Hello everyone,
I will be an inten at a major debt fund in Europe in January. I have some free time at school and I am trying to improve my modelling skills!
Does someone have some modelling example for debt funds are more broadly for acquisitions (I already have the one from M&I and adventure in CRE)
Thanks a lot for your help!
Have a nice day!
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Are you sure the role entailed "Acquisitions" for a debt fund?
Not at all!
But i think that I can also work on my financial modelling skills on acquisitions since it is a more broader topic and people might have some of them in stocks!
If you have an equity model, you have a debt model. Although the assumptions driving revenue and expenses might be slightly different, everything up to Net Operating Income will be the same.
Below Net Operating Income, debt funds ideally are less sensitive to extra capital an equity investor may be injecting into the project. Otherwise, it’s all the same. Debt funds will be paying attention more to debt yield, debt coverage ratios, LTV, LTC, etc. Many debt investors will also be cognizant if how their quote and structure of their debt will effect the overall return for the equity investor. If an equity investor has the choice of two quotes and one really hurts the returns of the deal, the equity investor is going to choose the quote which helps the deal more.
Equity investors will be more concerned with IRR and other return metrics, however, they need to be cognizant of the same metrics as debt investors as equity investors will be on the hook for the debt and it’s payments.
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