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Capital Allocation

BankingCapital AllocationCapital Markets
March 2, 2021

A Third Path for Stock Buybacks: Enhanced Open Market Repurchases

Some NeuGroup members have turned to eOMRs to get the flexibility of OMRs and pricing below VWAP, like ASRs.Many NeuGroup members across groups at recent meetings agreed they have enough excess liquidity and trust in market stability to restart share repurchases; but there has been a range of views about how much emphasis to place on the price per share a corporate pays for its own stock. Where companies fall on the spectrum of answers may determine if they opt…
Justin Jones
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Capital AllocationCapital MarketsESG
March 2, 2021

Getting Granular on Green Bond Proceeds: Capex? Opex? Both?

Some investors prefer that green bonds finance capex projects, but corporates use proceeds for opex, too—with caveats.How a corporate intends to spend the proceeds from a green bond is integral to deciding whether to issue the bond in the first place. You need to have sufficient uses to create a deal that is large enough to make the costs worthwhile and ensure that investors will participate. NeuGroup members at a recent ESG working group meeting addressed a related, more granular…
Justin Jones
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Capital AllocationCash & Working CapitalCOVID-19
February 18, 2021

Cash Cushions and Covid: Retailers Not Yet Ready To Declare Victory

Retail treasurers returning to offense with share repurchases and dividends are proceeding with caution.A growing number of retailers in the NeuGroup Network are spending or preparing to spend some of the excess cash they raised at the beginning of the pandemic on share repurchases and dividends. But most treasurers at these retailers remain cautious and conservative as they return to playing offense—not surprising given that these companies were among the worst impacted by lockdowns and social distancing. Declare victory? “One…
Justin Jones
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Capital AllocationCapital MarketsCOVID-19
February 11, 2021

Sending a Strong Signal: Accelerated Share Repurchase Programs

As more companies resume stock buybacks, some treasurers are feeling pressure to use ASRs.Corporates eager to send a clear signal to investors about their financial health are brushing the dust off stock buyback plans and weighing—if not committing to—accelerated share repurchase (ASR) programs. That was among the takeaways from a NeuGroup meeting of treasurers this week. It’s the latest development in a journey that began in the spring when the pandemic slammed the brakes on many share repurchase programs. In…
Justin Jones
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Capital AllocationCapital MarketsTalking Shop
February 11, 2021

Talking Shop: Do You Use Barra Beta or Bloomberg To Calculate WACC?

Member question: “Is anyone using Barra to calculate WACC (weighted average cost of capital) or do you use another service provider? “To calculate cost of equity, we use our beta available from Bloomberg. Over the last year, our beta has decreased. The lower beta results in a lower calculated cost of equity and then WACC.“We think this could be a short-term impact and need to be very thoughtful about how to apply it in various analysis. In recent conversations, we…
Justin Jones
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Capital AllocationCapital Markets
February 9, 2021

Spin-off Class: Perspective From a NeuGroup Member Pedaling Hard

Spin-offs mean complex, time-consuming work on capital structure, bank accounts, credit facilities and more. Spin-offs are huge strategic undertakings for corporations looking to part ways with a subsidiary or business. And finance teams, including treasury, do a lot of the heavy lifting to manage a complex process that can take years to complete. At a recent NeuGroup meeting, one member in the midst of a spin-off described the process as an “all-consuming activity.”Afterward, he agreed to share some insights and perspective…
Justin Jones
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Capital AllocationCapital Markets
February 9, 2021

Why Spin-offs Are Complex, Time-Consuming Affairs: A Lawyer’s View

The legal perspective on spin-offs from attorneys at Gibson, Dunn & Crutcher.Spin-offs are intricate, multifaceted endeavors for corporates that decide to take a subsidiary and make it an independent public company. In addition to internal finance and tax teams, they can involve scores of investment bankers, auditors and lawyers. At a recent NeuGroup meeting, one member in the midst of a spin-off described the process as an “all-consuming activity.”For a look at some of what’s involved, NeuGroup Insights turned to…
Justin Jones
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Capital AllocationCapital MarketsCash & Working Capital
November 17, 2020

Game Plan: Flexible Buybacks on the Open Market vs ASRs

Meeting sponsor SocGen sees corporates growing comfortable with flexible, open market buybacks amid recovery.During the global pandemic, many corporates have slammed the breaks on share repurchase programs to save cash and avoid criticism from politicians as Americans lost jobs and some companies sought government bailouts. At a recent NeuGroup meeting of treasurers at life sciences companies, Societe Generale’s David Getzler, head of equity capital markets for the Americas, forecast an increase in share buybacks in 2021 as the economy recovers and…
Justin Jones
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BankingCapital Allocation
October 29, 2020

Time for Bonds: A Growth Company Learns the Ropes of Issuing Debt

A debut bond offering reveals the benefits of preparation in working with rating agencies, banks and the C-Suite.Eight years after going public, one NeuGroup member company planned to refinance equity-linked capital with straight debt—in the middle of the pandemic. It successfully completed the issuance, and at a recent NeuGroup meeting the company’s treasurer described a process that was challenging at times but ultimately proved rewarding. Along the way, the treasury team—which had never issued straight bonds—learned valuable lessons, including the need…
Justin Jones
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Capital AllocationCash & Working Capital
October 13, 2020

The Cup Runneth Over: Corporates Awash in Cash Mull Options

Treasurers discuss concerns about companies rushing to deploy cash too quickly.When uncertainty abounded at the start of the pandemic, companies drew down revolvers, issued debt, cut capital expenditures (capex), halted share repurchases—whatever it took to conserve cash for the troubling times ahead.  A few months later, after massive government stimulus and a recovering economy, many are awash in cash and trying to figure out what to do with it—or not do with it.At a recent NeuGroup meeting for large-cap companies,…
Justin Jones
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