Global Expansion Financing

Global Expansion Financing

 

PART I

Prompt: First, review the module resources (including the optional resources which may also be useful in completing this task). In addition, do a bit of research on your own regarding global financing options. Large global banks, such as HBSC or Bank of America—ones that have extensive experience with foreign lending policies—detail their global loan procedures on their websites.

Next, address the following critical elements:

  •  Funding Options: Identify and describe the possible options of financing available for your selected company as it expands globally, for example, debt- issuing bonds, taking a loan, equity, issuing a new stock, etc. Briefly explain why these options are a good fit for your company.
  •  Requirements, Rules, and Regulations: Identify and discuss the requirements, rules, and regulations of the banking system in the selected global market in regards to lending to foreign companies.
  •  Impact: How will these requirements, rules, and regulations impact your company’s financing decisions?
  •  Mode of Entry: What mode of entry would be most beneficial for your selected company (for example, merger, greenfield investment of just exporting)?Why?

***MUST BE 1-2 PAGES***

PART II

JP MORGAN- The paper should outline the current capital structure for the selected parent company and the funding details for the new foreign subsidiary. You will need to research the potential sources of funding and determine how best to finance the expansion. Be sure to analyze the capital structure of the new company for debt financing, stock issue financing, or using retained earnings from the parent company.

Specifically, the following critical elements must be addressed:

 Section 3: Global Expansion Financing
A. Analyze the current capital structure of the parent company. This should be done using the current annual statements.
B. Determine the funding your corporation should secure for this expansion into a global market. For example, you need to determine if the company will finance its expansion by using debt, issuing new stock, or using retained earnings of its expansion. Look at the current capital structure and use it as a guide for the subsidiary structure.

C. Analyze the financing of the new expansion. Consider financial requirements and how foreign currency will be acquired. Since the company will need to have foreign currency (currency of the country it is expanding into) on hand from day one of the company operations, determine how it will obtain the foreign currency. What are the options of local financing—including any regulations on local currency reserves?

***MUST BE 2-3 PAGES***

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