London Business Challenge Week: What’s involved?

by Hennes Hamann, MFA2020

As an integral part of the Masters in Financial Analysis (MFA) programme at LBS, the London Business Challenge Week (LBCW) is a great opportunity for students to apply their skills outside the classroom and work on a real-world project for a business client. Simultaneously, it constitutes a chance for businesses to gain fresh ideas and insights from our MFA cohort.

As LBCW moved closer, we were provided with a list of companies that were interested in this special cooperation, including both start-ups and established firms. We ranked our preferences according to our interests, and I was more than happy to be selected – along with 6 of my peers – to support Three Hills Capital Partners, a London-based private equity and venture capital firm with €1.2bn AuM that focuses on tailor-made debt and equity investments in the £30-100m+ ticket range.

After working groups were formed, we had our first contact with the project hosting companies in the form of an introductory pitch. For us, the presentation was held by Barbara and Esteban from THCP, who not only introduced their company and the project at hand, but also explained their expectations regarding the quality of our work and the key deliverables. The project was focused on a portfolio company of THCP which is the global leader in trading environmental energy commodities. Our job was to perform a deep-dive analysis of Green Bonds and Sustainability Linked Loans – two relatively recent lending products, whose volumes had risen dramatically over the past few years to over $99bn in 2018. Our analysis was expected to cover all important aspects of these products, including structuring, the underlying price mechanisms, the aspects of oversight and reporting, as well as potential incentives and the environmental integrity. A second important deliverable of the project was a flexible decision model, which would provide a suggestion which one of the two products would be beneficial to a potential lender or borrower, based on both qualitative and quantitative inputs.

We started our work on the project right after the pitch by deconstructing the tasks into several milestones and creating a road map of when we would complete them. Over the course of the next two days, we effectively assigned responsibilities among our group members and made great progress with our deliverables. In the middle of the week, we had the chance to discuss our status with Barbara, who provided us with constructive feedback on our approach and answered clarifying questions that had emerged during the process. I particularly enjoyed that every single member of our team brought a distinctive skillset to the table that they had acquired through previous work experiences. For me, the development of the decision model was where I could provide the biggest impact: after planning out and thoroughly discussing the theoretical structure as a team, I took ownership of the model development and realised our ideas in Microsoft Excel while others worked on their particular topic of expertise.

At the end of Wednesday, we were able to merge the individual parts of our presentation and had a great time going through it together as everyone explained the intuition behind their work. I highly appreciated the respectful, professional and communicative mindset that every single member of our team demonstrated during the process – despite coming from vastly different geographical and cultural backgrounds, we were able to establish a strong communal spirit that made the team work not only very productive but also truly enjoyable. Towards the end of the week, we discussed our final outcomes and prepared everything for the presentation at THCP’s office. On Friday, the day of the presentation, we were able to successfully communicate our findings and answered all the questions posed by THCP. Besides Barbara and Esteban, a senior director was present via Skype and tested our understanding of the topic by asking in-depth questions. We closed our presentation by providing a test run of our decision model, where we demonstrated the handling of both qualitative and quantitative inputs which yielded a clear preference for either the green bond or the sustainability-linked loan product from both a borrower’s and a lender’s perspective.

For me, LBCW has been one of the best experiences during the MFA programme due to several reasons: firstly, the week allowed me to gain deep insights about the fascinating topic of Green Finance in an exciting and motivating real-world environment. Secondly, the project gave me the chance to not only further develop my technical skills, but also to put my intercultural team-working and communication skills to the test. Finally, the week was an amazing opportunity to get to know my team in a great way and it certainly forged a strong bond between us. I believe that all of these things incorporate what London Business School stands for and I am very grateful to everyone who made this experience possible: Barbara and Esteban from THCP, the MFA programme office and of course my fantastic team mates Anna Kvasnikova, Arush Manchanda, Nikita Kozlov, Parth Gupta, Shane Zheng and Tuan Nguyen!

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