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Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

Business Plan






Invertrust


Prepared by


Diego Rodriguez

CEO


Presented
to

Venture Capitalists

Georgetown University



December 16, 2009.

Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

Invertrust

Alternative Investment



Execu
tive Summary


This business plan has been developed to present
Inverstrust

to
venture capitalist and private
equity investors, a
nd to assist in raising the $12

million

in capital needed to establish the
company and

to launch its first product: a hedge fund

specialized in Colombian financial
markets.

The Company’s Origins &
G
oals

Inverstrust is a
n

investment

management
star
t
up company
, created by three experienced, well
recognized
,

and successful financial Colombian traders. This team has identified that
the

investment

management
business

has

the current opportunities

in Colombia
:

-

Not many

creative

investment opportunities

are being
offer
ed
: Nowadays, Colombian
financial institutions almost only provide typical investment opportunities such as:
b
onds,
t
ime de
posits,
s
tocks, and
m
oney
market

funds.

However, the financial field is
large

and
the
alternative investment
s

ha
ve

shown its benefits and potential in develop
ment

markets
such as the US,
the
UK
, and Brazil

among other important financial markets.

-

Alternati
ve investment industry is

in its infancy
:

Colombia only has four financial
institutions which provide alternative investment opportunities. Likewise, all of them are
focus
ed

on private equity; two
are
specialized in infrastructure
,

and the other two
are
sp
ecialized in growth business.
Furthermore
, these companies do not have
a
successful
experience to show because
they were recently

created.

Therefore, there is an ex
plored
world waiting to
be
conquer
ed
.

Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

-

Investment rates are in the historic low
:

Colombian
m
oney
market

funds give a fixed
return rate between 3.5%
and

5%. If the inflation rate
oscillates between

3%
and

4%, the
real investment rate
currently
offered is not attractive. Therefore, the investors are
looking for more creative
and
profitable investme
nt
s
, as well as in
s
tit
uti
ons
where they

can trust
.


Invertrust will take advantage of
these opportunities

by

creating an
i
nvestmen
t management
firm which requires

$2

million

of capital to be authorized
to raise public money
by
Colombian financial regulator
s. Likewise, the company
p
lan
s
to launch its first product
which will be a Colombian hedge fund. This fund will invest in Colombian financial
markets:
f
ixed income,
e
quity
,

and
c
urrency.

Because one of the major variables to grow an
investment management c
ompany is
its

performance, Invertrust is looking for $10

million

to
launch the new fund and
to start

building

a profitable track record.


The company expects to achieve
$25

million

in assets under management
at the end of the
first year
,
$100

million

at t
he end of the second year, and
$300

million

at the end of the third
year. The long term goal is
to a
chiev
e

$1

billion

under management
, and

we
project

will be

achieve
d

at the end of the fifth year.


Marketing plan

Product/ Service
.
Alternative investment

is

defined as

any other investment which is not
traditional (s
tocks,
b
onds, and cash).
Among th
e alternative

investment
s

we can find:
real
state, ETF’s,
c
urrencies, hedge funds, private equity, venture
capital,

and commodities
.
These financial products of
fer special opportunities of return as well as
moderate and high
Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

risk investments
. For that reason, the expertise, knowledge, ethics, and professionalism of
the
investment managers
are

highly
valuated

for
future

investors
. Therefore, Invertrust will
supply

this necessity
by
creating an excellent investment management team.
This team
and

the market opportunity
constitute

a
u
nique

competitive advantage

which will help
to achieve

the success as well as a good local and international reputation.

Price
.

The pri
c
ing

strategy will
be
divide
d

in two parts. First, the management fee which will
be around 2%
to

3% of the money under management. Second, we will use a success fee. We
will create a
benchmark

for any fund which we will create. T
he idea is that the funds be
at
these benchmarks
.

When

it happens, the fund will charge a success fee between 30%
and

40% from the extra profits.



Place (distribution).

The potential investment management business in Colombia can
be

analyze
d

in two parts:

-

Professional investmen
t managers
:
These kinds of companies have the license to manage
money from the p
ublic. Among the
se

institutions are:
p
ension
f
unds,
i
nsurance,
t
rust,
s
ecurity
,

and
i
nvestment management companies.

According to the
Colombian
Financial Superintendence
SFC,

which is the financial regulator in Colombia, these kind
s

of companies
have $100 billion under management
.

-

Banks and other financial institutions
:
B
ecause time deposits and saving accounts are
consider
ed

as

the first investment options for Colombians,
i
t

is important to take the
deposits in these institutions in
to

consideration of the total investme
nt management
business. Therefore, according to the SFC, these companies have $500 billion in deposits.

Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

-


The market potential is enormous and
it
is avid of n
ew investment opportunities; we strongly
believe that this is the appropriate time to develop the
alternative investment

market in
Colombia.

However, des
pite the widely market, we plan

to focus on
:
w
ealthy
i
nvestors,
p
ension
f
unds,
i
nsurance companies, an
d
other
m
oney
m
anagement
i
nstitutions
.
T
he minimum account for
invertrust will be $
250
,000.
Thus,

at the beginning
we
will use
our

own sales force,
especially because the market will be very selective.
Nevertheless
, after the second year,
when we think to
have a tremendous growth, we plan to raise joint venture contract
s

with
local brokerage
firms in order to
expand

our

sales

possibilities.

Promotion.

We will use direct communications to attract our main investors
. For instance
, we
will use promotional broc
hures,
advertis
ements

in business magazines

and we will
host

golf,
tennis and polo tournament
s

as well as develop a strong campaign in public relations to
expand the company network.



Management team

The
management
team will be divided in three parts:


1
.
The Investment management professionals
.
Diego Rodriguez

(CEO).

Has over 15 years
of
experience in
the
financial Colombian
market
s
. He

has developed proprietary trading
business
es

in different financial institutions such as
c
ommercial
b
anks,
i
nvestmen
t
b
anks and
s
ecurities firms. He has a great reputation in the currency Colombian market exchange
,

and
currently he
lead

the industry leader in terms of profitable and volume operation.

Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

Daniel Arguelles (
VP of
Trading Strategi
es
).

He

h
as over 10 y
ears

of e
xperience in currency
trading;

all of
th
e
s
e

years ha
ve

work
ed

with Diego Rodriguez in
developing successful
trading teams and trading strategies. He has an excellent reputation and track record in the
industry. Currently
, he

is the senior trader and
he
man
ages

a successful trading team who are
the leaders in the industry.


Carlos Cortez (
Co
VP of Trading Strategies)
.

He

h
as over 10 years

of experience in fixed
income, currencies
,

and equities in emerging markets, especially in South America.
Currently
,

he

work
s

for
a US hedge fund which focuses

on emerging market
s
.

2.
Operation and control members
.
Ivan Ramirez (
COF
)
.

He has over 20 years

of
experience in the field. He is a
f
ormer
controller of the biggest

m
oney management firm in
Colombia.

3.
Staff Membe
r
s
.
Ricardo
Urrutia
.

L
awyer advisor; he is a partner of one of
the
most
well
recognized lawyer
office

in Colombia.

Antonio Vargas
.
M
arketing and
C
ommunication

advisor
.

H
e is the owner of one excellent recognized marketing and communication firm in
South Am
erica
.

Alejandro Olivar
es
. Business advisor. He is a partner of one of the most
important real state companies in Colombia.

José Maria De Valenzuela
. Business advisor.
He
is a partner of an important
manufacturing

company in Colombia as well as a successfu
l
Colombian entrepreneur with a long experience in private equity deals.


Financial Summary

Because the first $10
million
will serve to launch the first produc
t, the company will have
income

since its creation. We have used a
normal scenario

instead of an
optimistic scenario

Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

in our analyses based on our experience and track record. We
think tha
t

the fund’s return

will
be in the 30%, 25%
, 20
%
, 18
%
,

and 15% for the next
five
years.
Therefore, because we
project that

the benchmark will be close to 7% and the s
uccess fee will be 30%, we will
achieve
a
n attractive

ROE

of 90% for the second year and 558%
for

the fifth year.


Miles $ M

2010

2011

2012

2013

2014

Money under

management


25,000.00


50,000.00


300,000.00


500,000.00


1,000,000.00

Management fee


500.00


1,000.00


6,000.00


10,000.00


20,000.00

Success

fee ($)


1,725.00


2,700.00


11,700.00


16,500.00


24,000.00

Total Income


2,225.00


3,700.00


17,700.00


26,500.00


44,000.00









Operating expenses







Salaries Management team

480


504.00


529.20


555.66


583.44

Others


397.00


416.85


437.69


459.58


482.56

Total Expenses


877.00


920.85



966.89


1,015.24


1,066.00









Profit before tax


1,348.00


2,779.15


16,733.11


25,484.76


42,934.00

Tax (35%)


471.80


972.70


5,856.59


8,919.67


15,026.90

Net profit


876
.20


1,806.45


10,876.52


16,565.10


27,907.10









ROE

44%

90%

544%

663%

558%

ROI

19%

17%

14%

13%

11%


Exit strategy

We believe that after the fi
fth

year the
company will be ready
for

an IPO or we can sell
it
to
anoth
er big inter
national competitor.

It is common that
these kinds of companies

are

trade
d

in
scope

of
five

to
ten

times their
earnings before tax

which means a $200 to $400 million of
company value in the year five.



Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler


Annotated Bibliography


Barreto
,
J. (2009, December
5). CFO, White Water S.A Colombia, interview.

This interview served to confirm the main characteristics which an institutional investor
looks for an investment management company.

Colombian Finance Superintendence home page. (2009). Retrieved December, 7,

2009, from
http://www.superfinanciera.gov.co

I used this webpage to find the market size and the minimum investment requirements to
launch an investment management company.

Ford, B., & Pruitt, P. (2007). B
usiness Plan Guide. New Jersey: John Wiley & sons, Inc

I used this book in order to have an executive plan reference as well as a research of how to
create an exit strategy.

Galan, J
.

(2009, December 5)
.

Commercial Vice president, Corredores Asociados S.
A,
i
nterview
.


This interview shows the point of view of an investor who wants a conservative investment
in their portfolio
.

Gaviria, F
.

(2009, December 5)
.

Vice president of Investment, Santander Pension Fund
Colombia,
i
nterview
.


Diego Rodriguez

-

Final project


BPE RWR 2009 Jennifer Uhler

This interview served
to

confirm interest for alternative investment in Colombia, as well as to
explore the view from an institutional investor related to
invest

in a hedge fund
.

McCrary, S. (2002). How to create and manage a hedge fund. Hoboken, NJ: John Wiley &
sons

I have use
d this book as a business bible. It explains very carefully what you need to launch a
hedge fund.

Mick
,
C
.

(2009, December 5)
.

Private financial advisor
,

i
nterview
.

This interview shows the point of view from a person who manage
s and advices

wealthy

inves
tors.

Solnik, B., & Mcleavy, D. (2009). Derivatives and Alternative Investments. Boston, MA:
Pearson

I used this book to understand the alternative investment business.

Valenzuela, J
.

(2009, December 5)
.

Investor,
i
nterview
.

This interview served to see th
e perspective of an individual investor
.