The following briefly show examples of unique
solutions designed by GRAVITAS to address individual client's
Note: Any performance quoted or implied represents past
performance and should not be viewed as a
representation of future investment performance. The information
here is not intended as a solicitation for investment.
Issue: A regional multilateral organization concerned with the liquidity and solvency of commercial banks in the region wanted to find a solution that would provide liquidity to the problem-banks and find a mechanism that would strengthen bank balance sheets and public confidence in them - thereby averting a run on banks. This crisis situation stemmed from the global financial crisis. The solution had to take into account divergent sovereign needs and bank governance problems that had led to the situation the banks currently faced.
Solution: GRAVITAS recommended the creation of a Special Purpose Vehicle (SPV) that would issue 10 year bonds backed by multilateral and sovereign guarantees. The capital raised would be used to provide liquidity to each problematic bank. The banks would exchange illiquid assets (Government bonds issued by the sovereigns over the past 5 years that had remained illiquid) for liquidity. To determine the exchange ratio - GRAVITAS suggested the creation of a synthetic yield curve that would be used to price the bond repurchase agreements for the illiquid bonds which would be exchanged for liquidity. In addition, the SPV, managed under the aegis of the multilateral organization and related entities, would provide Tier 1 capital to the banks in exchange for preferred equity and mandatory changes in governance. To achieve this the client would need to bring in the International Finance Corporation (IFC) to help structure the transaction, restructure oversight and good management at the troubled banks. Over time, the bonds held as liquidity collateral would be reverted back to the banks at a ratio favorable to the SPV, and the preferred equity would be liquidated, in an orderly fashion, at a profit.
Through creative structuring GRAVITAS proposed an elegant solution to its client that offered to avert a regional financial crisis, reintroduce best practices and realign incentives - while making the solution budget-neutral to its client.
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Issue: A global client wanted to create an investment
mechanism that would enable it to make a one-time investment
to protect biodiversity conservation in one of the
conservation “hot spots”. The problem was twofold: firstly,
maintaining the corpus of the investment ad infinitum while
generating sufficient capital to finance conservation work
and the creation of related new jobs and secondly, making
sure local content is used while abiding by best practices.
Solution: GRAVITAS designed a locally registered conservation Trust
As a means of providing transparency, the selected trustees
were local, respected and knowledgeable in financial best
practices. Using an endowment approach to trust fund
management, all returns above inflation were disbursed into
conservation projects. Capital preservation mechanisms were
put in place to preserve the corpus of the fund ad
infinitum. GRAVITAS designed a multi-fund,
multi-strategy investment program that used local fund
managers with public oversight. Results of the trust fund
would be published in the local newspapers on a regular
Through creative structuring GRAVITAS met the
client’s specific requirements and achieved local financial
objectives, as well.
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Issue: A central
bank client wanted to create an investment benchmark which
it would use to build in-house staff investment management
capability. The client's return objectives were to generate
consistent predictable returns.
Solution: GRAVITAS took stock of the client’s
risk/return objectives and designed an investible benchmark
portfolio with a calibrated risk profile. The key feature of
the benchmark portfolio was that it was statistically
calibrated to have a zero probability of generating negative
returns in any rolling 12 month period. Furthermore, to
facilitate the transition from benchmark replication to full
blown portfolio management, GRAVITAS designed a risk-taking
framework with oversight from the newly established
Investment Committee. Moreover, GRAVITAS designed and
installed a software program, the Benchmark Maintenance
System �, to help the client easily replicate the tailored benchmark
portfolio. Lastly, the firm designed and executed an
in-house training program that involved setting up and using
By understanding the client’s intrinsic objectives
GRAVITAS was able to lead them to
innovative solutions and the creation of new software.
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commercial bank client was seeking a more efficient way to manage
its asset-liability ratios. With growing liquidity and few
investment options, the bank wanted to maintain high
liquidity while meeting
benchmark returns in order to remain in the black.
Solution: GRAVITAS developed an innovative liquidity
management framework that facilitated the identification of
excess liquidity and enabled the bank to more efficiently
generate returns while meeting its liquidity and regulatory
ratios. GRAVITAS furthermore developed a multi-strategy
solution that increased the probability of consistently
generating sufficient returns to meet financial hurdles.
Moreover, the firm proposed and created a new set of
financial products which the bank could sell to its retail
GRAVITAS' solutions and products provided a profitable liquidity
management framework and helped the client to reposition
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multilateral organization was seeking to spur employment
and regional growth by creating appropriate incentives for private banks
to lend more to Small and Medium-sized Enterprises.
However, the organization possessed limited resources and
realized that a one time capital allocation to the project would not be sufficient.
At issue was whether a mechanism could be developed to leverage the sponsor’s capital allocation ad infinitum.
Solution: GRAVITAS recommended the set up of a
Fund that would manage the one time capital injection under predetermined guidelines that
would permit the generation of annual returns at least equal to the annual default rate of SME
loans in the region. The Fund would insure all loans made by local banks under strict guidelines,
to prevent lax credit standards. The size of the guarantee would be directly proportional to the excess
cumulative returns generated by the Fund. Therefore, the client could grow the insurance program as
cumulative returns are generated annually.
The implications of this simple tool judiciously applied are significant in terms of credit availability
and job growth. This is one way GRAVITAS adds value through in-depth understanding of client circumstance
and innovative application of financial tools.
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