesn’t have banking license but does provide banking services. These institutions do not have enough rights to take up deposits from public. However, all the activities of this body are still covered under banking regulations.

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Investment Banking is a unique sector of banking related to the production of capital for other businesses and corporations. Investment banking deals in providing guidance to issuers regarding placement of stocks. Apart from that, an investment bank can undertake the following activities:

• Act as Underwriter
• Project Financing Portfolio Management - Discretionary & Non-Discretionary basis
• Eligible financier for capital markets
• Brokerage services without engaging in deposit raising activity
• Project Financing
• Issuance of guarantees and counter-guarantees.
• Advisory Services which include financial restructuring, mergers, professional analysis to investors for securities, assist in obtaining various types of finances including placement of debt and equity etc.
• Act as Underwriter Extend finance facilities
• Provide custodial/ trustee services subject to fulfillment of certain criteria.

Business Activities:

Equities:

• Elixir Securities has professional and devoted teams for institutional and retail sales, which is based in Karachi (HO), Lahore and Islamabad branches, servicing almost all major local, foreign institutional and retail investors
• In terms of client trading volumes, Elixir knobs transactions worth approximately PKR60bn (USD750mn) annually. Elixir knobs average daily trading volume of 7mn shares with an approximately market share of around 3% of the KSE daily turnover
• The company grips approximately 10% of the total foreign portfolio investment routed through the Pakistani equity market.
• FIX/DMA capability via MIXIT offers an electronic communications network and Direct Market Access to KSE and offers Elixir an edge for FII executions.
• Equity Sales & Trading team has great experience in implementing block deals by leveraging its relationship in the domestic market.
• Elixir is on the panel of big Foreign Broker Dealers besides having direct contacts with key FII's in Far East, Europe and Americas
• Elixir examines its clients risk and return objectives through its own in-house risk assessment operations.
• Online Equity Trading Terminals are offered to HNW clients throughout the country and to Pakistani expats living globally.

Corporate Finance:

Elixir Corporate Finance (CF) provides a full range of Advisory & Arrangement services along with execution capabilities.

The Corporate Finance Team has a great exposure of major sectors of Pakistan’s economy, which include Oil & Gas, Telecom, Fertilizer, Pharmaceuticals, Banking & Finance.

The Corporate Finance team strives to provide clients with customized solutions with respect to their objectives. Strong sector and product expertise provides Elixir’s Corporate finance with an unparalleled edge over it’s competitors.

Management Profile of the Company:

• Fawaz Valiaani
• Chief Executive Officer

Fawaz Valiaani is an entrepreneur and an investment banker and has above 18 years of experience in securities brokering, investment banking & private wealth management. He has previously worked in Dubai, London and Karachi covering advisory in most asset classes which include equities, fixed income, corporate finance, Islamic investments, commodities and real estate. Fawaz has a vast experience in origination, structuring & execution of deals with major investment banks, alternate asset managers, private equity funds, and handled deal flow / investments above US$ 3 billion advising Family Offices, Corporates, Private Equity Firms and HNWI clients. He holds a BBA in The George Washington University.

Experience (19 Years):

• He has previously worked at BMA Capital Management, Halkin Investments, Valliani Capital and Fidelity Investments.
• Muhammad Moazzam Ali
• Head - Corporate Finance & Advisory

A self-motivated & accomplished professional with a great experience in Investment Banking and Corporate Finance including M&A, ECM, DCM, Restructuring and Valuations. He also has a vast experience of Deal Origination, Structuring and Execution. While at the Privatization Commission (Ministry of Finance / GoP) he broadly worked with global bulge bracket Investment Banks for almost 6 Years and successfully initiated, managed & closed transactions with total combined value of US $ 4.5 billion. He holds a M.Sc. from University of York, MBA from Lahore School of Economics, B.Sc. from Government of College Lahore

Experience (14 Years):

• He previously worked at Privatisation Commission of Pakistan and British Power International also.

Organizational Structure:

Departments in which I worked:

• Department: Corporate Finance
• Supervisor’s Name: Mr. Hamad Aslam
• Designation: Director Investment Banking.
• Duration: 6 weeks (1 Oct 2019-15 Nov 2019)

The function of Department:

Corporate Finance

Corporate Finance, being the prime focus of Elixir Securities, their main functions are to provide an extensive range of services, which include underwriting services for agencies that issue stock on the primary marketplace, dealer-provider services for both buyers and sellers of stock on the number one and secondary markets, merger and acquisitions offerings, help with corporate reorganization and financial disaster procedures, widespread consulting offerings for organizations large enough to have enough money them, and different such services related to elevating or moving capital.

Services of the Company:

1. IPO’s (Initial Public Offerings): The firm advises what type of security is to be issued (common or preferred), the most suitable offering price and the proper time to bring it into the market.
2. Mergers & Acquisition: The firm develops an acquisition strategy, set up a M&A search criteria, further searches for target companies, starts the acquisition planning, performs valuation, guides the client in negotiation and signing the deal, finalizes the sale and purchase contracts and finalizes the financing strategy.
3. Project Finance: The firm mitigates the Project Risk, starting with the pre bidding stage in favor of the client leading to examining the project agreements, analyzing the revenue hence finalizing the financial model.
4. Due Diligence: Elixir Securities undertakes an extensive process undertaken by the firm in order to thoroughly and completely assesses the target company's business, assets, capabilities, and financial performance.
5. Secondary Public Offering: Elixir Securities provides help in the secondary offering of the sale of new or closely held shares by an organization that has already made an initial public offering (IPO).
6. Privatization Advisory: Privatization advisory is basically a service in which Elixir Securities does valuation of a government owned entity and attracts local and foreign customers to invest in.
7. Debt Advisory: Debt advisory is basically a service in which Elixir Securities provides debt restructuring as well as other debt related tasks of its clients.

Work Done

Corporate Finance Department:

The internship period in Corporate Finance department was for 6 weeks where I was given multiple tasks; I was allowed to view the whole process of merger and acquisition from its documentation to its compliance. During the internship period the firm was conducting evaluation of a government owned entity, which planned to go for privatization, NPPMCL (National Power Parks Management Company Limited) for which they assigned me to conduct a research on Pakistan country profile and the Power Sector of Pakistan that was included in the information memorandum of the respected firm. In order to achieve the given task, I thoroughly researched on the demand and supply of the power sector. Furthermore I analyzed the different players within the same sector and presented an overview on it to the respected CFO. The key element of this task was to examine and assess the regulations followed by the Power Sector. Moreover, I worked under the supervision of the finance manager to inspect the guaranteed returns of the previous decade of NPPMCL.

Also, I studied, scrutinized and added the interest rates, law and order, inflation rate and all other macro economic indicator in the Information Memorandum, which are directly linked with the company’s performance.

Theories learned in academics and their application

Department: Corporate Finance

• Treasury and Fund Management:

Basically I got the opportunity to learn how stocks are traded within the exchange market. I got to know about the big market dealers and how there point of view can change the entire sentiments in the market. The company had also performed stock evaluations and my manager guided me as to how each and every macro economic as well as micro economic indicator affects the stock market. Hence, studying Treasury and Fund Management gave me the opportunity to look towards the practical experience how treasury stocks as well as other market securities are valued.

I also got to know about the internal details of few companies that Elixir Securities is managing but due to confidential reasons the management has restricted me to further provide any data.

• Introduction to Macro/Micro Economics:

While conducting the research of NPPMCL, I got the opportunity to go towards a thorough research related to Interest Rates, Inflation Rate, GDP and other various indicators. I had to conduct an analysis how these indicators would affect the valuation of NPPMCL which would be going for privatization.

• Analysis of Financial Statements:

While conducting a thorough analysis on the financial statements of NPPMCL, I had to review the financial statements of the past decade and give an opinion over it as to what the overall performance has been of the company.

• Pakistan Economic Policy:

While preparing Information Memorandum the concept learnt was an essential as when writing the analysis and referencing it with historical events that took place gives an extra edge to the Information Memorandum.

New theories / Concepts learned

MASS DPGP:

I recently worked on this software in which an expense invoice is created. Moreover, budgeting which includes cash flows valuation was also learnt. This software also helped in the budget summary.

Application of Statutory Liquidity Ratio:

While reviewing the recent evaluation of one of the banks that Elixir just did valuation on, I got to know that SLR is the measure of cash that is to put resources into certain predetermined protections transcendently focal government and state government protections. By and by this rate is of the level of the all out bank stores accessible to the extent the specific bank is concerned. The SLR, the cash goes into speculation transcendently in the focal government protections as referenced before which implies the banks acquire some measure of enthusiasm on that venture as against CRR where it gains zero.

Excel Learning:

I wasn’t familiar how companies manage their accounts and clients on excel so I learnt that. However, due to confidential reasons I can’t mention as to how they managed all the other soft wares.

Recommendations:

If one really wants to work in the Advisory/Brokerage sector one should work at Elixir Securities as they give you so much knowledge and train you to such an extent that one can be an expert in Capital Markets and Investment Banking. The company opens the mindset of a Management Trainee specially a fresh graduate as he can apply all the concepts he has studied throughout his academic career. On the other hand, there are not much of negative things to recommend on but I feel that everyone should be aware of there job description because at times it leads to burden the employees as well as the fellow employees. So I would recommend the employee to focus on the objectives of the particular job description and make it clear as you start with the job in order to avoid work conflicts. Moreover, one gets to learn about the practicality of the Corporate Sector and how it actually works in Pakistan. Lastly, I also got the opportunity to learn a lot as the seniors made me extremely comfortable and made the environment open for suggestions/opinions.

• CEO
• Corporate Secetary and CFO
• Corporate Finance
• Accounts and Finance
• Admin and HR
• IT