1. Unlocking Potential
An Idea !

2. what do you see in these people …

8. i see failure of capital markets (and hence a business opportunity)

9. everyone of us is a capital asset, producing some future cash flow
cash flows differ in character
We all need long term investment and active management to grow into a productive capital asset

10. key assumption: every child given adequate financial investment and quality parenting would develop into a productive individual

11. then why don’t financial institutions invest in these assets?

12. long term financial commitment (10 – 17 years)
monitoring costs
too risky and “unconventional” to be accommodated within internal risk management systems
contract issues

13. a private equity solution …

14. What do PEs do? identify underperforming companies with potential
take long term financial (equity) interest
actively manage (involve in the business)
develop business to full potential and get out

15. the idea a private equity fund
identify poor children with no access to career development
take long term financial commitment
actively participate in their development into a successful, productive individual

16. innovative aspects … asset management structured financial products (derivatives) contract enforcement

17. asset management - relationship managers (RMs)
Responsible for mentoring & counseling a select group of kids
Close tracking and assistance
Assistance in life, career choices, ups and downs
Effectively a good parent

18. relationship managers
Long term relationship with assigned kids
Good parent, enjoys mentoring
Max 5 relationships (a family!)
Compensation includes interest in fund & future earnings from relationships

19. Ct = Max ( αt (Mt - βt ), 0 ), l ≤ t ≤ u
financial contracts
Financing depends on asset performance
More talented (better performance) will lead to higher funding
More talented => greater return => we invest more
Payback contingent on a minimum level of income attained
Ct = Max ( αt (Mt - βt ), 0 ), l ≤ t ≤ u

20. a typical contract cash-flow

21. portfolio management duration risk cash flow uncertainty managing risk
levels of talent
professions
maturity

22. issues RMs – how do we get them? legal short term cash needs
social – “exploitation” ??