IME Corporate Treasury Solutions
Board-approved Investment Mandates for Corporates
IME Corporate Treasury Solutions collaborates with corporates towards creating a board approved investment plan that provides an optimal balance of risk, returns and liquidity.
The Problems we help Corporate Treasuries solve
More often than not, we have noticed the following common fundamental investment errors while investing corporate funds. Here are some examples and also a glimpse into what we would do differently:
Overtly conservative asset allocation
An over-reliance on ultra-low risk debt funds (especially liquid).
Optimal Asset Allocation
There is an ability to increase yields without a substantial increase in risk (via low-duration or short-duration debt funds, conservative hybrid funds or even the use of equity for longer-term goals for unlisted companies).
Sub-optimal Goal-based allocation
Every company has different goals and needs – contingency fund, an acquisition fund, a monthly recurring expense fund, funds for specific projects etc. However often, investments are made at an overall corporate treasury level, as compared to investments against specific goals.
Investments linked to Goals
Keeping in mind the liquidity requirements of specific goals, we would identify investments and allocate them against each goal. This allows for substantial efficiencies in identifying the optimal investment for each goal.
Over-diversification
Large treasuries often have too many debt funds in their portfolio, with the misconception that a larger number of funds helps reduce risk.
Optimal Diversification
In reality, it is better to carefully select the best high-quality low-risk debt funds and have a concentrated exposure, as compared to increasing the number of funds that forces you to include lower-quality funds in the portfolio.
Excess liquidity held in current accounts
Typically to keep money available for monthly overheads (rent, salaries etc).
Low-Duration funds for liquidity management
Idle funds can be used to earn a return via low-duration funds with automated transfers to your bank account just prior to expense due-dates.
Bank funding lines against Bank FDs
These are investments that a company is unlikely to redeem (to keep the funding lines open), yet pays taxes on these every year.
Substantial reduction in annual taxes
You can substantially reduce taxes on such investments, by using low-risk debt-type funds for these funding lines instead.
IME Corporate Treasury Services
Our corporate treasury solutions can help boost your investment yields, with virtually no incremental risk, while ensuring that all investments are being managed via a board-approved investment mandate that gives clear visibility of the investment book to all key stakeholders. Our services include:
Identify your core financial goals and timelines (e.g. monthly recurring expenses, M&A warchests, contingency funds, specific project funding).
Help identify the most suitable investment option for each goal, in order to get the optimal balance between risk, return and liquidity requirements.
A board-approvable investment Mandate that details out risk-appetite (MTM volatility, capital risk, liquidity management & other such criteria), approved investment options and core goals to drive future investments.
The needs of your company will evolve regularly and a dedicated consultant will work on all of the above keeping track of your needs. Also, you will have real time monitoring and advice on portfolio changes by our investment professionals.
Top management / board reporting on compliance, suitability and progress on plans.
Our Engagement Process
1) Initial Consultation
We are 100% sure about the value we can deliver so we offer a free consultation where we assess your organisation goals, risk appetite and ability (including capital risk, reputation risk). At this step, we also offer an existing analysis of your existing portfolio and its suitability in terms of risks, returns and volatility.
This allows us to invest considerable time & effort on a no-fee, no-commitment basis. Once the consultation is completed, we can then evaluate if there are any specific areas where we can engage with you, to help add value to your portfolio on an on-going basis.
2) Investment Plan
After this, we provide a detailed investment plan that includes documenting goals, defining white listed investment options, level of risk at a company and loan level, and actions that can be taken to improve risk return trade off on existing investments.
3) Management / Board Approval
We present the investment plan for consensus across the key stake-holders for specific approval. A clearly defined path for investment decisions makes the process more strategic and reduces the chance of conflict or errors.
4) Flexible Engagement Models
Based on the corporates requirements, we have the ability to operate across different engagement models, including as a fully-outsourced corporate treasury, a distributor or an advisor.
