Wealth & Finance December 2014 by AI Global Media

December 2014

www.wealthandfinance-intl.com

Wealth

& i

f i n a n c e

How to Find Your Niche

Competition doesnâ&#x20AC;&#x2122;t have to be a barrier for SMEs

The Rise of Sukuk Why the Islamic bond is one to watch

2015: Year ofTopSuccess investment tips

for the coming 12 months

Hedge Funds What would another 2008-style decline mean?

Plus... Cocktails to get you in the festive spirit

Exit Strategies:

Why management teams need to get involved in 2015

December 2014 | Contents

5 6-11 News & Appointments Funds 14 Hedge Funds: A Stronger System? Don Steinbrugge, Founder and Managing Partner of global hedge fund consulting and marketing firm Agecroft Partners, asks: What will happen to the hedge fund industry if we experience a 2008-type market decline?

Finance Focus 20 Make a Smooth Exit Stuart Coventry, Partner at global management advisory firm Jamieson Corporate Finance, takes a look at the implications of 2015’s predicted resurgence in buyouts and tells us why it is important for management teams to be involved in the process 24

Make 2015 Go with a Bang As the year draws to a close, Laith Khalaf, Senior Analyst at Hargreaves Lansdown, gives five top investment pointers for investors to take into the New Year and beyond

Banking Zone 26

Markets Matters 28 SMEs: Carving out a Niche A crowded, competitive market need not be a barrier to success, says David Allmond, Co-Founder at Peppered Moth Marketing, who offers tips on how new small businesses can target the right people and ensure they have the edge over the competition

Relax 32 A Perfect Hideaway The Kipi Suites hotel, in the heart of Greece’s stunning and remote Zagori region, offers a welcome respite from the strains of modern life

36 Bottoms Up All the deals are wrapped up and the out-of-office auto replies are turned on. Now here are some easy and delicious cocktail recipes to really get you ready for the festive season

Editor’s comment Hello, and welcome to the final Wealth & Finance of 2014. Our cover story this month takes a look ahead to the coming year’s expected resurgence in management buyouts. What will this mean for businesses, and how can they ensure the smoothest exit possible? Stuart Coventry, Partner at Jamieson Corporate Finance, is on hand to tell us (p.20). Sukuk, Islamic finance’s equivalent of a mortgage or bond, is taking the world by storm. Dr Heba Abou-El-Sood and Dr Marwan Izzeldin tell us why (p.26). For many new SME owners, the prospect of a competitive marketplace is a terrifying one. But, it needn’t be, if businesses make the effort to find their own niche, says David Allmond from Peppered Moth Marketing (p.28). In our downtime section, Relax, this month we visit deepest Greece to experience the Zagori region’s wonderful Kipi Suites (p.32). And, with Christmas just around the corner, we’ve got some cocktail recipes that are guaranteed to really get you in the spirit (p.36). And of course there’s our regular roundup of the news affecting the major regions and markets from around the world. I hope you enjoy the issue, and have a fantastic holiday season. See you in the New Year. Ollie John, Editor ollie.john@ai-globalmedia.com

News & Appointments | December 2014

News in brief Global Coal Demand 9 Billion Tonnes p.a. By 2019 Global demand for coal over the next five years will continue marching higher, breaking the 9-billion-tonne level by 2019, the International Energy Agency (IEA) said in its annual Medium-Term Coal Market Report. The report notes that despite China’s efforts to moderate its coal consumption, it will still account for three-fifths of demand growth during the outlook period. Moreover, China will be joined by India, ASEAN countries and other countries in Asia as the main engines of growth in coal consumption, offsetting declines in Europe and the United States.

Start-Ups Worse than FTSE 100 for Gender Diversity Though the FTSE corporations are often thought to represent the “Old Boys’ Club”, new study suggests that start-up culture appears to be repeating the diversity mistakes of their predecessors New businesses are worse for female representation at board level than the FTSE 100 firms, according to research commissioned by approvedindex.co.uk, the UK’s leading business-to-business services market place. The study revealed the number of women on the boards of UK start-up firms is depressingly low and has been on a continuous decrease since 2010. The report highlights that whilst the FTSE 100 and FTSE 250 companies have witnessed incredible growth in female directors (22.8% and 15.6% respectively) start-ups across the UK have a meagre national average of 8.37%. Thus since 2010 the gap between the FTSE 100 companies and start-ups has quadrupled. To add a further blow, it appears that start-ups are making some attempt to change the profile of the stereotypical director through appointing younger faces; 48 is the average board member age. Start-ups are rewarding the young, but continue to exclude the female. Though the FTSE corporations are often thought to represent the ‘Old Boys Club’, these new findings

suggest that start-up culture appears to be repeating the diversity mistakes of their predecessors. The findings re-fit the figurative glass ceiling. Have we missed the rise of the Silent Suppressors? In all the focus on the ‘25 by 2025’ objectives set for the FTSE 100 firms, how have the bad practices of new businesses gone completely under the radar? Trilby Rajna, of Approved Index said: “It seems that despite start-up firms being heralded as the pioneers for innovation and technological advances, the inherent culture is far from progressive. Emerging entrepreneurs do not have the excuse of a history of bad cultural practices to latch on to. They should know better.” Amy Catlow, Director of Publishing at Approved Index and MVF Global said: “As a woman on the board of a leading tech company I feel the importance of my position as a role model for all women who are seeking to work in the industry. It’s a shame many of these new start-ups have not made a mixed board essential to their plans, as it’s crucial that the next generation of business leaders are advocates for diversity.”

“We have heard many pledges and policies aimed at mitigating climate change, but over the next five years they will mostly fail to arrest the growth in coal demand,” IEA Executive Director Maria van der Hoeven said at the launch of the book. “Although the contribution that coal makes to energy security and access to energy is undeniable, I must emphasise once again that coal use in its current form is simply unsustainable. For this to change, we need to radically accelerate deployment of carbon capture and sequestration.”

Global Climate Finance Falls for a Second Year Global investment in activities that reduce the threat of climate change fell for the second year in a row from US$359bn in 2012 to US$331bn in 2013. Climate Policy Initiative’s Global Landscape of Climate Finance shows that while public sources and intermediaries contributed US$137bn, a figure largely unchanged from last year, private investment totaled US$193bn, falling by US$31bn from 2012. The study credits the decrease in private investment largely to falling costs of solar PV, with deployment of this technology growing as investment shrinks. Solar deployment cost US$40bn less in 2013 than would have been the case with 2012’s solar investment costs. However, the situation remains grave: The International Energy Agency estimates that an additional US1.1tn in low- carbon investments is needed every year between 2011 and 2050, in the energy sector alone, to keep global temperature rise below two degree Celsius. In cumulative terms, the world is falling further and further behind its low-carbon investment goals.

December 2014 | News & Appointments

Alternative Investments: Still in the Growth Phase Deutsche Asset & Wealth Management survey finds liquid alternatives, multi-strategy hedge funds and private equity secondaries may command larger flows, as investors increasingly focus on factors other than absolute returns Alternative investments remain squarely in the growth phase, with investors across the globe looking beyond absolute returns as they seek to incorporate liquidity needs, regulatory status and transparency when weighing their alternatives allocation decisions. Meanwhile, the definition of what constitutes an alternative investment continues to vary by region and, to a greater extent, by organisation type. These dynamics create opportunities and challenges for helping investors fully understand their potential alternatives contributions. These were among the key findings of a new Deutsche Asset & Wealth Management (Deutsche AWM) survey of investors. “The Alternative Perspective – 2014 Global Survey of Investors in Alternatives” surveyed 373 investment executives from a diverse set of organisations in Europe, Asia-Pacific and the Americas. “Alternative investments have come into their own, taking a core position in an increasing number of portfolios. More than half of the Deutsche AWM clients whom we surveyed plan to increase their portfolio exposure to these asset classes, with funding most likely to come from cash and fixed income rather than from a reallocation between the various sub-sectors within the alternatives space,” said Dario Schiraldi, Deutsche AWM’s Head of Global Client Group. “Our 2014 Alternative Perspective survey points to a number of ways for alternative investments to validate and expand their role in asset allocation and risk management.” The survey’s key findings include: • Investors look beyond absolute returns. While investors expect private equity primaries, single strategy hedge funds, private infrastructure and private real estate to outperform, our survey reveals that liquid alternatives, multi-strategy hedge funds and private equity secondaries may command larger flows, as investors increasingly focus on factors other than absolute returns. • Liquidity needs send investors down different paths. Liquidity needs vary by organisation type

and region. Going forward, investors with high liquidity needs will increasingly turn to the expanding universe of liquid alternatives, while those with low liquidity needs will seek to capitalise on that flexibility in the form of higher potential rewards or better fee terms. • Alternatives are in the eye of the beholder. Differences in the way firms define alternative investments are evident across regions, organisation types and experience levels. As firms increasingly come to recognise the specific contributions each alternative asset class can bring to portfolio diversification, each could potentially earn its own allocation, as opposed to competing with each other for space within an overall alternatives allocation. • ESG is rising in importance. Nearly half of the respondents indicated that Environmental, Social and Governance criteria play some role in their alternative investment process, with ESG implementation most evolved in Europe, followed by North America. As ESG takes on a larger role, firms will develop more structured frameworks for choosing managers who implement these criteria. • One size doesn’t fit all when it comes to growth. Asia-Pacific arguably offers the most growth opportunity. Respondents from Asia-Pacific overwhelmingly say that they look to alternative asset classes to decrease correlations and improve diversification, versus their Americas and Europe counterparts, who use alternatives for a broad range of reasons ranging from risk reduction to returns enhancement. • Fee pressure is likely to intensify. Fee negotiation is becoming more commonplace, with investors pushing for better terms based on arguments including being a Day 1 investor and large ticket sizes. Investors across regions and organisation types say that the most persuasive argument for a reduction in fees is industry standard pressure.

Appointments New Singapore Operation, Leaders at Berkshire Hathaway Berkshire Hathaway Specialty Insurance (BHSI) has announced that it has received its non-life insurance license in Singapore, and named Marc Breuil as Regional President, Marcus Portbury as Head of Third Party Lines, and Peter McKenna as Head of Energy and Construction Casualty, in Asia. “We are pleased to bring the stability and capacity of BHSI to serve the commercial insurance needs of customers in Singapore,” said Peter Eastwood, President of BHSI. “With Marc, Marcus and Peter spearheading our entry into the local insurance market, we are pairing substantial expertise and local knowledge with our strong balance sheet from day one.” Under Breuil’s leadership as Regional President, BHSI is introducing a full range of commercial insurance products in Singapore, including commercial property, casualty, energy & construction, marine, and financial lines.

Swiss Re Names UK & Ireland Country Manager Swiss Re Corporate Solutions has named Marc Davis as Country Manager UK & Ireland. Davis will be based in London and drive the company’s growth strategy in those markets. Tony Buckle, Head of Europe, Middle East and Africa (EMEA) for Swiss Re Corporate Solutions, said: “Bringing on board an executive with Marc’s experience demonstrates our strong commitment to the UK and Irish markets. Our strategy is to bring our products and services closer to local clients and brokers. Marc’s knowledge and reputation will serve us well to strengthen our presence in the UK and Ireland.” With nearly 30 years of experience in the insurance industry, Davis has worked in a number of leadership roles in customer relationship, account management and sales, dealing with global accounts as well as with UK retail clients.

News & Appointments | December 2014

Bogged-Down Multinational Benefit Leaders May Be Missing Opportunities New research shows that global and regional headquarters pension and benefit leaders are under continuous pressure to focus on activities that will add value to their organisation, but are stretched in day-to-day operational tasks

Appointments RFA Hires George Ralph as MD RFA, technology advisor to investment management clients, has announced that George Ralph has joined the firm as Managing Director of RFA UK. RFA also announced the January opening of two data centres that will be part of the firm’s plan to provide its full portfolio of services to the UK and European asset management community, including RFA Cloud, disaster recovery, and outsourced IT, design, and implementation services. Prior to joining RFA, Ralph founded and grew three separate technology companies. He has over fifteen years’ technical experience in network and server architecture, large scale migrations utilising leading technology and brands such as Microsoft, Linux, VMware, Cisco, and Hosted Infrastructure. “We are confident that George will play an important role in RFA’s legacy of providing industry-leading service and technology guidance to our clients,” said Richard Fleischman, CEO of RFA. “His history of strategic management and business acumen make him an important addition to our leadership team.”

Nearly two-thirds (62%) of global pension and benefit leaders at multinational companies claim that day-to-day operational activities are limiting their ability to add value and hampering their strategic contribution to the company, according to research from global professional services company Towers Watson. Results from the latest Current and Emerging Global Benefit Themes survey shows that threefourths (75%) of participants also believe there is increasing pressure for them to do more with less, suggesting they need to change the way they do things if they are to create the time to focus on more value-added activities. “Our research shows that global and regional headquarters (HQ) pension and benefit leaders are under continuous pressure to focus on activities that will add value to their organisation, but are stretched in day-to-day operational tasks,” said Brian Makuck, senior consultant in Towers Watson’s International Consulting Group. “To overcome this, leaders need to revisit and review their teams’ activities, and evaluate the impact on the business and what changes can be made to improve efficiency. Global pension and benefit leaders should also consider different resourcing models for HQ activities — such as insourcing, cosourcing and outsourcing — to create space to focus on more valuable opportunities.”

According to the research, about seven in 10 (71%) respondents predict a significant increase in their global or regional involvement in pensions and benefits in 2015. The top three focus areas are expected to be global control and oversight of pensions and benefits, financial management of pension and benefit costs and risks, and employee appreciation of pensions and benefits. North American respondents also named Germany, the UK and the US as the top countries to focus on in 2015 for financial and strategic pension and benefit review reasons; the Netherlands owing to pension legislation changes; and Brazil, China and India for more operational reviews. “The respondents overwhelmingly believe that real value-added business opportunities exist from HQ getting more actively involved in pension and benefit management globally, for example, to help bring global perspective to key local decisions,” said Makuck. “The challenge for HQ pension and benefit leadership is to articulate and implement a coherent global pension and benefit strategy and management approach, and support it with enablers such as road maps of priorities, policies, guidance, technology and networking forums for sharing experiences.”

New CFO at Onyx Onyx Renewable Partners, a leader in flexible, creative solutions for the development, finance, construction and operation of large-scale renewable energy projects, has appointed Leanne M. Bell as chief financial officer. Bell brings over 30 years of experience to Onyx, with expertise in deal analysis and negotiations, risk management policies and investor relationships. “We are thrilled to welcome Leanne to our team,” said Matt Rosenblum, CEO of Onyx Renewable Partners. “Her extensive experience in energy financing will serve as a tremendous asset to Onyx’s proven ability to implement creative financial structuring in the development of successful renewable energy projects.” Prior to joining Onyx, Bell served as chief financial officer and chief operating officer at Synergy Renewables, a global power development company. She previously served as managing director at both Tiger Infrastructure Partners and Lehman Brothers.

December 2014 | News & Appointments

Dealmakers Crave Sleep and Time Off, Study Finds Most US and UK M&A analysts are getting just three to five hours of sleep a night, and between two and four days off a month So who are the luckiest M&A bankers that get the most shut-eye and rest?

In contrast, their counterparts in the US and UK survive on no more than seven hours of sleep.

Those in Asia Pacific, according to specialist M&A data room provider ansarada.

ansarada asked the M&A bankers what was the most important factor in ensuring success in their role. Attention to detail, replied M&A analysts, associates, vice presidents and directors.

Sydney-based ansarada surveyed 51 analysts and 44 associates, vice presidents and directors working in the M&A departments of investment banks in the UK, US and Asia Pacific. ansarada found most M&A analysts in Asia Pacific get between five and seven hours of sleep a night with some even getting more than seven hours. These analysts are also getting as many as four days off a month.

“Junior bankers in Asia Pacific must be the envy of their peers in the US and the UK,” said James Rees, a former Credit Suisse M&A banker who now works as a corporate advisor to mid-market companies and family offices.

Most US and UK M&A analysts are getting just three to five hours of sleep a night. The US and UK analysts are getting between two and four days off a month.

“If attention to detail is the key to success, then getting more than five hours sleep a night and an occasional day off makes an enormous difference,” says Mr Rees. “M&A transactions are similar to a marathon and not a sprint. Sleep will assist with coping with high pressure environments over a long period of time.”

The majority of Asia Pacific M&A associates, vice presidents and directors get between five and seven hours of sleep a night. Some are getting more than seven hours.

ansarada also asked associates, vice presidents and directors why they work in M&A. Many said the job pays well. A similar number see their job in M&A as a stepping-stone to a different career.

Similarly, most M&A analysts view their job as a stepping stone to work outside the M&A industry. ansarada also asked what the M&A bankers would do if they weren’t working in M&A. A number of M&A analysts said if they weren’t working in investment banking they would be management consultants. One M&A analyst though, perhaps jokingly, has ambitions to be a guidebook writer. Another a fly fisherman. Associates, vice presidents and directors said if they weren’t in M&A they would be lawyers or working in corporate development and strategy. Some expressed interest in starting a company. One says, perhaps in jest, they would be a dolphin trainer. Another a Formula One motor racing driver. Racing cars for a living may be the ultimate fantasy but the best M&A market since the collapse of Lehman Brothers is giving many M&A bankers the ride of their lives.

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December 2014 | News & Appointments

One in Five Employees Going Rogue with Corporate Data Survey also finds despite that 60% of employees stated they were aware that their employer strictly forbids taking intellectual property after leaving the company, a quarter of workers admitted they would take copies of corporate data with them Companies around the world have reason to be worried about the use of cloud applications to share mission-critical information: 1 in 5 employees has uploaded proprietary corporate data to a cloud application, such as Dropbox or Google Docs, with the specific intent of sharing it outside of the company. SailPoint’s 7th Annual Market Pulse Survey also found a clear disconnect between cloud usage across the business and existing IT controls with an alarming 66% of users able to access those cloud storage applications after leaving their last job. And, despite that 60% of employees stated they were aware that their employer strictly forbids taking intellectual property after leaving the company, 1 in 4 admitted they would take copies of corporate data with them when leaving a company. SailPoint’s 2014 Market Pulse Survey was designed to measure employee attitudes toward protecting corporate digital assets. The company commissioned Vanson Bourne, an independent research firm, to interview 1,000 office workers at large companies with at least 3,000 employees across Australia, France, Germany, the Netherlands, the United Kingdom and the United States. With only 28% of survey respondents stating that corporate policies pay close attention to who is granted access to mission-critical SaaS apps, the survey showcases the complex challenge companies face when trying to manage applications outside of IT’s control, as well as the risk of

massive security breaches and internal theft faced by companies.

Germany (70%); Netherlands (61%); United Kingdom (61%) and United States (69%).

The Market Pulse Survey focused on specific regions to help companies gain a better picture of the progress of security controls around sensitive information. The key findings of employee actions around the globe include:

• Employees who are aware of corporate policies against taking intellectual property when they leave their companies: Australia (68%); France (49%); Germany (58%); Netherlands (57%); United Kingdom (60%) and United States (61%).

• Employees who have uploaded a sensitive document to share outside their companies via a cloud application (such as DropBox, Box or Google Docs): Australia (11%); France (20%); Germany (17%); Netherlands (13%); United Kingdom (18%); and United States (22%). • Employees who have purchased and/or deployed a cloud application (such as Salesforce. com, Concur, Workday, DropBox, DocuSign, etc.) without the help of IT: Australia (14%); France (14%); Germany (16%); Netherlands (18%); United Kingdom (21%) and United States (24%). • Employees who are aware of corporate policy that pays close attentions to who is granted access to cloud applications with mission-critical data: Australia (24%); France (27%); Germany (28%); Netherlands (24%); United Kingdom (30%) and United States (29%). • Employees who were able to access corporate data via cloud storage applications (including Dropbox and Google Docs) after they left their companies: Australia (56%); France (70%);

• Employees who admitted they would take any corporate data when they left their jobs: Australia (21%); France (24%); Germany (16%); Netherlands (15%); United Kingdom (26%) and United States (27%). “The survey results are an eye opener of how cloud applications have made it easy for employees to take information with them when they leave a company,” said Kevin Cunningham, founder and president at SailPoint. “With almost 20% of employees purchasing a cloud application for work without involving the IT departments, combined with the ability for employees to use consumer cloud apps for work activities, it’s virtually impossible to manage access to applications and the sharing of mission-critical data. “In order to establish control over this ‘bring your own app’ phenomenon, it’s critical to provide specific incentives for end users to follow corporate policy such as offering users a seamless login experience in exchange for using a central access control framework.”

Funds | Hedge Funds: A Stronger System?

Hedge Funds: A Stronger System? Don Steinbrugge, Founder and Managing Partner of global hedge fund consulting and marketing firm Agecroft Partners, asks what will happen to the hedge fund industry if we experience a 2008-style market decline

â&#x20AC;&#x153;

The hedge fund industry is structurally much more stable today than in 2008. Such stability would result in significantly less redemptions and an avoidance of a complete seizing of inflows

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ith interest rates and credit spreads near historic lows and equity valuation above historical averages, many people are concerned that the Federal Reserve, by artificially keeping rates low, has created a 2007-type asset bubble in the capital markets where many securities are priced to perfection. What happens to the financial markets when the Fed begins to raise interest rates or there is some other economic shock to the financial system, and what impact will this have on the hedge fund industry? We recently saw a glimpse of this from mid-September to mid-October when we experienced a slight tremor in the capital markets which saw asset prices decline and volatility spike. This was followed by an onslaught of negative articles from the mainstream media relative to the hedge fund industry.

Agecroft Partners believes there is a low probability of another 2008 type market selloff in the near future. However, if it were to occur, the outcome in the hedge fund industry would be very different than what was experienced in 2008. The hedge fund industry is structurally much more stable today than in 2008. As described below, such stability would result in significantly less redemptions and an avoidance of a complete seizing of inflows. 1. The make-up of the hedge fund investor base is very different from 2008. Pension funds over the past 6 years have been responsible for a significant percentage of positive net flows to the hedge fund industry. These institutional investors are much more long term oriented and stable. This trend could actually be enhanced by a

Hedge Funds: A Stronger System? | Funds

Funds | Hedge Funds: A Stronger System?

market decline as pension funds strive to reduce their unfunded liability by enhancing returns and reducing downside volatility. Pension funds need to generate a return equal to their actuarial assumptions which typically are in the 7.5% to 8% range. This is difficult to achieve when the fixed income portion of their portfolio is yielding around 3%. Endowments and foundations, which were criticised for their redemptions after the 2008 market correction, have repositioned their portfolios to better withstand “liquidity” events. These liquidity issues were primarily driven by the private equity portion of their portfolios, where common practice was to over allocate to private equity in order to maintain a targeted allocation. This caused significant issues when capital calls increased while return of capital came to a halt. Most of these liquidity issues have now been resolved. Going forward endowments and foundations will be much more active allocators to hedge funds given a similar sell off. Finally, the fund of funds market place is much more stable. These organisations are using less leverage and their investors are better educated on what they are buying. Before 2008, many fund of funds were selling their funds as a t-bills plus 400 basis point product. Many investors did not realise that they could experience material negative returns. When investors’ experience is dramatically different than their expectations, they are much more likely to redeem. 2. Significantly less leverage utilised by hedge fund investors and managers. In 2008, a majority of the highly leveraged fund of funds either went out of business, suffered heavy withdraws, or had their leverage reduced by their lenders. This in turn led to significant redemptions from the underlying hedge funds. Today there is much less leverage used by fund of funds. In addition, the average leverage used by individual hedge funds has declined, which should help their performance in a down market and reduce the amount of withdrawals. 3. Better alignment of liquidity terms and underlying investments. Back in 2008, there was less regard for the mismatch in liquidity terms of a fund and its underlying investments. It did not matter if the fund strategy focused on asset based lending, distressed debt, or some other type of illiquid investment as long as the fund allowed for monthly or quarterly liquidity. This mismatch worked fine as long as there were positive flows to the fund; however, the large redemptions at the end of 2008 led to many funds raising gates and suspending redemptions. This also reduced confidence in the hedge fund industry and unfairly penalised liquid strategies by turning them into ATM machines for many investors who needed liquidity. Since then there has been a much

greater focus among investors on liquidity terms and their alignment with the underlining investments. Investors are much more willing to accept longer lock-up provisions for less liquid strategies and are avoiding those funds with mismatches in liquidity terms. In addition, those managers who investors perceived as self-serving by employing a gate provision at the end of 2008, have been mostly banished from future consideration. We should see significantly less use of gates and suspension of redemptions in the future. 4. Lower probability of another Madoff. The Bernie Madoff fraud caused a ripple effect throughout the industry which led to massive redemptions from investors in fund of funds that had Madoff exposure. It also temporarily reduced investors’ confidence in the hedge fund industry, leading to further redemptions and reductions in allocations. Since that terrible event, there has been a significant enhancement in the due diligence process of many investors to reduce the probability of fraud, including a greater focus on transparency, operational due diligence and the quality of service providers. 5. Lack of good investment alternatives. Contrary to mainstream media reports of investors giving up on hedge funds, the recent spike in volatility of the capital markets has not led to large redemptions. This is because of a lack of investment alternatives for investors. Money market funds are yielding close to zero and generating a negative real return. The 10year US treasury is yielding approximately 2.5% and could sustain a large market value decline if interest rates rise. Investors obviously don’t want to increase their equity holdings if they expect a major decline in the equity markets. We believe institutional investors view hedge funds as more attractive if they are concerned about a market sell-off. In addition, once the market actually does sell off, investors’ emotional response is the market can always go lower, which again makes hedge funds look attractive. Market sell-off will create winner and loser hedge fund organisations Although we believe the hedge fund industry net-flow will hold up much better given a 2008 type sell-off in the capital markets, the impact relative to each individual hedge fund firm will be dramatically different. Instead of assets leaving the industry we will see a large rotation of asset flows within the industry creating winner and loser hedge fund organisations. How each firm does will be highly dependent on 1. their investment strategy 2. how they performed verses similar funds and 3. how they performed compared to investors’ expectations. Investment Strategy: The hedge fund industry is very dynamic relative to what strategies are in demand and large market sell-offs tend to be a catalyst for major changes in the relative

demand for various strategies. For example, after the market sell-off of 2008, long short equity strategies declined from approximately 40% of the hedge fund industry’s assets to 25%, while allocations to CTAs and structured credit expanded significantly. We expect to see similar shifts in demand, although not necessarily affecting these particular strategies. Relative performance compared to peers: Volatile markets cause significant deviations in performance across mangers in similar strategies. Those managers who significantly underperform their peers will experience larger withdrawals compared to other managers who successfully navigate through the difficult markets by better protecting their investors’ capital. Performance compared to investors’ expectations: Hedge fund managers that have been truthful with their investors, done a good job of educating their investors on their investment process, along with how it does in different market environments, and treated their investors fairly relative to gates and other restrictions of liquidity will have a much easier time holding on to their investors. In conclusion, if we experience a major market correction, net flows will be negative, but nowhere near the extent that was experienced in 2008. Most of the redemptions will be recycled within the industry creating winner and loser hedge fund organisations. Hedge fund organisations’ actions and quality of communications with their clients can have a major impact on which category they experience.

About the author... Don Steinbrugge is the Founder and Managing Partner of Agecroft Partners, a global hedge fund consulting and marketing firm. Agecroft Partners has won 23 industry awards as the Hedge Fund Marketing Firm of the Year. Agecroft is in contact with over a thousand hedge fund investors on a monthly basis and devotes a significant amount of time performing due diligence on hedge fund managers. Don frequently writes white papers on trends he sees in the hedge fund industry, has spoken at over 80 hedge fund conferences, has been quoted in hundreds of articles relative to the hedge fund industry and is a regular guest on business television including Bloomberg Television, Fox Business News, CNBC, Reuters Insider, Al Jazeera America and CCTV. Don can be contacted at donsteinbrugge@agecroftpartners.com and he tweets at www.twitter.com/DonSteinbrugge.

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Finance Focus | Make a Smooth Exit

Make a Smooth Exit Stuart Coventry, Partner at global management advisory firm Jamieson Corporate Finance, takes a look at the implications of 2015’s expected surge in buyouts, and why it is important for management teams to be involved in the process

raditionally, there are three types of exit: a trade sale, a private equity acquisition and an initial public offering (IPO). All three have been prevalent exit options in 2014, with the return of the IPO leading the way as the maximisation exit route of choice. Although the IPO listings have tailed off in recent months, Europe has been very much a sellers’ market driven by stock market flotations. Exit numbers this year set to hit pre-Lehman levels and exit value double the Buyout market value. Over the course of the year, we have seen large secondary buyouts (i.e. greater than £250m) supressed due to the popularity of IPOs and alternative exit options such as quasi trade deals. On the whole, there have been fewer secondary buyouts this year compared to 2013 and the mega-sized secondary deals have been few and far between. One of the only examples of a large secondary buyout this year has been Pizza Express, which in July was acquired for approximately £900million by Hony Capital, the Chinese private equity fund. By comparison, there were five similar-sized deals last year. However, with IPOs having stalled, advisor teams largely expect the buyout market to pick-up again in the New Year. This is further

supported on account of large cash deposits held within the private equity market, and the continued access to cheap debt. Additionally, the General Election further complicates matters, as the second quarter of 2015 will, in all likelihood, be a period of financial and political instability. The first three months of the year is a narrow window of opportunity for management teams to exit; the next opportunity will be in the later summer months. So, with the secondary buyout market likely to pick up at the start of 2015, where does that leave management teams looking to exit? Aligning exit interests With the choice of exit route for private equity-backed businesses as varied as it has ever been there is a role to play in ensuring there is alignment between the Investor and the management team with regards to the exit strategy. It may sound obvious, but management teams need to be involved in the exit process from day one. It is frightening how often we come across teams that do not fully understand the implications of the deal until the 11th hour, which is disruptive

to a sale process. A successful exit process is one where management are fully engaged in all aspects of the process and the process for agreeing their terms is baked into the timetable. Incentives & Taxation Employee incentives programmes should be revisited during the early stages of the exit process and looked at as part of the exit route being taken. Whether it is a required rollover of proceeds or lock in arrangements as part of an IPO listing, these are value implications for Management teams. Again, the management and Investor should be aligned and collectively agree on the implications of the exit incentives. Another element for management teams to consider is taxation. If the structuring of the exit process is performed correctly, it is possible for management incentives to fall into capital tax schemes, which is clearly more attractive than an income incentive. However, with the General Election rapidly approaching, there is much uncertainty around the current tax schemes in place and whether these will change going forward.

Make a Smooth Exit | Finance Focus

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A successful exit process is one where management are fully engaged in all aspects of the process and the process for agreeing their terms is baked into the timetable

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Finance Focus | Make a Smooth Exit

Management teams should seek advice on any technical areas, particularly as any changes in policy with regards to taxation can great impact exit strategies. Succession planning With secondary deals representing close to two thirds of European private equity-backed transactions, implementing a robust succession plan is not only best practice but it is an essential component of the exit process. The importance placed on management teams to ensure these deals cross the line means that appropriate succession planning cannot be over-estimated. In short, succession planning is good practice not only for the business but it also goes to value. Investors tend to be sympathetic to the challenges of succession, and are often most impressed when management teams have implemented a clear, carefully-managed succession plan during the deal. There really is no reason for a transaction to get into difficulties because of succession issues. The succession story needs to be carefully thought through well ahead of the exit process. This is easier said than done: it is often the case that the managers who invested in the previous deal will not necessarily be the same managers driving the next business plan. As a result, different perspectives and agendas must be taken into account.

Communicating to stakeholders is vital component; management teams must be clear with their intentions from the outset. The amount of reinvestment and new equity participation are pertinent issues for managers making decisions on succession and transition planning. It is rare for a manager to crystallise their investment until the Investor exits but the decision becomes muddied when a manager when he will make the transition. Significantly, there is now a much more established market for tertiary (and even quaternary) deals. This can be frustrating for management teams that may feel they are constantly moving from one deal to the next in a time-consuming game of buyout ‘pass the parcel’. A recurring question from managers is: “Do I have to die in order to get my money out?!” The simple answer is: no. The best way to avoid a protracted deal process is to stick to agree the transition arrangements at the planning stage of an exit process and sort out a re-investment amount and equity participation commensurate with the transition role being performed. I would also say, beware the manager who assumes he will transition but ends up working to the same role and compromising his incentive. Planning for every eventuality is virtually impossible: out-of-the-blue changes to market conditions, macro-economic issues, regulation changes

and other variables will often threaten wellplanned deal strategies. Fundamentally, any exit strategy needs to be adaptable to changing market conditions. The dual track process – where management teams explore an exit through a flotation and a trade sale and/or private equity sale simultaneously - has been a popular approach by management in recent months. With May’s Election likely to destabilise what is an already fragile domestic market, plus troubles persisting in Europe, a dual-track process is not a bad strategy to cover the bases. Management teams that are able to clearly outline their concerns and desired outcomes at the beginning of the exit process will go a long way to ensure a smooth - and importantly - successful deal for all parties.

About the author... Stuart Coventry is Partner at global management advisory firm Jamieson Corporate Finance. Stuart has been in corporate finance for over 12 years, specialising in private equity and leveraged buyout transactions. His experience covers all aspects of private equity deals, including bid support, management advice, finance raising and disposals, and he has a strong interest in the support services sector.

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Finance Focus | Make 2015 Go with a Bang

Make 2015 Go with a Bang Laith Khalaf, Senior Analyst at Hargreaves Lansdown, gives five top investment pointers for investors to take into the New Year and beyond

1. Choose properly active or properly passive funds Too many funds are closet trackers which charge fees for active management but provide an index-like return. This phenomenon is particularly prevalent amongst pension funds which hold billions of pounds of investors’ retirement savings. Investors should rid their portfolio of this deadwood, and replace these funds either with proper index trackers at a fraction of the price, or a truly active fund run by a talented and proven fund manager. It is absurd that some investors are paying more to invest in closet trackers than they would to invest with one of the UK’s foremost fund managers like Neil Woodford. HL Vantage investors can invest in Woodford Equity Income for an annual fund charge of 0.6%, or Legal & General UK Index fund for an annual fund charge of 0.06%. This is the lowest priced UK Index Tracker available to UK retail investors. 2. Match your investments to your tax shelters Putting your investments into a SIPP and an ISA can make significant savings on income tax and capital gains tax for you. A pension like a SIPP is by its nature a long term investment for most investors and so, counter-intuitively, should include

your riskiest investments as you have the longest investment horizon to ride the ups and downs. There is also some sense to sheltering income-producing assets in your pension and ISA before growth assets. This is because capital gains tax can be avoided if your profits are less than £11,000 a year. Meanwhile when it comes to income, a SIPP or ISA protects basic rate taxpayers from paying 20% income tax on interest payments, and protects higher rate taxpayers from paying 40% tax on interest payments and 22.5% tax on dividend payments. Additional rate taxpayers are protected from 45% tax on interest payments and 27.5% tax on dividend payments.

once a year. This way there are no nasty surprises waiting for you when you finally come to cash in your investments. Investors should keep an eye on how their funds are performing and weed out any serial underperformers. They should also make sure they are on course to meet their savings goals, if not they may have to top up along the way, because investment markets don’t ever go up in straight lines. Finally investors need to consider whether their portfolio is still appropriate for them in light of any changes in their personal circumstances, such as their employment status or dependants. 5. Consolidate investments

3. Consider if you are taking enough risk Many investors question whether they are taking too much risk, but few ask if they are taking enough risk. Risk and return are related and taking less risk is fine if that suits you, but it is likely to lead to lower returns over the long term, which may make your savings goals less attainable. There are two ways to counter this: take more risk if you feel you can stomach the ups and downs, or save more each month while maintaining a lower risk portfolio. 4. Conduct an annual portfolio review All investors should review their portfolio at least

Getting all your investments under one roof will help you to make them more manageable. Being able to look through your portfolio online 24 hours a day, seven days a week is a convenience which is now available to investors today, but there are plenty of savers who still run their portfolio from an overstuffed drawer full of paper. The Christmas and New Year break might provide an opportune time to get rid of the paperwork and go electronic. Transferring to an online SIPP, ISA and investment account is a straightforward process once you know where your existing investments are held. Once you’ve done it you can look over your savings at the click of a button, and you can use that drawer for something else.

Make 2015 Go with a Bang | Finance Focus

Banking Zone | The Rise of Sukuk

The Rise of Sukuk This year, Britain became the first non-Muslim country to issue sukuk, an Islamic financial instrument equivalent to a bond or mortgage, leading to £2.3bn in orders. Hong Kong quickly followed and now Société Générale and Bank Tokyo-Mitsubishi, as well as the governments of Luxembourg and South Africa, are planning thieir own sukuk issues. Dr Heba Abou-El-Sood from Cairo University and Dr Marwan Izzeldin from Lancaster University Management School tell us why the sukuk is one to watch

The Rise of Sukuk | Banking Zone

n June 2014, Britain became the first non-Muslim country to issue sukuk, an Islamic financial instrument equivalent to a bond or mortgage. Hong Kong followed Britain’s suit in September and the governments of Luxembourg and South Africa expressed their planned sukuk issuance by the end of 2014. Britain’s issuance has attracted above £2.3bn in orders while the Hong Kong issuance attracted US$4.7bn in orders. The huge market demand for sukuk has encouraged non-sovereign sukuk issuance to tap into the fast growing Islamic finance market of approximately US$2tn. The Goldman Saches successful sukuk issuance in September has motivated Société Générale and Bank Tokyo-Mitsubishi to follow the lead by the end of 2014. Non-Islamic financial institutions have been devising sukuk instruments that are compliant with Islamic Shari’a rules where the possessor is entitled to part-ownership of an asset and then receives income either from profits generated by that asset or from rental payments made by the issuer. This structure is resolves the issue of receiving non-Shari’a compliant interest payments on lent money, as in a standard bond. Therefore, if a customer wants to buy a house, the bank will buy the house itself rather than lending money and receiving interest. The customer then has two options depending on the structure of the Islamic sukuk transaction. He can either buy the house back from the bank at an agreed-upon, value paid in installments in

a partnership-like structure (murabaha sukuk) or he can make monthly payments that comprise a rental portion and another portion that goes towards the purchase price until he owns the house (ijara sukuk). Non-Islamic financial institutions have to devise financial instruments conforming to Shari’a requirements and fitting the sukuk structure. The urging question has been whether the appeal to a growing market has been the sole motive for non-Islamic banks to issue Islamic Shari’a-compliant instruments. With Basel III banking regulations being phased in starting 2013, several Islamic banks have issued subordinated instruments, including those in the United Arab Emirates, Saudi Arabia, Turkey, and Pakistan to boost their regulatory Tier 1 and Tier 2 capital. Banks in Malaysia have started to use of investment partnership structures (murabaha) for their sukuk, which will be classified as Tier 2 capital on the balance sheet. Tier 1 capital constitutes core equity and disclosed reserves; and Tier 2 capital comprises supplementary capital of other reserves, provisions, subordinated debt, and hybrid instruments. Basel III regulations allow part of the minimum Tier 1 capital ratio to be in the form of additional Tier 1 capital, a layer of additional capital that is perpetual in nature. The main purpose of Tier 1 and Tier 2 capital is to absorb losses during economic shocks. With additional Tier 1 capital, Basel III is signaling opportunities of using instruments that are potentially hybrid in nature and provide fixed rates of return.

While the growth of sukuk issuance has been targeting market opportunities, there have been massive opportunities for the capitalization of Islamic and non-Islamic banks to meet regulatory capital adequacy needs. Out of the total volume of sukuk instruments issued to date, 59% support the Basel III Tier 2 capital requirements while 41% support the Tier 1 capital. Recently, sukuk compliant to Basel III has formed an alternative source of finance for institutions that face difficulties in raising capital through stock issuance as financial instability depresses stock market prices. After Basel III new regulatory capital adequacy rules, there has been a market gap for the supply of instruments that are potentially hybrid in nature (equity callable at the discretion of the issuer), subordinated to depositors, have no maturity date or perpetual, and offer fixed rate of return to sustain the perpetual nature. This unexploited market gap has been filled with globally growing sukuk instruments, boosting the regulatory capital of issuing banks and reinforcing the role of Islamic finance in the global banking industry.

About the authors... Dr Heba Abou-El-Sood is Lecturer in Accounting, Finance and Banking at Cairo University. Dr Marwan Izzeldin is a Senior Lecturer at Lancaster University Management School

Markets Matters | SMEs: Carving out a Niche

SMEs:

Carving out a Niche

A crowded market equals a competitive market â&#x20AC;&#x201C; but that need not be a barrier to success. David Allmond, Co-Founder at Peppered Moth Marketing, tells us how new small businesses can target the right people and ensure they have the edge over the competition

SMEs: Carving out a Niche | Markets Matters

t’s a dilemma faced by many small businesses in their infancy: you’ve got your idea, you think it’s great, but when you research the wider market, it becomes apparent that there are already various companies out there doing a similar thing. A crowded market means a competitive climate – but it doesn’t necessary mean that your venture won’t be a success. If anything, it shows that demand – and a market – exists. The key isn’t, therefore, necessarily finding an empty space. Facebook, for example, was by no means the first social media platform. Zuckerman developed the site specifically for Harvard University students. Within the first month, half of the undergraduate body had signed up, and quickly spread to other Ivy League universities. Facebook now has as many users as China has people. Defining the remit of their site to a specific group has been the key to Facebook’s success. In meeting the needs of this group better than anyone else, they were then able to conquer the market – so much so that the platform now almost defines social media itself. If you can narrow your product or the service you provide to a well-defined customer and are able to meet their needs better than anyone else – you may be able to survive and flourish in a crowded market. Here are some ways of carving out your niche, and making sure you have the edge. It doesn’t matter how ‘crowded’ a market is – you can always find a tranche of customers whose needs aren’t being met. Firstly, if you’re a newcomer to a crammed industry, look for a slice of the market that’s not getting enough attention. The key is always to identify a tranche of potential customers whose needs aren’t being met – and to make sure you know exactly what those needs are. Being able to target a specific segment whose needs aren’t being met – providing this is still large enough to be profitable - is one of the best ways an SME can challenge a large and established brand, which will normally appeal to a mass market. Providing this segment is so it makes sense as a newcomer to isolate a group whose needs aren’t being met. For example, the cosmetics industry is – on the surface – dominated by big and reputable names, with strong customer loyalty. But within this, there are always customer groups whose needs haven’t been properly met. Take, for example, when Sian Sutherland and her business partner, Cathy Mellor, decided to enter the market from

both of their experiences of pregnancy, and having looked for safe and effective products to use on their skin, they realised that there wasn’t much on offer. They developed Mio – a brand specifically designed to address the emotional and functional needs of pregnant women and new mothers. Some valuable marketing lessons can be learned from what they have achieved – mainly that they based their product on understanding customer needs. A desire to understand this, and to meet these needs, was the starting point of their venture, and in doing this, they were able to enter into a market which appeared to be ‘too crowded’ for an SME. Can this group be properly classified – and successfully targeted – as a customer segment? Once you’ve examined and identified customer needs, the next thing to consider is whether or not this particular group can, in marketing speak, be classed as a ‘customer segment’. Failure to define real customer segments is very common pitfall for small businesses. Weaker strategies simply look at broad descriptors, such as age, sex and geography without properly examining the different subgroups that exist within these – and how these are clearly defined by their needs. To determine whether or not a segment is viable you should ask yourself: Is the segment clearly definable? Is the need consistent across a significant number of customers? And, are they profitable to target? If the answer to these questions is ‘yes’ – you may have yourself a well-carved customer segment, based on needs which may not have been met in a market which at first appeared ‘crowded’. Think creatively about how you can reach your customers When entering a crowded marketplace, it can be a challenge to get placement in the portfolio of products already offered by the big players. With the example of Mio still in mind, one of their less obvious strategies to navigate this issue was to find alternative channels through which to market. When you sit back and think about it, you can soon realise where you might find the target customer and in which context they may be ready to buy such products. For Mio, this context was shopping for maternity wear. Such creative approaches to reach customers have been a major success factor for Mio, helped them to step around the issue of being a small player. Think about how you can reach your customers in a creative way – it will often be where others have missed a trick.

To get this, you need true market insight Getting this far requires good market insight, which is reliant on quality data input. Garbage in equals garbage out – simple as that. Gaining market insight is not an exact science, but a combination of interpretation of fact-based data and people’s opinions. This can come from primary market research, secondary research like market reports, competitor monitoring and formally-collected data from within the company, e.g. through interviews with directors and customer-facing staff. It doesn’t matter where great insights come from, from the founders, the sales team, primary or secondary market research or somewhere else. What matters is knowing what to look for, what information is valuable and then tapping in to the right channels to gain real insight. Pay attention to the competition – but don’t let this dampen your passion Of course, it’s vital to pay attention to what your competitors are doing. Of course, it’s important to pay attention to what your competitors are doing. Or, perhaps more importantly, what they’re not doing. But in the case of a crowded market, examining the competition as a starting point is likely to only dampen spirits and passion. It’s best to start with an understanding of customer needs and innovate to meet them. In fact, if you start from looking at unmet customer needs, you will naturally be examining what the competition are failing to do – far more important in carving out a niche, than simply focusing on everything that they are doing already. No matter how crowded a market may seem at first, or monopolised by leading brands, there will always be a group whose needs aren’t being completely met. All you need to do is identify the group, figure out their needs, why they aren’t currently being met, and how it is that you can meet them.

About the author... David Allmond Co-Founded Peppered Moth Marketing with Jonathan Slobom. The firm works directly with clients, with no delegation to account managers, using its extraordinary ability to simplify and clarify the marketing strategy process to help businesses create a coherent practical marketing strategy that will generate double digit sales growth and enhance shareholder value.

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Relax | A Perfect Hideaway

A Perfect Hideaway The Kipi Suites hotel, in the heart of Greeceâ&#x20AC;&#x2122;s stunning and remote Zagori region, offers a welcome respite from the strains of modern life

A Perfect Hideaway | Relax

Relax | A Perfect Hideaway

The region has an area of some 1,000 square kilometres. To the south lies the provincial capital, Ioannina. The southwestern side is formed by Mount Mitsikeli (1,810m), and the Aoos river and Mount Tymfi constitute the northern side. The southeastern side runs along the Varda river to Mount Mavrovouni (2,100m) near Metsovo. It’s a perfect place for those wanting to escape the rat race: the population of the Zagori area is around 3,700, which gives a population density of four inhabitants per square kilometre – compared to an average of 73.8 for Greece as a whole. Nestled in Zagori’s magical network of mountains, valleys and rivers is Kipi Suites, an exclusive boutique hotel. Its eight luxurious suites and terraces offer panoramic views of the village, Mitsikeli mountain, Baya river and Milos – one of a network of bridges that links the many traditional villages in the area. The hotel has been developed from two Zagori village houses dating from 1850, with a further three buildings added to blend perfectly with the original property. The traditional exterior facades have been carefully preserved while the interiors add a contemporary air. All materials used for the construction, renovation and maintenance of the Kipi Suites are environmentally friendly and special care has been given to energy and water conservation throughout the hotel.

Eight different suites, named after the surrounding villages of Central Zagori await you. All suites have separate entrance, unobstructed views and one or two open fireplaces, while most enjoy a private terrace or balcony. The furniture is custom made and, along with designer fixtures and fittings provide a contemporary, minimalist result. The spacious bathrooms are fully equipped with top quality amenities, towels and bath robes. Most suites feature a Jacuzzi. Relax in the ultra-comfortable king-size beds and enjoy 32’’ HD TVs, Nespresso machines and iPhone docks. The hotel takes great pride in its breakfast, and regards it as the most important meal of the day. Start your day with a glass of fresh orange juice and choose from the varied breakfast menu. All breakfast delicacies – including breads, marmalades, yogurt, biscuits, desserts and pies that change daily – are home-made, using fresh local ingredients.

“

Best of all, breakfast is served until midday – so there’s no excuse not to enjoy a well-deserved lie-in.

All suites have separate entrance, unobstructed views and open fireplaces, while most enjoy a private terrace or balcony

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uilt, amphitheatrically, in the area of Timfi, Pindos and Mitiskeli, northwestern Greece, the Zagori region comprises a cluster of 48 traditional, stunningly picturesque villages.

The hotel features an informal restaurant serving light dishes throughout the day including a signature breakfast with many locally-sourced ingredients. The restaurant terrace offers stunning views of the mountains, village and river below while the Kipi Lounge Bar with its comfortable armchairs is perfect for relaxing. Want to get out and about? Zagori is a haven for outdoor activities with its mountains, rivers, gorges, ancient paths and the unsurpassed nature of VikosAoos National Park. Kipi village is the perfect base for exploring this magical area, whether it is trekking (the Zagori area is famous for its old walking trails, some of which start from the Kipi Suites), rafting, mountain biking, rock climbing, paragliding, horse riding, river or lake swimming and much more. Alternatively, wander in the cobbled alleys of the traditional villages of Zagori with its distinctive stone built houses. Take a break for a “tsipouro” brandy in the central square, under the shade of the plane tree. Or visit the various museums of local arts and crafts. Hop between villages via the traditional interconnecting paths and stone bridges. Enjoy the wealth of nature or drive off road to discover the unique beauty of the National Forest of Vikos-Aoos and Valia Calda.

For more info and reservations... Tel: +30 26530 71995 Email: info@kipisuiteszagori.gr Web: www.ariahotels.gr

A Perfect Hideaway | Relax

Relax | Bottoms Up

Bottom

Christmas is almost upo easy-to-make (and deli to see you through the courtesy of thebar.com

ms Up

on us, so here are some icious) cocktail recipes e festive party season, m

Bottoms Up | Relax

ou’ve picked out your Christmas party dress, invited the guests, downloaded the festive playlist, planned the canapé menu and bought the mistletoe, but what about the drink? To help you make the most of your merry nights in, the drinks experts from thebar.com have come up with some delicious cocktail recipes that will see you through the Christmas season. Old Fashioned Christmas Ingredients: ●35ml. Smirnoff No.21® vodka ●50ml. Apple juice ●1tsp Cranberry sauce ●1pinch Cinnamon powder ●1piece Orange zest ●1piece Star anise Method: ●Fill a glass with ice. ●Add Smirnoff No.21 Vodka, apple juice, cranberry sauce and orange zest into the glass. ●Stir thoroughly. ●Garnish with cinnamon and star anise. Baileys Eggnog Ingredients: ●35ml. Baileys Original Irish Cream Liqueur ●50ml. Milk ●1tsp Sugar ●1 sprinkle Nutmeg ●1 egg ●1piece Cinnamon Stick ●1piece Split Vanilla Pod Method: ●Whisk together egg and caster sugar until creamy and the sugar begins to dissolve ●Mix in Baileys Original Irish Cream, milk and split vanilla pod ●Add some grated nutmeg ●Strain into a short glass ●Garnish with a cinnamon stick Spiced Gingerbread Ingredients: ●50ml Smirnoff Golf ●25ml Ginger syrup ●25ml Lemon Juice ●0.5 pieces Egg white ●1 piece Gingerbread man biscuit Method: ●Add Smirnoff Gold Liqueur, ginger syrup, lemon juice, and egg white to the shaker ●Dry shake the mixture ●Fill the shaker with ice ●Shake until cold ●Strain into a glass ●Add a gingerbread man biscuit

Hot Apple Bite by Smirnoff Ingredients: ●50ml. Smirnoff® Gold ●200ml. Apple Juice ●2tsp Brown Sugar ●1tsp Apple Purée ●1slice Apple ●1piece Crushed Biscuit Method: ●Place all ingredients in a saucepan. ●Warm the mixture and stir together thoroughly. ●Pour the mixture into a glass mug. ●Garnish with a slice of apple and crushed biscuit. Baileys Original Irish Cream Hot Chocolate Ingredients: ●50ml. Baileys® Original Irish Cream Liqueur ●150ml. Hot Chocolate ●1 piece Whipped Cream ●1 shaving Chocolate Shaving Method: ●Pour Baileys Original Irish Cream Liqueur and hot chocolate into a glass. ●Garnish with whipped cream and chocolate curls. Spiced Cider Ingredients: ●50ml. Captain Morgan Original Spiced Gold ●80ml. Apple Juice ●2 dashes Angostura Bitters ●3 pieces Star Anise ●4 buds Clove ●2tbsp Sugar or Maple Syrup Method: ●Pour Captain Morgan Original Spiced Gold, apple cider, angostura bitters, star anise, cloves and sugar into a saucepan. ●Heat until the sugar has dissolved. ●Pour into a glass. And for the designated driver... Fresh Shirley Temple Ingredients: ●40ml. Schweppes Canada Dry Ginger Ale ●40ml. Pomegranate Juice ●1.5tsp Sugar ●1 wedge Lemon Method: ●Extract the juice from a pomegranate. ●Measure into a glass. ●Add sugar. ●Stir until well combined. ●Add ice to the glass. ●Top up with Schweppes Ginger Ale. ●Garnish with a lemon wedge.