[Rotman] What country starts with "A", but doesn't end with "A"?

[Rotman Series: 1, 2, 3, 4, 5]

Arash is a old friend of mine back from my McMaster Engineering days. After pursuing his Masters of Engineering, he decided to come to Rotman to do his MBA and will be joining Booz & Co in the Middle East when he is finished here. We also went on the Latin America Study tour together in May of last year.

During my visit on the Middle East study tour, we visited the Aga Khan foundation. The Aga Khan Development Network (AKDN) is a group of development agencies with mandates that include the environment, health, education, architecture, culture, microfinance, rural development, disaster reduction, the promotion of private-sector enterprise and the revitalisation of historic cities. AKDN agencies conduct their programmes without regard to faith, origin or gender.

One of their impressive projects was their work with Roshan, a unique telephone company that performed to the same standards of private enterprise with regards to profit generation, but also imposed high standards to their relationships with governments regarding transparancy. Arash had the opportunity to work with Roshan this recent summer and he's written a post about the experience which follows:

Little did I know what adventures awaited me upon starting my MBA at Rotman. Of course it would open new doors and new opportunities, but where exactly was still to be determined. However, I knew that I would have preferred an international experience, as a result of which I also signed up for the Latin America study tour for which we visited Brazil and Argentina. When summer recruiting came around, I applied to both domestic and international opportunities. Of the postings that came up, the one that stood out the most was the one by Roshan Telecom in Afghanistan. Having been born in Afghanistan, I jumped at this opportunity to go to back and work there. I was very young when I left Afghanistan so I never actually got to see the country, so this opportunity was ideal – international work experience in an extremely challenging work environment and the ability to see the country and my extended family.

Naturally, working there was not easy, and definitely not for the faint-hearted. The challenges were numerous – adapting to the local work culture, working with expats colleagues from 20+ countries, and learning about the telecom sector as well as the market in Afghanistan. Imagine doing business in a country where there is little to no rule of law, very little regulations and a largely illiterate population. In addition to this, security restrictions were extremely tight and violations were swiftly dealt with (one intern was sent home for breaking curfew rules). However, these restrictions were definitely necessary – while I was working there, there were numerous incidents in Kabul, including a suicide bombing, roadside bombing, rocket attack on the airport, riots and street fighting. The challenge was to try to reduce the possibility of being at the wrong place at the wrong time, and really, the wrong place could be anywhere, and the wrong time could be any time. Despite this, I did managed to connect with relatives there (they had seen me when I was born but I never met them), and made visits to a couple historic sites in Kabul as well as Herat. It was definitely interesting to see some of the places that my parents saw when they grew up, although things now were radically different. Over the last 30 years of war, the population of Kabul swelled from 400,000 to over 4 million and you could definitely feel it.

My project at the company was as interesting as it was challenging. I had no background in the telecom sector. More specifically, I was looking into a type of fraud that occurs in the sector, which made matters even more complex. My project was to analyze internal detection and treatment mechanisms as well as to come up with potential strategies for preventing this fraud from taking place. After spending days learning about this problem and gathering data, I spent the following weeks working on analyzing the information to develop actionable strategies that could be used to reduce the impact this fraud had on the company. I found it extremely interesting, and I found several areas of improvement that could positively impact the company by improving their fraud strategy.

After work we were shuttled back from the office in downtown Kabul to our guesthouse just on the outskirts of the city. Life was actually less complicated there than it is here – we had room service that cleaned our room every day, we had laundry service and buffet style breakfast, lunch and dinner. I absolutely loved the fruits there – the best grapes and cantaloupes I have ever had in my entire life. After dinner people hung out in their rooms or relaxed out in the courtyard, watched the Indians/Pakistanis play cricket, worked out, played basketball or played pool. All in all, not a bad life, if it weren’t for the volatility of the country.

Overall, it was a fantastic opportunity to work in a challenging environment and with an interesting company. I never thought that coming to Rotman would have enabled me to work in Afghanistan, but it did, and I am definitely grateful for that. In addition to this, the study tour was definitely very interesting and also helped solidify my interest in working abroad. Moving forward, I will be working full-time for a top tier management consulting firm in the middle-east, an opportunity which also came about through Rotman. Not only did my MBA at Rotman open new doors for me, but it opened up the entire world to me – the world truly is my oyster.

[Rotman Series: 1, 2, 3, 4, 5]

[Rotman] Why is an MBA taking a Geology class?

[Rotman Series: 1, 2, 3, 4, 5]

As I’m preparing to go to go to LBS, I’m dedicating this week to Rotman: What makes us different? Over the next 5 days, I’ll be putting up posts about what differentiates Rotman the school and the students, not just locally, but also within a global context.

The first post is about Shree, a brilliant friend and colleague at Rotman who I respect very much. He also had a very unique experience; an opportunity which I think is often over looked and should be highlighted. Specifically, that Rotman is part of the University of Toronto, but more than just having access to U of T’s libraries, sports facilities and resources, as U of T students, we also have access to elective courses outside the business faculty.

Shree had the idea of taking an engineering geology course because he has a natural interest in commodities and wanted to have the insight and gain a higher level of understanding of mining.

I’ve asked Shree to write a honest review of the course (GLG 1442) and I’ve included it below:

Do you have a specific career in mind that demands you know things other than the 4Ps of marketing or the time value of money? If so, you might want to look into picking up a course outside of Rotman in that area.

My job involves looking at investments, and since Canada is often referred to as the “mining capital of the world”, I felt that a geology course would add value to my education. With this in mind, I took the GLG 1442 course, which is offered through the Earth Sciences department at UofT. My review in a nutshell:

Learning accomplished: 9/10
Relevance of the course to everyday business: 6/10
Organization of the course: 3/10
Degree of difficulty: 8.5/10

Lets break down the components above into more detail –

Learning accomplished: If there was one objective in my mind for taking this course, it was to learn more about geology. The course was highly education towards this objective. I was able to learn about different types of deposits, how they are formed, what the typical characteristics of such deposits are and where a certain type of deposit can be found. I doubt I would have been able to achieve all this learning outside of the classroom within a four month time frame. As a result, I give a very high grade for the learning accomplished.

Relevance of the course to everyday business: Let’s face it. Many of you will never have to deal with a mining company in your career. This reduces the relevance of the course right away. However, for those who want to become involved in equity research or investment banking that could benefit from having some knowledge of geology, this course should provide a decent level of groundwork. Relevant topics include different types of deposits for specific metals as well as the grade, tonnage characteristics of these deposits. There is very little coverage regarding the costs related to mining these types of deposits, which makes this course somewhat less relevant than it could be. Secondly, there isn’t much coverage regarding the economics of mining either, which further erodes the relevance.

Organization of the course: If you are expecting a course which is organized in a manner similar to Rotman, you are in for a huge shock. A combination of handwritten overheads, no powerpoints and old school slide projectors makes the organization of this course difficult to follow. Additionally, there are in class handouts which are meant to supplement the handwritten notes, which further make it difficult to keep track of what might be going on in the course. The structure of the course is fairly loose since materials covered tend to skip many parts of the notes and does not strongly tie into the textbook. In fact, I never had to even use the textbook.

Degree of difficulty: The major fact of this course is that this is a graduate level geology course. The majority of the students taking this course are mining engineers or geologists. You will be expected to be on the same level as these guys pretty much from day one. Given the lack of a foundations course, this puts a student at a huge disadvantage. Therefore, if you are taking this course with the expectation of getting a good mark, you may be better off sticking with a Rotman course. If you are expecting to take this course as an elective, you are definitely better off taking a Rotman course. Compared to a typical Rotman course which is 2 hours of lectures per week, you will find that this course demands 5 hours of class time (2 hours of lectures + 3 hours of lab time). There is also a lab exam in this course which is unrelated to the materials covered in the exam, which means you are really taking an equivalent of two courses. The takeaway here is, be prepared for a difficult course and have some prior knowledge of the materials before hand. This will be the difference between struggling through this course and potentially failing this course.

Conclusion: For the people who have a genuine interest in mining, this course is highly useful. This course would be much more useful if it were better organized and had a better tie-in with business concepts such as IRR, project financing etc.

[Rotman Series: 1, 2, 3, 4, 5]

Game On!

We just arrived at the Westin Harbour Castle in Toronto for the MBA Games hosted by Schulich. The Rotman team has arrived and we are just getting sorted in our rooms before finding a quick bite to eat and attending the opening ceremonies later tonight.

The hotel lobby is filled with students from other schools and already we are piled up with great deals of swag: Rotman branded sweaters, t-shirts and track suits from our sponsors, snacks from General Mills, KD from Kraft, water bottles from RBC, etc.

Already, I've had a chat with someone I met at FEI competition from the Ryerson team. There is a lot of energy in the air as everyone is excited to meet with other students from different schools over the weekend.

I'll be in one of the academic competitions, the Case Competition, where only hint is that the topic will be "Organizational Management". We'll be spending all of Saturday (starting early) on the case competition. Sunday has many of the sporting events so we will be cheering our team mates as they compete in various sporting events.

Modeling a Down Payment as a Call Option

There was an interesting idea that came up in our discussion of Islamic Finance that got me thinking. While not directly related to what we were doing, someone mentioned the idea that a down payment was modeled like a call option which I thought was quite clever.

Consider this, you can:

• put down a payment for the right to purchase the asset
• elect to walk away from this right, forfeiting the down payment, or
• pay the *remaining amount* and purchase the asset at the appropriate time

This is very similar to a call option, with only one exception:

Note that in a down payment, you are paying the remaining amount, not the full amount of the asset. So if you were to use a call option to model down payment, you would have to adjust the strike price down by the premium (down payment) because the down payment is applied to the purchase price of the asset.

So imagine that the value of your asset changes after you’ve paid the down payment. If it goes up, you can continue your purchase (and possibly even sell your asset for a profit, assuming its liquid enough) or you can elect not to buy it if you’ve taken a huge bath (maybe even the market value dropped by more than the down payment amount).

Back from the Holiday

Well after a well deserved break, all the students are back.

First years are in their Negotiations class which odd for me as I didn’t do this last year due to the Middle East study tour, but now I see what it was like with the Atrium constantly being flooded by ambitious MBA students trying to get better deals in their exercises. There have also been requests for help with preparing for recruitment week which is coming up next week and some postings already up.

Even second years are at school, many having the clever idea of taking an intensive or two to lighten their final term course load.

Yesterday, we did a presentation for our ICP in Islamic Finance. Arash and I did a presentation on two comparable securities, one conventional and one Islamic and we showed they were strategically and operationally comparable (same industry, business model, enterprise value, capital structure, debt ladder, similar maturity, seniority and economic conditions, but different country and terms) and we analyzed the yield, adjusting for country risk and broke down the spread accounting for liquidity risk, minor maturity differences and increased cost of capital related to Sharia compliant terms.

This material will be used as part of Rotman’s new Executive MBA program class on Islamic Finance. While we aren’t quite finished with our work, the next step being to propose a term sheet for what the conventional financing would look like if it were Sharia compliant, I’m very happy with our progress and the insight we were able to bring into this new product class.

ICP Islamic Finance - "Conventional" Analysis

This morning we had a working session for our ICP - Islamic Finance with some lawyers, a corporate banker and professors. The two teams presented their analysis of the conventional financing structure of the primary security instruments used to finnace our projects. Under this conventional analysis, we looked at the costs of capital and the associated terms related to these types of paper with the intent of understanding the requirements need to make them Sharia compliant.

We also had great explanation from a senior lawyer regarding the structuring and "asset-based" (versus "asset-backed") nature of nominating (rather than selling) assets under a Special Purpose Vehicle (SPV) in order to comply with the necessary requirements of Islamic finance. We had considered the capital gains implications of a sale leaseback transaction, as well as understood how an asset and capital intense infrastucture project would look similar under an adjusted EV to EBITDAR metric regardless of the off-balance sheet financing that may potentially be required.

We have a solid understanding of the work requirements due before our next meeting in early January (before I fly off for London). We also had an opportunity to fire questions back at the professionals in the room in terms to learn what were the appropriate resources for generating comparables for analysis and benchmarking of our theoretical capital structures based on similar Sharia compliant instruments and current market conditions.

Some of the best advice we got:

• Understand the difference between "asset backed" versus "asset based" and how that affects your ability to issue Sharia compliant instruments
• Be aware of tax implications of capital gains/losses in a sale leaseback transaction
• Like any financial security, understand the key characteristics of seniority and expected return for a sukuk issuance and understand market appetite for these structured products

What Makes Rotman Different? A foray into the world of Business Design

In anticipation of our trip to LBS, Geoff and I have been asking ourselves: “What makes Rotman different?” In discussing this idea, one of the key points at the top of the list was business design. This week, I’ve had the pleasure of attending various events over at Design works where members of a university in Singapore are undergoing certification for Business Design.

On Tuesday, Geoff and I attended a working session with Anita McGahan discussing the evolution of demographics across different geographies and the implications for the future of the health care industry around the globe. With our guests present, we learned a great deal about the specific differences in the Singaporean culture and life style and were impressed by the innovation produced by their ambitious programs.


This exercise was particularly enlightening for me, not only because of my previous work as a Wireless Consultant for RIM in the healthcare communication and process optimization space, but also to learn more about the business design process.

Today, I also attended a talk given by my class mate and president of the Business Design club, Jason Huang, at Design Works for our Singaporean guests. He gave a very inspiring speech about the current state of business design at Rotman as well as a road map to the initiatives he and his team are putting into place to further develop the program at Rotman at the academic and extra-curricular levels. I am particularly impressed by his attitude, aiming to be the top club at Rotman. I think he also has demonstrated that he has the will and ability to execute on these new initiatives, launching business design more prominently into the spotlight.

He also had a great point about case competitions where “the idea isn’t just to try to do well, but more importantly to learn” a sentiment which I would like to echo and I think reflects my personal motivation for participating in various case competitions, including those not necessarily related to my chosen profession.

What is Business Design @ Rotman? Find out for yourself by watching the YouTube video below: