Finance

This time Is different We don't often say that about the Fed, but after yesterday's FOMC meeting, we think it may actually be true. In fact, we believe yesterday's meeting ushered in a new era of monetary policy in the United States.    For the better part of two decades, monetary policy has followed a familiar playbook: extensive forward guidance, frequent communication, data dependence and the  Federal Funds rate as the primary policy tool. While leadership has changed, the broader framework has remained remarkably consistent.   What we heard yesterday suggests the possibility of a meaningful evolution.   We believe the Fed may be moving toward a framework that places less emphasis on signaling every move in advance and more emphasis on assessing where inflation, employment and broader economic conditions are heading. In a world of real-time data and increasingly sophisticated analytics, that could prove to be a healthier and more effective approach.   We also continue to hear indications that the policy toolkit could broaden beyond the overnight policy rate, with greater consideration of balance sheet policy, liquidity conditions, money supply dynamics and longer-term interest rates.   Importantly, change does not automatically mean more volatility. A broader set of tools and a more forward-looking approach could ultimately increase confidence in policy outcomes rather than diminish it.   For investors, the near-term message remains straightforward: inflation is still above target and remains the Fed's primary focus. While rate hikes are far from certain, they remain a possibility that markets need to respect.   That's one reason we continue to favor income-oriented fixed income opportunities over pure interest-rate expressions. And when markets overreact to uncertainty around policy change, we think there may be opportunities to sell volatility rather than buy it.   This time may indeed be different, and it will be fascinating to watch how this evolution in monetary policy unfolds. The real question is whether less signaling creates more uncertainty, or ultimately more confidence in the Fed's ability to achieve its objectives.

The latest reporting from the Financial Times highlights a point that energy analysts have been making for years: geopolitical shocks consistently strengthen the case for renewables, electrification and storage. Microsoft’s global vice-president for energy notes that oil and gas price spikes linked to the Middle East conflict reinforce the value of wind, solar and batteries in providing price stability. Once installed, renewables offer predictable cost profiles and reduce exposure to volatile global fuel markets. We saw this dynamic after Russia’s invasion of Ukraine. Europe accelerated solar deployment, heat pump uptake increased in several countries, and governments revisited questions of energy security through the lens of diversification and electrification. The underlying issue remains unchanged. Fossil fuels must continuously flow through complex global supply chains. When those flows are disrupted, prices spike and economies are exposed. Renewables, by contrast, are capital intensive upfront but deliver long term domestic supply and insulation from commodity shocks. There are short term risks. Inflation, higher interest rates and supply chain constraints can slow clean energy investment. Some governments may also respond by doubling down on gas infrastructure. The policy challenge is to avoid locking in further structural vulnerability. Energy security and climate policy are not competing objectives. In a world of recurrent geopolitical instability, they are increasingly aligned.

It might not feel like it, but Britain is not unique in facing difficult budget choices. France and Germany have also seen governments destabilised or fall over attempts to pass budgets. Low growth, ageing populations and rising demands on the welfare state are putting pressure on public finances right across the continent. What is striking, however, is how some of the countries that were once held up as cautionary tales during the eurozone crisis (Portugal, Italy, Ireland, Greece and Spain) have responded. They undertook painful reforms: raising retirement ages, restructuring their welfare systems, making labour markets more flexible and, in some cases, linking pensions to life expectancy. As a result, they are now seeing stronger growth and lower borrowing costs than many of their northern neighbours. By contrast, there has been less urgency in the UK this past year. We are already on course to spend far more on benefits and debt interest in the next decade, even before additional pressures on the health and welfare systems are factored in. Simply opting for higher spending without confronting the underlying structure of the state is not a sustainable strategy. The lesson from Europe is not that reform is easy or popular. It rarely is. But it is better to confront these choices on your own terms than to wait for markets or external shocks to force them upon you. That is the debate we need to have in Britain: how to protect the most vulnerable while reshaping the welfare state and public spending so that our economy can grow and our finances remain credible. Read more in my column for today's Sunday Times here: https://lnkd.in/eTuWcNBK

It’s one of those rare instances when AMUL’s top man (Jayen Mehta) has got me a little worried about his plans 🙏🙏 In the last few days, Sir has expressed optimism about what Donald Trump’s reciprocal tariffs mean for Indian dairy exports. He has made a case that: - Nearly 50% of the US dairy exports are to places in India's vicinity, including West Asia, North Africa, China, Southeast Asia, Sub Saharan Africa, Japan, and South Korea - Biggest of them, China has imposed 34% retaliatory tariffs on dairy imports from the US and many more countries are expected to follow These markets will need alternate suppliers, for which AMUL is ready and roaring, as per Jayen Sir. .. All of this SOUNDS great. After all, India is the world’s largest milk producer at 230mn tonnes in 2024 (NDDB). But this ‘win’ for dairy farmers spells disaster for crores of Indian households already crushed by skyrocketing milk prices. Here’s the ugly truth: - India’s milk production growth is slowing-down. It crashed to a measly 1% in 2023 from a 5-6% annual average pre-2022 (Department of Animal Husbandry). And 2024 is widely reported to have remained a measly growth year - Meanwhile, costs are spiraling. Fodder prices jumped 20% since 2022, and as per NABARD’s official stats, lumpy skin disease killed ~97k cattle in 2022 alone, slashing yields Result? Procurement prices for dairies like Amul have (as per news reports) almost doubled from Rs 18/litre pre-Covid to Rs 36/litre in 2023, forcing retail milk prices up 15-18% - from Rs 50 to Rs 70/litre in just about 4yrs 🙏🙏 .. With that context, imagine boosting exports. Pushing more exports - say, to China or Southeast Asia - will shrink our already strained and slow-growing supply while demand continues to be gangbusters in domestic market. - More exports mean even less milk at home, driving prices higher. With demand projected at 274 million tonnes by 2032 (Fortune Business Insights), we need a 5mn tonne annual increase—double the current pace. We’re nowhere close! - Yes, exports could bring in millions of dollars annually, boosting dairy farmers and giants like AMUL. But, crores of households, already paying much higher sums for milk, paneer, curd, and ghee, will suffer Thus, as good as it sounds, India’s dairy isn’t ready to ‘feed the world’ when our own people are struggling. Unless production growth increases, this export dream is a nightmare for consumers. .. Check out my WhatsApp communities: 1> With 28k+ members - Biz News+ : https://lnkd.in/gUKkNXPS 2> With 3k+ members - PrimeStuff : https://lnkd.in/g6tc9VNq Also check out my newsletters with ~9k others here: https://linktr.ee/jmundhra Best, Jayant

Founders are turning down millions in venture capital. Their reason? "I don't need the money. We're already profitable." 10 years ago, unthinkable. Today, common. The Information wrote an insightful piece on "Seed-strapping"—raise once, focus on profitability: → $3.7M revenue per employee (10X industry standard) → 80% lower development costs → 90% less capital to reach profitability The uncomfortable truth for VCs: → Companies need just one funding round → SAFEs never convert → Founders keep 70-80% ownership → The traditional model breaks For investors, survival requires reinvention. New Fund Economics: → Smaller funds with more concentrated bets → Lower management fees, higher carry → Faster distribution timelines → Many smaller wins vs. few unicorn exits New Deal Structures: → Revenue-based financing with capped returns → Dividend rights if companies don't raise again → Profit-sharing without requiring additional rounds New Value Proposition: → Capital efficiency expertise over growth-at-all-costs → Customer connections & distribution support → Operational support over financial engineering → Alternative liquidity paths beyond traditional exits The era of "We'll figure out profitability later" is over. What comes next? Imagine a VC landscape dominated by smaller, specialized firms helping founders build profitable businesses from day one. In this new world, the winners won't have the biggest funds—they'll understand AI has fundamentally changed capital efficiency. For founders: Why dilute when you can profit after one round? For investors: How do you add value when capital isn't the constraint? The answer determines who thrives—and who vanishes in 24 months.

It’s all about Capital Solutions: Many private credit managers manage an “Opportunistic Credit” investment program. Traditionally, these opportunistic credit investors known as ‘distressed’ investors targeted the fulcrum security within the capital structure of a highly leveraged/distressed company, whereby the holders of this debt class took control of the equity once the company exited Chapter 11. Today, most Opportunistic Credit investors have updated their playbook to avoid distressed companies that must go through Chapter 11. BK is expensive, costing ~10% of the total enterprise value of a company, which wipes out the pre-petition equity and eats into the recovery value of creditors. In BK, lawyers and bankers win, but the fees they earn comes directly out of recovery for the debt. Investment Managers recognize that companies typically benefit if they can continue to operate outside of Chapter 11. So, today it’s all about Capital Solutions. ‘Higher for Longer’ has proved punishing for many over-levered companies as interest expense eats up available cash flow, leaving little/no distribution for shareholders. Liability management exercises such as debt refinancing, discounted debt buybacks, and tender offers, help a company improve its debt profile without the need to convert debt into equity or fundamentally change the company's ownership structure. Private Equity sponsors have been quick to adopt to this market practice and prefer a pro-active engagement with creditors to strengthen the capital structure and cash flow of a company thru capital solutions. This allows the PE sponsor to retain their full equity position rather than being wiped out or diluted, which occurs in traditional restructurings where new equity is issued to creditors. Capital Solutions are always a negotiation, and often the PE sponsor is willing to invest additional equity to support the company since it is only fair that both the equity sponsor and creditors do their part to strengthen the capital structure, to enable the company to thrive. Transactional volume from BK to Capital Solutions shown below in this chart highlights this broader trend in corporate finance that is highly beneficial for investors, creditors, and stakeholders alike. Credit investors who navigate the complex landscape of corporate restructuring in an effort to create a win-win for the equity, company and creditors are the true value creators.

Pick a company Read last 3 annual reports Read last 12 earnings call transcripts Find relevant information on the company Calculate key ratios for it Repeat for another company in the same sector See your understanding of the sector soar in a few weeks. Not sure how or where to start? 4 resources to help you 1) What to read in an earnings transcript  (using Eicher Motors as example) https://lnkd.in/gqaYwkNM 2) What to read in an annual report  (using Titan as example) https://lnkd.in/dtt674gu 3) Quick Financial Analysis using Screener  (using Ultratech Cement as example) https://lnkd.in/dFM9ypEa 4) Ratio Analysis: A Step by Step Guide in Excel  (Using SAIL as an example) https://lnkd.in/dd9HwiqC Subscribe to our channel for more such videos. https://lnkd.in/dR4nvGxd ------- Peeyush Chitlangia, CFA I help you build a career in Valuation and Investment Banking

ESG Regulation Map and Timeline 🌎 ERM’s latest Global Regulations Radar provides an in-depth update on evolving ESG & EHS regulations worldwide, highlighting the increasing complexity of compliance requirements. Regulatory frameworks continue to expand, introducing stricter disclosure obligations and higher expectations for corporate transparency. Businesses operating across multiple jurisdictions must navigate these changes while ensuring alignment with global sustainability goals. The report underscores how new regulations are reshaping corporate accountability, particularly in areas such as climate risk reporting, supply chain due diligence, and environmental impact assessments. Regulatory bodies are introducing more standardized methodologies for sustainability disclosures, making data integrity and verifiability central to compliance. As expectations grow, companies must adopt more structured approaches to managing ESG-related risks and responsibilities. For organizations with global operations, these regulatory shifts extend beyond national boundaries. Requirements related to emissions reporting, sustainability claims, and biodiversity protection are influencing investment decisions, supply chain strategies, and competitive positioning. The increasing alignment of disclosure frameworks across regions signals a move toward greater consistency, but also demands careful adaptation to varying compliance timelines. ERM’s analysis highlights that many regulations are set to take effect within the next few years, requiring businesses to integrate compliance planning into strategic decision-making. Deadlines for mandatory disclosures, implementation of corporate due diligence requirements, and phased environmental targets will require companies to enhance their governance structures and risk management processes. Proactive adaptation will be key to maintaining regulatory alignment and mitigating potential business risks. As the ESG and EHS regulatory landscape continues to evolve, businesses must stay ahead of developments through structured monitoring and strategic planning. ERM’s Global Regulations Radar serves as a valuable resource for organizations seeking to understand the implications of regulatory changes and position themselves for long-term sustainability compliance. Source: ERM / The Global Regulations Radar #sustainability #sustainable #business #esg #climatechange #regulation #reporting

There’s a missed opportunity in the investment world: over 95% of capital remains allocated to non-diverse funds. This leaves diverse-led funds undercapitalized, despite their proven ability to outperform. This disparity isn’t just about fairness — it’s about untapped potential. A report from the National Association of Investment Companies (NAIC) highlights systemic barriers: smaller commitments to diverse-managed funds, higher asset requirements and inconsistent support from corporate and union pension funds. These challenges restrict market growth and limit wealth creation in communities that could benefit most. Addressing these disparities is critical to building a more dynamic and equitable financial ecosystem. When diverse leaders manage funds, they bring unique perspectives, broader networks and innovative strategies that drive returns and create lasting economic impact. This mission is personal to me. Throughout my career, I’ve championed initiatives to expand opportunities for underrepresented entrepreneurs and fund managers. By supporting diverse leadership in finance, we not only unlock growth but also help close the #racialwealthgap and foster sustainable change. It’s time to reimagine how we allocate capital — embracing equality as both a value and a strategy. Together, we can fuel innovation, empower communities and strengthen our economy.

During the ascent of #fintech as a disruption driver in #finance, digital banks have been the first and most impactful use case. Let’s take a look at their playbook. The term itself – alternatives include challenger banks or neobanks – characterizes players (usually new entrants) challenging the traditional banking model with a #technology-first approach that involves flexible, branchless, digital-native (mobile) banking, often focusing on or starting from niche segments and customers. An increasingly digital arena, a shift in consumer behaviour and a gap in product and customer focus by incumbents have enabled these new players to challenge the status quo. Their success and proliferation around the globe is a clear sign of agile, digital-first, product-niche strategies prevailing over traditional, monolithic, vertical banking #business models. Whereas different patterns can be identified in their evolutionary path, the successful models can be aggregated to two broad categories: — Greenfield players starting completely from scratch by means of identifying a niche market or segment, often neglected by incumbents, and focusing on seamless customer experience, attractive design, competitive pricing and a digital or mobile only set-up. In terms of strategy two elements clearly stand-out: 1) hyper-growth and scale as the core - sometimes only - metrics (which explains why so many have been unprofitable) 2) an ecosystem play, driven by horizontal partnerships (vs the vertical traditional model). N26, Revolut and Nubank are typical examples of this model. — Large, closed-loop ecosystem players with a non-finance business geared on technology and an anchor in #ecommerce launching (digital) #banking spin-offs as a means of converting (and monetizing) their existing client-base. Most (or almost all) of the examples here come from Asia (i.e. Webank, Kakaobank), mainly due to the set-up of the #economy (lacking a robust, finance architecture and, in effect, benefiting private, BigTech players covering the gap). Webank, for example, is owned by Tencent, China’s largest social-media BigTech company (owner of WeChat, China’s equivalent of Facebook). It has managed to reach a value of $33 billion and a base of more than 320 million active users by focusing on building a modern IT stack (as a competitive edge to traditional banks) and leveraging on the data generated by the Tencent ecosystem (i.e. retail lending credit scoring built on Tencent data, resulted in a non-performing loan ratio of just 1.2%, about half (or less) of the industry average for such non-secured loans). Irrespective of their origins, both models have been (fast) converging to what has become the new holy grail of modern finance: platform #economics and ecosystem plays. These are the concepts that will be defining the boundaries in an increasingly network and technology driven field. Opinions: my own, Graphic source: Momentum Works, Decoding digital banks