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Venture Capital and Private Equity (MBA.FI.016)

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  • Venture Capital and Private Equity-MBA FINAL EXAM SCHEDULE MBA FINAL EXAM SCHEDULE (16/11 – 19/11/2015) SUBJECT: Venture Capital and Private Equity LECTURER: Dr. Ho Diep EXAM DATE: 18/11/2015 TIME: from 6:15 pm
    Posted 14 Oct 2015, 22:24 by Diep Ho
  • FYI: Vietnam Spearheads Frontier Market Investing Oct 1, 2014By  SONJA CHEUNGInvestors are hungry for food and beverage deals in Vietnam. Zuma PressBoasting a young population and growing middle class, Vietnam continues to be ...
    Posted 1 Oct 2014, 20:50 by Diep Ho
  • Asignment 3: Blackstone/Celanese Please go to the following link:https://cb.hbsp.harvard.edu/cbmp/access/27978972Then click on "Register Now" and fill-in your details.  Note: only one team member from ...
    Posted 22 Sep 2014, 19:40 by Diep Ho
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Recent Files

  • VC&PE final exam Oct 2012.pdf   0k - 18 Jul 2016, 20:42 by Diep Ho (v1)
  • VC&PE final exam Sep 2013.pdf   0k - 18 Jul 2016, 20:42 by Diep Ho (v1)
  • Pointers on Playing the Blackstone Celanese Roles.docx   0k - 11 Jul 2016, 04:17 by Diep Ho (v1)
Showing 3 files from page File Cabinet.
Lecturer:  Dr. Ho, Diep, PhD [email protected] (Tel. 0946 317 379, Room A1.305, Thu Duc Campus)

Teaching Assistant: Nguyen The Nam, [email protected] (Room Ạ1.305, Thu Duc Campus)

Course Aims:

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Venture Capital
The venture capital industry is core to the engine of growth in developed and, increasingly, in developing countries over the past decades. Many of the largest companies formed as new ventures in the last several decades emerged from an ecosystem in which angel investors, venture capitalists, private equity firms, entrepreneurs and university research all play a role.  

More generally, venture capital (VC), is a sub-category of private equity (PE), and represents many common characteristics. VC partnerships raise money from institutional investors and wealthy individuals to take equity stakes in relatively early stage companies. The PE market, in the parlance of most practitioners, refers to the market for buyouts of established companies by private partnerships. Between VC and PE there are partnership investment strategies that include elements of both, such as growth equity. While there are many differences, these sectors all share a framework in which a private partnership identifies investment opportunities and takes a substantial equity stake in a corporation.

The course is motivated by both the current situation and long-term increases in both the supply of and demand for PE and VC in Vietnam. More importantly, however, they face a number of difficulties in gaining access to capital due to an immature capital market, high interest rates, and undervalued property being used as collateral. PE and VC firms not only provide capital for their investee companies but also work with the management to grow and improve them by providing support in financial structuring, strategy, recruitment, and operations to maximize shareholder value. Equally important, the increase in the supply and demand for funds has occurred all over the world.

The primary objective of the course is to provide an understanding of the concepts and institutions involved in entrepreneurial finance and private equity market. Students and executives interested in other categories of private equity may find this course of interest for that reason.

Prerequisite course: 
Entrepreneurship -- MBA295A, or
Comparable work experience of students

Units of Credit:
This course is worth [3 credits]. 

Teaching times and Locations:
Lecture Time: Tues and Thurs, 6pm-9pm
Venue:  Room B101, 
              3B Lý Tự Trọng, 
              Quận 1, 
              TP.Hồ Chí Minh

Academic Integrity:

Integrity is critical to the learning process and to all that we do here at HCMIU. A student’s responsibilities include, but are not limited to:

Attendance:
Regular and punctual attendance at lectures and seminars is expected in this course. University regulations indicate that if students attend less than eighty per cent of scheduled classes they may be refused final assessment. Exemptions may only be made on medical grounds. 

While we do not penalise occasional tardiness, a pattern of repeated unexplained late arrivals and non-attendance shall negatively impact the student's class participation grade. Understandably, job search or other obligations may occasionally conflict with class.  It is each student’s responsibility to find out from his/her classmates what has been missed during the absence.

Homework:
Homework and other assignments are expected to be completed on time. Late Assignments will not be accepted unless due to documented serious illness or family emergency.

All electronic devices must be turned off prior to the start of each class meeting.

Laptops, tablets, ipad, cell phones, smartphones and other electronic devices are a disturbance to both students and the lecturers.

Calculator:
You need a calculator for this class. A scientific calculator is good enough; you do not need to buy a financial one. As a rule, you will use spreadsheets for homework assignments, and the calculator for the simple examples in class, and, most importantly, for the exams. It is a very bad idea to wait for the last week before buying a calculator.

Study Groups:
It is highly encourage that you regularly review the readings and class notes in a study group. Don’t wait until exam week to set up such a study group. By then it’s too late. You are encouraged to work on the problem sets with your study group, but you must hand in your own answers for individual tasks.

Attendance:
Regular and punctual attendance at lectures and seminars is expected in this course. University regulations indicate that if students attend less than eighty per cent of scheduled classes they may be refused final assessment. 

Assessment Details:
The final grade is computed as follows:

Class Participation  20%
Case Write-ups 20%
Group Assignment  20%
Final Exam  40%
Total 100%

Exam shall be semi-open book.  Each student, may bring in a calculator and one A4 cheat sheet.  Two sides of the sheet may be filled with anything the student wishes, but must be handwritten by him/her (no photocopying).

In addition, since I wish to emphasize practical skills, students shall complete assignments that use actual data, where possible--and to reflect how most companies conduct business, students shall form groups to handle these assignments.  Groups shall comprise four to five students – no less, no more.   In addition, all group members shall score their team mates on how well they have contributed to the assignment (see "Peer Group Participation Form.doc" in the file cabinet section).

Class participation is important and will be explicitly rewarded (20% of the total grade). Effectively, the class participation grade may change a grade near a cutoff.  While we do not penalise occasional tardiness, a pattern of repeated unexplained late arrivals and non-attendance shall negatively impact the class participation grade.  Understandably, job search or other obligations may occasionally conflict with class.  It is each student’s responsibility to find out from his/her classmates what has been missed during the absence.

Textbook: 
  1. Lerner, Hardymon, and Leamon (2005), Venture Capital and Private Equity, 3rd ed. Boston, MA: John Wiley & Sons, Inc. (main textbook: VC)
  2. Robert A. Finkel (2010), The Master of Private Equity and Venture Capital, New York, NY: McGraw Hill, Inc. (reference book: MPE)
Course outline:
  • Class 1 Fund Raising, Firm Organization and Structure
  • Class 2 The Investment Process 
  • Class 3 The Exit
  • Class 4 Venture Capital Profile and Class Participation I
  • Class 5 Class Participation II
  • Class 6 Recap and Important Terms
  • Class 7 Industrial Talk With Guest Speaker From VCBF
  • Class 8 Valuation Private Equity Settings
  • Class 9 The Term Sheet
  • Class 10 Business Game Simulation: Blackstone/Celanese
Suggested Extra Reading:

Module 1: The Private Equity Cycle – Industry Overview, Fund Organization and Structure
The first module of "Venture Capital and Private Equity" examines how private equity firms are organized and structured. The structure of private equity funds, while often arcane and complex, has a profound effect on the behavior of venture and buyout investors. Consequently, it is as important for the entrepreneur raising private equity to understand these issues as it is for a partner in a fund.
Reading suggestion:
  • “Yale University Investment office: August 2006” [VC Page 34 – 58]
  • “Note on Private Equity Partnership Agreements” [VC Pages 72 - 82], and
  • “Grove Street Advisor” [VC & PE. Pages 83 - 111]
  • “A Note on Private Equity Fund Raising” [VC Pages 112 - 118], and
  • “Gobi Partners: Raising Fund II” [VC Pages 119 - 139]
Module 2: The Private Equity Cycle – Making Investment Decisions
The second module of the course will prepare you for what many perceive as the core of the venture capital business: making investments and managing relationship between investors and the company they finance. It is not reasonable to present foolproof instructions for making good investments: investment decisions vary widely with time and place and investor. However, we can focus on the decision process for making investments, describe the need for investment strategy, and explain many of the tenets of private equity investing such as the contextual nature of investment decisions. Finally, we will investigate the interactions between private equity investors and the entrepreneurs that they finance. These interactions are at the core of what private equity investors do.
Reading suggestion:
  • “Tad O’Malley: June 2005” [VC Pages 165 - 182], and
  • “Portfolio and Partnership” [VC Pages 183 - 193]
  • “A Note on Private Equity Securities” [VC Pages 206 - 213], and
  • “Lion Capital and the Blackstone Group: The Orangina Deal” [VC Pages 259 - 278]
  • “A Note on Private Equity in Developing Countries” [VC Pages 321 - 338], and
  • “SAIF: May 2004” [VC Pages 292 - 320]

Module 3: The Private Equity Cycle – Achieving Liquidity
The third module of "Venture Capital and Private Equity" examines the process through which private equity investors achieve liquidity for their limited partner investors. Successful exits are critical to insuring attractive returns for investors and, in turn, to raising additional capital. These transactions require different skills and resources than the initial investment decision. Collaboration with other private equity players, such as other venture firms, corporate investors, mezzanine funds, and buy-out firms are key tools of the trade. Also private equity investors' concerns about exiting investments - and their behavior during the financing and exiting process itself - can sometimes lead to severe problems for entrepreneurs. We will employ analytic frameworks, case studies and class guests to investigate and illuminate these processes.
Reading suggestion:
  • “Warburg Pincus and emgs: the IPO Decision (A)” [VC Pages 343 - 362]
  • “Motilal Oswal Financial Services Ltd.: an IPO in India” [VC Pages 363 - 381]
  • “A Note on the Initial Public Offering Process” [VC Pages 382 - 388], and
  • “Between a Rock and a Hard Place: Valuation and Distribution in Private Equity” [VC Pages 389 - 415]

Module 4: The Future of Venture Capital
Our final module will consider the future of the PE industry. In the course of understanding the likely challenges that VC and buyout organizations will face over the next decade. Rather than simply looking at more cases about the same PE groups, however, we will examine organizations that at first glance seem very different from the ones we have considered on the 3 previous modules. 
Reading suggestion:
  • “Village Ventures” [VC Pages 424 - 447]
  • “3i Group plc: May 2006” [VC Pages 448 - 471]
  • “Best Practices: Decision Making Among Venture Capital Firms” [VC Pages 495 - 508], and
  • “Actis and CDC: A New Partnership” [VC Pages 472 – 494]