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: [email protected], 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