Introduction:
Databank group is a diversified financial services firm based in Accra, Ghana. The firm was founded in 1990 by Ken Ofori-Atta and two other American-educated Ghanaians, Keli Gadzekpo and James Akpo who were engaged in offering corporate financial advisory services, investment research, mutual fund, stock brokerage, venture capital, asset management and private equity fund management.
Q1: Databank is considering marketing a version of its EPACK fund in the US. What set of questions should they ask themselves in making this decision?
Databank’s flagship equity mutual fund Epack achieved returns that were superior during the previous ten years to those of the already impressive main index of the GSE. Epack is a long-term collective investment initiated in 1996. The basic purpose of Epack is collecting pool of funds from various investors and then investing it in securities that are mostly listed in Ghana Stock Exchange.
Databank asset management division had grown dramatically in the previous years and contributed more than any Databank business in both revenue and profit. In the start of 2008, division had more than $180 million assets with majority of its assets in the company’s flagship Epack investment fund. Epack investment fund comprised of five investors of $29 each. The investment performed extremely well in the Ghana Stock Exchange over the previous decade. The major reason behind this success was the combination of profitable stock choices and regional diversification across Africa. For marketing a version of Epack in the U.S, the management of the company needs to charge more from the clients because it has been mentioned in the case that the fund charged a 2% management fee and still the management believed that the company has undercharged its funds in Africa. Therefore, the company needs to charge at least double fees from the clients in the United States.
In the United States, the economy is far more stable compared to South Africa, particularly Ghana. In addition to this, there is less political chaos in the country because the country is unwavering in political and regulatory terms as well. In order to market a version of firm’s Epack fund in the United States, Databank needs to open service centers to provide consultancy service for the US customers. Along with this, the company can also open a company portal on the web to facilitate its existing and potential customers. In addition to this, the company can make efforts in terms of investing in promotion through print media like online advertising, newspaper, billboards, direct mailing and phone advertising. Despite all these marketing efforts, the reputation of the bank itself plays a major role in propagating mutual funds of the firm. Most of the individuals believe that they would like to invest in a mutual fund if they have built good relationships with the banks previously.
Q2: What analysis and specific adjustments to EPACKS’ returns would US investors and financial advisors need to do to test whether EPACK was a good investment vehicle for them?
If a company or an investor is planning to invest in stocks, it involves its particular types of risk. The structure of Epack is made in a way that can help investors to reduce the level of risk connected with an investment. In addition to this, the US investors and financial advisors need to identify the level of risk that an investor will share among each other.
Another factor that the US and financial advisors need to consider is to check the capital growth on a long term basis. As far as the Epack’s investment is concerned, the mutual fund is covering a broad range of objectives related to investment that comprise of structure investment for future needs, providing allowance related plans, reserves for home and future purpose and structure capital for future needs.
In addition to all this, making investment in stock is risky because of the fact that there is no guarantee in terms of returns. However, it is also a fact that high-risk yield to high returns and the U.S investors are known to be the risk takers and thus, found Epack as an attractive opportunity.............................
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This case addresses issues of regional strategy and strategic institutional arbitration. Data bank is a financial services design of its regional strategy for Africa and aims to benefit from the institutional arbitration. "Hide
by Jordan Siegel, Yi Kwan Chu Source: Harvard Business School 30 pages. Publication Date: Mar 02, 2008. Prod. #: 708478-PDF-ENG
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