A French manufacturer of corporate promotional gifts was being acquired by a financial sponsor. While the organization’s global sales were concentrated in SE Asia and the USA, its production was based in China and therefore its net currency exposure was predominantly to movements in the USD FX rate.
Furthermore, while the currency of debt and equity financing for the acquisition was EUR, the debt was to be drawn in USD to match with the business’ assets and revenues. The client needed to effectively ‘lock in’ the EUR/USD exchange rate at the drawdown date.
- Define the precise hedging requirements;
- Orchestrate the hedge’s execution with the active management of the four banks who were involved;
- Actively reference the FX rate to ensure that a fair rate was being set.
Results & Recommendations
We defined precise requirements and facilitated the hedging process; we were able to ensure that the hedge was efficiently executed at an appropriate and transparent FX rate.