Deal contingent forward and Institutional investor: Difference between pages

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''Foreign exchange risk management''.
Institutional investors are those who invest on behalf of others.


A deal contingent forward is a specialised forward foreign exchange (FX) contract.
They include pension funds, insurance companies and a variety of other organisations who invest on a larger scale than individuals, and whose investment decisions are made by professional fund managers.
 
The hedging customer is only obliged to fulfil the contract if a planned major transaction, such as an acquisition, occurs.
 
 
:<span style="color:#4B0082">'''''Reverse complexity'''''</span>
 
:"There is quite often a risk around the FX of these transactions, which comes from the fact that we are raising equity in sterling to make a euro transaction acquisition.
 
:Obviously, if the relative value of sterling and the euro changes between the point that you commit to raise the sterling and spend the euros, there is a risk associated.
 
:That involved us putting in place a deal contingent forward.
 
:This is basically a forward contract where the banks agree with you that if the transaction does not occur, then it expires worthless, but if the transaction goes through, then you get a specific FX rate."
 
:''Adam Richford FCA FCT, Group Treasurer, Renewi, The Treasurer, August 2018, p18.''




== See also ==
== See also ==
* [[Acquisition]]
*[[Fund]]
* [[Equity]]
*[[Fund manager]]
* [[Foreign exchange forward contract]]
*[[Investor]]
* [[Foreign exchange risk]]
*[[Investor relations]]
* [[Forward contract]]
* [[Hedging]]
* [[Transaction]]


[[Category:Manage_risks]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Financial_products_and_markets]]

Revision as of 16:21, 24 December 2019

Institutional investors are those who invest on behalf of others.

They include pension funds, insurance companies and a variety of other organisations who invest on a larger scale than individuals, and whose investment decisions are made by professional fund managers.


See also