City Investments

Best in France

Case Study

Sept - Dec 2004

By: Ms. Khammar, Mr. Skibiski, Mr. Martini, Mr. Lang

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Executive Overview

Company Presentation Company Evolution Company Services Company Values Company Clients Why did it go to France Constraints in France Adaptation to France Key Constraint Costs Key Benefit Numbers Essential Advice

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City Investments

City Investments is a Pan-European private investment and financial advisory boutique in the fields of real estate, secondary private equity and corporate structured finance.

The company is currently staffed with 7 heads - 4 directors and 3 advisors

Nationality of the 3 co-founders: Italian, German and British

Company location: Paris

NoteDue to privacy reasons and along with its “discretion policy”, the company decided not to disclose any financial information in this case study.

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Company Evolution

2002 2003 2004

First OperationsFirst Operations

Legal ConstitutionLegal Constitution

Practice Areas ExtensionPractice Areas Extension

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Company Services

Real Estate

Private Equity

Corporate Structured Finance

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Company Services

Services:

Deal sourcing, selection and structuring

Valuation, audit and due diligence Purchase and sale negotiations Financing arrangements Transaction oversight and

facilitation Portfolio analysis and optimization Monitoring development and

repositioning programs Investment and disposal strategy

formulation and execution

Real Estate

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Company Services

Private Equity

Services:

Portfolio and fund analysis and optimization

Valuation of portfolios and underlying positions

Acquisition and divestment of limited partnership interests

Transaction coordination and marketing

Risk assessment and new product development

Evaluation of new fund offerings, covering management, strategy and structure

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Company Services

Services:

Strategic analysis and business valuation

Business acquisitions, divestments and restructuring

Management buy-outs and buy-ins Capital structure and dividend policy Capital raising Financial risk management and

hedging

Corporate Structured

Finance

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Company Clients

Main clients: Major financial institutional clients (BNL, Merrill Lynch, etc) Major private equity market operators (Sodipierre Finance, Toros

Capital, etc) Major Property Companies (Commerzleasing, Acanthe Development,

etc) What are their expectations? Counseling in originating, structuring and executing cross-border

transactions

Specific knowledge for the target market of interest

Professionalism and competence

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Company Values

“City Investment aims to build lasting relationships rather than maximize gains on transactions and believes that relationships can endure only if founded on integrity. City Investment derives satisfaction from devising effective solutions and stays with its client to see them through to their strategic and financial goals.”

How do they fit with the french values?

The company members are well acquainted with the french values, given their Grande Ecole background education and the consistent business experience gained in the country.

From the beginning “no cultural friction” has been experienced.The perfect fit is further “guaranteed” by the newly acquired managing director: Mr. Pierre Nollet.

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Company: a French presence?

The company recently welcomed Mr. Pierre Nollet (french nationality) as a new Managing Director

The introduction of a french presence in the business partner’s base was considered “crucial” in order to expand the practise areas and to re-enforce the strategic network indispensable to succeed in the french business arena

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Why is it located in France

The growing business opportunity provided by the French Real Estate market, which keeps on attracting foreign investors, was the primary key to locate the company in France

Proprietary deal flow into France through strategic relationships provided by individual co-founders

Priviledged networks of investors access

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2004: The Real Estate Market opportunity

Nationality Product Preferred location Main investor Average size

  (E mill)

French Office/RetailWestern Business

District and Regions

Property and insurance companies

15

German Office

Paris CBD and Western Business District

Open end funds and special funds

65

North American Office/LogisticRegions and Outer

SuburbsInvestment and private

funds33

British Office/LogisticParis 12/13 and

Regions

Private funds, insurance and property companies

39

Dutch RetailOuter Suburbs and

RegionsProperty companies 19

Others (Middle Eastern, Asia)

Office Paris CBDInvestment and private

funds51

Source:

Inflowing investments in Real Estate products break-down

Le Marche de l'Investissement (2004); AXA Reim Strategie d’Investissement 2004/05

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Did it consider another location?

Managers at City-Investments did not initially consider any other possible location given the French real estate brokering business perspective…..

……however, when asked about the future, they do not exclude to relocate should the business climate change or cost constraints become “too suffocating” !

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Constraints in France

What are the principle constraints the company foresaw before going to France?

Bureaucracy HR costs in terms of labor flexibility

Did they discover any other? No efficient government help or assistance programme for junior

enterpreneurs

Which are the worst constraints? Bureaucracy is definitely the worst

How do these constraints differ with possible other locations? UK, Ireland, USA do seem to offer a more “business

friendly” environment for enterpreneurs

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Key Constraint Costs

What are the key costs of operating in France that are more or less than operating in other locations?

Corporate Tax, higher than other possible European locations

External consulting services, i.e. Legal assistance, higher than other possible european locations

Real estate is costly in the central Paris area

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Adaptation to France

What kinds of adaptations was/is the company making to its people management systems?

All the member of the team are to be proficient in French given the high exposure to French business partners, therefore continuous focused language trainings are provided

Internal Communication Policies

Compensation strategy constantly evolving in accordance with the French constraints

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Key Benefit Numbers

What are the key benefits of being in France?

Market potential Central European location Business platform testing possibility foreseeing the launch in other

European countries Quality of life Prestige of the location (Paris) Excellent transports available (TGV infrastructure)

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Essential Advice

What advice do you offer to other companies in this sector concerned about France as a location?

Thorough Market Study via serious partners

Building own consistent network of strategic relationships before entering the market

About the french environment: clear understanding of the “Rules of the game” ....the french bureaucracy

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We Thank

Nicola Ciavarella Managing Director

12, rue de la Montagne, 92400 - Courbevoie – ParisEmail: nicola.ciavarella@city-investments.com, Telephone:

Falk Wisinger Managing Director 12, rue de la Montagne, 92400 - Courbevoie – Paris

Sam Samarasinghe Senior Director

12, rue de la Montagne, 92400 - Courbevoie – Paris

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References

Website: www.city-investments.com

Internal reference: Mr. Nicola Ciavarella

External reference: Paris Region/Regional Markets (1st q 2004),CBRE

Appendix: Best in France questionnaire, www.bestinfrance.org

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Our Team

Maya Khammar MBA 06

Gregory Skibiski MBA 06

Piero Martini MBA 06

Chuanfeng Lang MBA 06