Google Website Translator Gadget

Wednesday, April 27, 2011

Why institutional money managers are not a good target

As we discussed in the case of the individual US investor, the decisions about how and where to invest are typically left in the hands of an institutional money manager. So naturally, we should explore whether it is the money manager with whom we should engage in the quest to find US investment dollars for Cape Verde.

Personally, I do not think this is a feasible target at this time and for the following reason: money managers must act within the constraints of strict securities laws and regulations. The result is that foreign investments would typically not be placed into illiquid, specific projects such as investing in Cape Verde.

There is the possibility of attracting such investments into the liquid Cape Verdean capital markets overseen by Bolsa de Valor (the Cape Verde's financial exchange), but again, the restrictions of US securities laws and regulations would make such a possibility extremely remote without major additional spending by Bolsa de Valor to conform to US requirements.

Even so, institutional money managers may be able to play a role in moving major amounts of money from money market funds into investments into Cape Verde ... but not directly.

There are some creative financing vehicles that can be created by Wall Street investment banks which can be used to connect institutional money managers to the target investors. Here, I am not referring to the exotic derivatives that got Wall Street into its most recent trouble, but rather to more traditional, transparent financial instruments. I will discuss these potential arrangements in detail in a separate blog post.

Be sure to read the blog post about corporate investors first.

No comments:

Post a Comment

Please give us your feedback. Did you find this information interesting or useful?