Two European financial sponsors were contemplating the FX risk associated with their expected divestment of a US based and USD denominated asset in the media industry. The exit value of this investment would therefore relate to both the USD sale price and the USD/EUR exchange rate.
- Leverage existing relationships with both the sellers and the likely buyer to arrange a deal contingent hedge between the counterparties (who were faced with the same issues albeit from opposite sides); and
- Provide input into the terms of the transaction, a role which included arranging for a bank to act as the settlement agent for the deal, thus removing a degree of risk.
Results & Recommendations
Our strategic input, coupled with our ability to leverage our existing relationships in the financial sponsor marketplace, enabled each of the parties involved to hedge their risk appropriately while minimizing execution costs.