Financing Sources of Exploration Works in the Light of Risk Related to their Activity

The article presents an overview of the determinants of exploration works and the definition of the role of junior mines in those processes. Junior mines, as special purpose vehicles, focus on the stages of exploration and documenting of the deposits, without going into theoperational stage related to the exploitation. Due to their nature, those entities finance their activities with equity capital in the formof share issues on the capital markets, addressing their proprietory securities to investors who accept a high level of risk. The largeststock exchanges on which the exploration companies obtain the required funds have been identified, and the trends that complementcapital raising, concerning the involvement of private equity funds, have been presented.

Introducing Hedge Funds

This introduction reviews recent research on hedge funds. The Handbook of Hedge Funds comprises 21 chapters from authors around the world. The chapters describe hedge fund industry governance, flows, limited partnership contracts, compensation, fund strategies, performance, activism, effects on investee firms, misconduct, misreporting, fraud, and financial regulation. Further, the chapters highlight differences with other types of intermediaries, such as private equity funds and mutual funds. The chapters feature both US and international analyses. This introductory chapter summarizes papers that appear in the handbook, provide a theoretical framework for research on hedge funds, and highlight research trends on topic.

Financialization as recombination: Bureaucracy and neo-patrimonialism on Wall Street

Finance is widely seen as a driving force of modern capitalism, a progress of organizational rationalization, and scaffolding for meritocratic elite reproduction. Using Orbis data on over 28,000 US financial firms, and sociodemographic data on 806 founders and managers in key firms, we show that neo-patrimonial elements, such as hybrid legal forms and trust relationships, are spreading within finance. Our findings show that hedge and private equity funds rely heavily on secretive hybrid forms in which “elite white men” benefit from baked in advantages. Financialization is not a modernization process but a recombination of bureaucracy and neo-patrimonial logics.

Problems of Private Equity Placements in South Korea and Suggestions for Amendable Measures

In the context of the protection of individual investors of private investment funds in South Korea, this study examines the current regulation of private placements from legal and economic perspectives. It compares Rule 506 of Regulation D in the United States with the similar regulation of South Korea. The most distinguishing feature of South Korea’s regulation is that any individual who can evidence a certain investment amount, regardless of accreditation or sophistication, is eligible to participate in private equity funds, which has recently resulted in “incomplete sales” problems in Korea. To conform to the definition of private equity, it is best to abolish the threshold criteria of minimum investment amount. Otherwise, the “sales” of private equity via commercial banks and central institutions for financial stability must at least be banned so that individual investors do not confuse private placement with public offering. In return, public advertisement can be permitted for private equity funds with only accredited investors and sophisticated investors. Public fund investment in private equities are de facto private equities; they are inappropriate for individuals, who may be confused with private funds and public funds. As such, they need to be limited.

Behavior of stock prices due to the lock-up period expiration in IPOs and follow-ons

ABSTRACT The objective of this study was to verify the effects of the lock-up expiration on the behavior of prices and volumes in IPOs and follow-ons in the Brazilian market and to identify factors that may explain the existence and magnitude of abnormal returns. Few studies were found to investigate this phenomenon in Brazil, which were limited to the analysis of IPOs without examining the effect on follow-ons and the construction of abnormal accumulated returns compared to the Ibovespa, instead of benchmarks appropriate to each stock's risk. Lock-up clauses exist to mitigate the problem of information asymmetry in public offers but expose investors to the risk of a price drop after its expiration. Understanding the magnitude of this impact is essential for investors in the stock market. Through this article's analysis, investors will be able to estimate the magnitude of the price variation around the lock-up expiration, what factors explain the returns, and whether there are indications of short selling limitations. The event study method was applied, comparing returns to the Ibovespa and an individual reference portfolio composed of similar companies. Database: 313 offers that occurred on the Brazilian stock market between 2004 and 2019. Evidence of volume increase was found around the expiry of lock-up in IPOs, but the price drop was verified only in companies with private equity funds as shareholders. In follow-ons, in which the asymmetry of information about the issuer is less pronounced, the opposite situation was verified. There are several extensions and lock-up formats worldwide, which provide different impacts on volume and price. This article contributes to the literature when analyzing this event in Brazil and extending the analysis to follow-ons. A possible interpretation for the phenomenon is the restrictions on short-selling in the Brazilian market.

Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting

The contributions of asset selection and incremental leverage to buyout investment performance are more important than typically assumed or estimated to be. Buyout funds select small firms with distinct value characteristics. Public equities with these characteristics have high risk-adjusted returns relative to common factors. Adding incremental leverage to a publicly traded stock portfolio increases both risks and mean returns in this sample. Direct investments in private equity funds earn lower mean returns than a replicating strategy designed to mimic these key economic features of their investment process with public equities and brokerage loans.

Private equity fondovi i hrvatsko iskustvo

Private equity funds are important players in the capital market, investing billions of dollars and euros in portfolio companies every year worldwide and in Europe, thus improving their business and development at almost all stages of their life cycle. Although Croatia lags far behind in this respect - both in terms of foreign private equity funds investing in Croatian companies and in terms of developing the private equity industry in Croatia - we believe it is important to analyze private equity funds and their characteristics in order to gain a full understanding of them . Therefore, this paper will try to define private equity funds and private equity and their interconnection, and explain the various forms and types of equity issued in private equity investments. Furthermore, the paper outlines the basic characteristics of private equity funds, which are crucial for understanding the way they operate, the relationship with the portfolio company and investors. Private equity funds have a specific lifespan and term, and bear significant risks (greater than those of the “infamous” hedge funds). They are meant for professional investors whose approach in portfolio companies is “hands on”. The paper also presents the most common structures of private equity funds, which differ significantly from those in Croatia, whose legislative framework unfortunately still places strong legal obstacles for the efficient and effective functioning of private equity funds. Finally, the paper presents the Croatian experience with private equity funds, with a description of the first private equity funds in Croatia and a special reference to economic cooperation funds, as a special feature of the Croatian capital market and private equity industry.