Publicly available General Introduction to Deutsche Bank Quality of Life Markets 2007

749 views
696 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
749
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
9
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Publicly available General Introduction to Deutsche Bank Quality of Life Markets 2007

  1. 1. 11/14/2007 A General Introduction Deutsche Bank’s Quality of Life MarketsTM Quality of Life Indices® and index-linked securities Keith Cunningham (212) 250 8866 Guillermo MacLean (212) 250 8866
  2. 2. 2 Disclaimer  This information is provided to you by Deutsche Bank and is not intended for trading purposes. This has been prepared solely for informational purposes. It is not an offer, recommendation or solicitation to buy or sell, participate in any trading strategy, nor is it an official confirmation of terms. It is based on information generally available to the public from sources believed to be reliable. No representation is made that it is accurate or complete or that any returns indicated will be achieved. Additional information is available upon request.  Deutsche Bank transacts business with counterparties on an arm’s length basis and on the assumption that each counterparty is sophisticated and capable of independently evaluating the merits and risks of each transaction and that the counterparty is making an independent decision regarding any transaction. There is no guarantee that a similar structure would have been available at any point in the past and that such results could have been achieved.
  3. 3. 3 Why am I here? Share Vision + What we are doing My Vision about: Create a Better World  Create a marketplace for what a Better World means. A market for “Vision”  Create a marketplace for those who care about something (a “Vision”) to do more about it (i.e. put money/actions where your mouth is)  Create a marketplace for those who believe they have a particular skill that can add significant value to achieving a “Vision” to receive the resources for them to scale and achieve  Create a marketplace for people who see solutions where others see unsolvable problems  Create a marketplace where “a non-political/non-controversial Social result” can be a profitable/economically viable pursuit (versus a martyrdom)  Create a marketplace where labels don’t matter as much as specific measurable results do  Create a marketplace where such people and organizations are seen as the most admired and effective leaders/professionals
  4. 4. 4 Executive summary: A Market for Breakthroughs  A Deutsche Bank Quality of Life Index measures the progress (“Current State [C]”) between any Defined “Starting State [A]” and another “Desired State [B]” of issues that affect the quality of life of our clients  Deutsche Bank’s GME – Structuring group then issues index-linked securities (and makes markets for them) with one or more of many possible payout structures, bringing together (and meeting the different needs of) multiple groups of people that have at least one thing in common: The achievement of a highly ambitious/unprecedented Desired State [B]  The ultimate objective is to create a new market dynamic that will, directly or indirectly, significantly increase the odds of achieving Desired State [B]. This new dynamic should allow an increase in focus, financial resources, and non-financial/creative resources destined towards the ambitious objective [B].  Therefore, this new market should present a compelling value proposition to individuals, corporations, endowments & foundations, development organizations, governments, non-profit non-governmental organizations, social entrepreneurs. In general, for anyone who has a strong desire for an ambitious “Desired State [B]” which can be described as “for the common good of any given community”  It is important to note that this new for-profit market is highly complimentary and supportive of any parties currently involved in the pursuit of social causes. Revenues generated by Deutsche Bank will be highly efficient and value enhancing for these parties, as compared to their current situation  Our clients can invest in an existing Quality of Life Market (off-the-shelve Desired State [B]), or can work with us to sponsor and/or seed a new Market. Each new Quality of Life Index is co-sponsored with an independent interested partner, and it is governed by an independent Quality Control Board, an Ombudsperson, and an Arbitration Panel
  5. 5. 5  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information Contents
  6. 6. 6  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  7. 7. 7 Generic structure of a DB Quality of Life Index A B  A Deutsche Bank Quality of Life Index measures the progress (or “Current State [C]”) between any given Defined “Starting State [A]” and another Defined “Desired State [B]” of issues that affect the quality of life of our clients C  “Desired State [B]” should be: (i) Highly ambitious or unprecedented (ii) Measurable, and (iii) The least controversial
  8. 8. 8 Possibilities of DB Quality of Life Indices® are endless Topics Sub-topics Geography/Segment Health/Safety Education Economic/Wealth Environment Justice/Freedom Cultural/Art Increase in safety standards Disease eradication Increase in education levels Art/cultural dissemination Scientific development Poverty reduction Employment growth Crime reduction Culture preservation Environmental planning/targets Access to Justice Peace Municipal State/National Regional Global By any other segmentation
  9. 9. 9 Index design and governance  Deutsche Bank works with Founding Client/Partner/Contributor to design an index that is creative, measurable, simple, transparent and effective for the objective  Once launched, each index should be calculated with little-to-none controversy throughout its life  In this sense, the index governance structure is meant only to become active in three cases - It is no longer practical or economical to use original data sources, - Any Index Stakeholder becomes concerned that the existing data sources have become corrupted in such a way that violates the original intent of the index, or - To make decisions in unforeseen circumstances,  In order to retain the original Spirit of the Index. The index governance structure includes - A Measurement Quality Control Board, - An Ombudsperson, and - An Arbitration Panel
  10. 10. 10  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  11. 11. 11 Creating a market-dynamic that works for the desired result  Deutsche Bank’s GME – Structuring group can issue a wide variety of DBQOL index-linked securities with one or more of many possible payout structures  The idea behind the set of structures is to bring together (and meet the different needs of) multiple groups of people that have at least one thing in common: The achievement of a highly ambitious/unprecedented Desired State [B]  In order to start understanding the market dynamics that these securities could inject and immense possibilities that they present, it is important to understand two extremes of the universe of potential index-linked payout structures: Security #1 and #2 Security # Principal Is Desired State [B] met at Maturity? Payout at Maturity 1 $100 Yes 0 No ($100+$x)*(1+R)n 2 $x f(Security 1’s Principal) Yes ($100+$x)*(1+R)n No 0
  12. 12. 12 Two extremes of the universe of potential index-linked payout structures Deutsche Bank or Alternative “Issuer” or “Vehicle”Security 1 Security 2 If Desired State [B] is met then 5, else 6 $100 $x Y= ($100+$x)*(1+R) n 1 2 4 6 5 Investor 1 Investor 2 3 1. Investor 1 buys Security 1 at $100 with Maturity n=15. Security 1 is issued by TBD (DB or alternative “Issuer” or “Vehicle”). Assets held in “Trust-like” vehicle, in some sort of principal protected structure (e.g. 15-year PPN + MSCI World) 2. Investor 2 buys Security 2 at $x with same Maturity Date as Security 1. Amount $x is presumably a function of Security 1’s value, and at issue is expected to be a low percentage of Security 1’s value. Security 2 is issued by TBD 3. At or before Maturity, Security 1 and Security 2 have mutually excluding claims to Y, defined as $(100+x)*(1+R) n , where R is a rate of return net of fees (TBD) 4. If Desired State [B] is met at or before maturity, then Security 2 has full claims to Y (5) , else Security 1 has full claims to Y (6)
  13. 13. 13  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  14. 14. 14 Two broad avenues  Current Deutsche Bank Quality of Life Markets under development include Global Infant and Child Mortality-related, Global Sanitation-related, Latin-American Millennium Development Goals-related, and more…  Deutsche Bank’s GME – Structuring can custom-design a new market that fits specifically the Desired State [B] that a client wants to sponsor Client Participate and help expand/reinforce existing Quality of Life Market Custom design, sponsor, and “launch” a new Quality of Life Market Customized, innovative solution to achieve Desired State [B]
  15. 15. 15 Custom-designed solutions towards [B]  Deutsche Bank’s GME – Structuring designs solutions based on clients’ particular approach/situation relative to Desired State [B], not based on their traditional classification. Some examples include: Traditional Classification Common objective Particular approach/situation/context DB Quality of Life strategy/ Value proposition  Individual  Corporation  Endowment/ Foundation  Pension Fund  Institutional Investor  Hedge Fund  Development Organization  Government  Non-Governmental Organization  Social Entrepreneur  Manager/Technician  Venture Capitalist  …. Achieve Desired State [B] Wants to spend/invest/”donate” contingent upon satisfactory results (reaching [B]) Deutsche Bank works with clients to issue “Security 1” linked to an existing Quality of Life Index or custom-design a new one. Deutsche Bank will then help create this Market by (i) raising more investor interest into that security and (ii) Creating demand for corresponding “Security 2”, and (iii) then constantly matching secondary buyers and sellers Believes to know the right implementation to achieve [B], but lacks sufficient financial resources to execute Deutsche Bank will help identify existing appropriate “Security 1”, “Security 2” or set of them, that can be used directly or re-structured for this purpose Believes a cause requires more human talent/competition than currently applied to it, more creative strategies applied to [B] This market and targeted strategies create many possibilities to recruit talent from any business/industry Believes more buy-in is required by society and/or governments to achieve cause Customized strategies such as targeted selling of Security 2 can be implemented Believes the achievement of the cause is a win-win proposition, but social causes are not its line of business Deutsche Bank can structure notes in which balance sheet or asset base is used in an efficient manner consistent with organization’s mandate
  16. 16. 16 The bottom line value proposition: The Result  This new for-profit market is highly complimentary and supportive of any parties currently involved in the pursuit of any Desired State [B] such as a social cause  Each new market’s unique strategies are designed to increase the total financial and non-financial resources applied to it. Most importantly, to increase the odds of achieving Desired State [B] by a multiple of 7 to 20 times the odds of accomplishing it without the Quality of Life Market Desired State [B] Increase the total financial and non-Financial resources towards Desired State [B] Increase the odds of achieving Desired State [B] anywhere from 7 to 20 times
  17. 17. 17  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  18. 18. 18 Timeline of entire process of bringing to life each index and index-linked securities.. Phase Timeline 1. Work with Client to Identify Quality of Life “Factor” 2. Create with Client appropriately-framed and governed DB Quality of Life Index 3. Seed “Incentive/Conditional/Prize Pool” (Security 1), define terms 4. Raise funds for Security 1 from other interested parties (non-seeding Investors) 5. Build “Venture/Management” interest (i.e. market Security 2) 6. Auction off Rights to interested bidders (i.e. issue Security 2) 7. Monitor performance/ make a secondary market for Securities 1 and 2 8. Maturity: Make corresponding payments
  19. 19. 19  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  20. 20. 20 Accelerate the Reduction of Global Infant and Child Mortality  The Challenge: An estimated 10 million children 0-5 years old die every year. Most of them from preventable diseases. This means that one out of every twelve children born annually is estimated to die prior to turning five years of age  The context of the DB Quality of Life Market’s construction/ Sponsors: Deutsche Bank approached Faculty from Harvard University’s School of Public Health/ JFK School of Government in order to create Index. Hoping to launch a related market, also complimentary with Market being created with Ashoka (the global association of the world’s leading social entrepreneurs) related to Global Sanitation (Children’s deaths and lack of sanitation are highly correlated)  Desired State [B]: The desired state is to reduce mortality rates at least twice as fast on the next 15 years as any other previous fifteen year period in history - Achieving this objective would mean saving the lives of an estimated 8 million children annually - Furthermore, the externalities or implications of a world (and individual societies) that takes care of its children, fulfills the basic human rights of health, appreciates life  Current Status: - Building expressions of interest for “Security 1”-type - Building expressions of interest for “Security-2”-type - Open to partnership for more narrowly focused (regional/local)-related markets
  21. 21. 21 Solve the increasing Global Sanitation Challenge  The Challenge: Front Page of The Lancet: “Adequate Sanitation is the most effective public health intervention the international community has at its disposal. Yet 40% of the world’s population still lacks access to a toilet”. For more than 1.1 billion people around the world, water is a constant concern. Where will their next drink come from? Will it be clean? Will it last? Suitable sanitation facilities are in even shorter supply. Basic human privacy and dignity are lost to 2.6 billion people who have no place to use the bathroom. And these problems will get worse. In the near future, water scarcity will lead to even greater suffering for the world's poorest.  The context of the DB Quality of Life Market’s construction/ Sponsors: DB is working with Ashoka (the global association of the world’s leading social entrepreneurs) and the Mannweiler Foundation inc. (creators of the L3C concept) among others to design the appropriate DBQoL Indices and linked- securities that may help this cause  Desired State [B]: TBD  Current Status: - Working group with Ashoka to design appropriate DBQoL Indices - Building expressions of interest for “Security 1”-type - Building expressions of interest for “Security-2”-type - Open to partnership for more narrowly focused (regional/local)-related markets
  22. 22. 22 Catching up with Latin-America’s Millennium Development Goals and reaching further  The Challenge: Latin America, as a region, exhibits several areas of persistent underdevelopment despite many years of free-market reform, economic growth and embracing of stable democracy.  The context of the DB Quality of Life Market’s construction/ Sponsors: Deutsche Bank approached the Inter-American Development Bank to explore ways to work together to enhance the pace of development in Latin America  Desired State [B]: TBD (various being considered)  Current Status: - Working group with President’s Office to propose initial $500m action plan to Board - Building expressions of interest on regional Latin American issues
  23. 23. 23 Helping to create a common vision of a first-world Peru, and channel the required resources  The Challenge: Peru, as a country, exhibits several areas of persistent underdevelopment despite many years of free-market reform, economic growth and embracing of stable democracy.  The context of the DB Quality of Life Market’s construction/ Sponsors: Deutsche Bank approached Grupo Interbank to explore ways to work together and develop a market that works for developmental causes in Peru  Desired State [B]: TBD (various being considered)  Current Status: - Working group with Grupo Interbank designing relevant indices - Building expressions of interest on country-specific Peruvian issues - $50m already committed on behalf of Corporations and underwritten by Deutsche Bank
  24. 24. 24  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  25. 25. 25 Deutsche Bank’s added value and revenue sources  Deutsche Bank’s GME – Structuring group is a for-profit entity and it has developed this capability in order to support either for-profit and/or not-for-profit organizations in pursuit of objectives that are non-political and not conflicting with our business practices  As stated previously, Deutsche Bank’s Quality of Life Markets are highly complementary and supportive of any parties currently involved in the pursuit of social causes. Revenues generated by DB will be highly efficient and value enhancing for these parties, as compared to their current situation  Each new market’s unique strategies are designed to increase the total financial and non-financial resources applied to it. Most importantly, to increase the odds of achieving Desired State [B] by a multiple of 7 to 20 times the odds of accomplishing it without the Quality of Life Market. No market is launched where Deutsche Bank is not encouraged to do so by a reputable interested party  Deutsche Bank and partners have the potential to earn revenues on one or more of this market’s related activities: - Fees for raising funds for Securities 1 and 2 - Fees for making secondary markets for Securities 1 and 2 - Possibly, Fees from holding assets in DB or partner-issued securities - Possibly, gains from principal investing on Securities 1 and/or 2 - Other
  26. 26. 26  Deutsche Bank’s Quality of Life Indices (DBQoLs)  DB Quality of Life Index-linked Securities & Markets  Implementation Strategies and Value Propositions  Timeline of creating a Quality of Life Market  Sample of DB Quality of Life Markets under development  Deutsche Bank’s added value and revenue sources  Contact information
  27. 27. 27 Contact information  Contact your Deutsche Bank Representative to learn more or schedule a meeting, or the following people: GME – Structuring (Developers of Quality of Life Markets) Keith Cunningham (212) 250-8866 Guillermo MacLean (347) 776-1404 Latin American-based (Investors, Corporates and Governments (and DC-based Latin Multilaterals)) Ivan Santillan (212) 250-6324 US Endowments and Foundations John Kidd (212) 250-9905 Cornelia Spiegel (212) 250-9905 German-speaking countries (Investors, Corporates and Governments) Jobst Hoyningen-Huene (4969) 910-46653 US Mid-size and small Endowments and Foundations Sean Lane (212) 454-1985 US and Europe-based Investors in Emerging Markets Rupert Hope (212) 250-6226
  28. 28. 28

×