SOURCE OF CAPITAL

Prof. Dr. Achsanul Qosasi, CSFA, CFrA

Learning Objectives

Understanding various simple and complex sources in a

globalized scenario

Learning the fixation of the rate and type of source of

capital suited to the criticality of the investment to be
made

Knowing the possible innovations in describing and

designing the source of finance

Understanding the process of assessing corporation’s

portfolio of own and borrowed funds

Appreciating various direct and indirect, short-term and long-

term and operational and strategic factors influencing the
choice of source of finance

2
 DISKUSI PEMBUKA

DEFISIT APBN – UTANG DALAM NEGERI

ATAU LUAR NEGERI?

• KENAIKAN HARGA
MINYAK DUNIA
• SUBSIDI TIDAK TEPAT
SASARAN
MENAIKAN HARGA BBM
RAKYAT SUSAH?
TIDAK MENAIKAN HARGA
MINYAK DUNIA NAIK APBN
TEKOR?
PILIH MANA…SOLUSI?
 KETENTUAN PEMBATASAN & PENGENDALIAN
PENYALURAN JBT SOLAR SESUAI SK BPH MIGAS 04/2020
 PENJELASAN KOREKSI SUBSIDI JBT SOLAR PERTAMINA

Koreksi kurang BPK atas penyaluran JBT Minyak Solar Pertamina sebanyak 14.913.770 liter dengan nilai subsidi
sebesar Rp14.913.770.000,00 karena:
Koreksi Volume Nilai Subsidi
No. Uraian
(Liter) (Rp)
1 Losses Operasi JBT atas pengelolaan JBT Minyak Solar 399.227.000
399.227
2 Stok JBT Solar di Lembaga Penyalur tidak disalurkan (switching ke produk non PSO) 18.468.000
18.468
3 Penyaluran JBT Solar Dilaporkan Lebih Tinggi (Stok awal & akhir tidak sesuai) 161.378.000
161.378
4 Penyaluran JBT Solar Tidak Sesuai Peruntukan (Tangki Modifikasi/Pengangkut CPO) 127.601.000
127.601
5 Penyaluran JBT Solar Tidak Didukung Kuota/Rekomendasi 292.757 292.757.000
Penyaluran JBT Solar kepada Pengguna Melebihi
6 4.885.987.000
Ketentuan/Kuota/Rekomendasi/Kebutuhan 4.885.987
7 Penyaluran JBT Solar pada saat masa sanksi 461.637 461.637.000
Kelebihan Perhitungan Bunker (Kesalahan sistem dan ketidaksesuaian data ship
8 394.599.000
particular) JBT Solar 394.599
9 Penyaluran JBT Solar untuk Kegiatan Kapal Docking/Anchorage (tidak berlayar) 198.310.000
198.310
Penggunaan JBT Solar oleh Kereta Api bukan untuk kegiatan mengangkut penumpang
10 3.880.146.000
umum dan barang 3.880.146
Selisih pencatatan penerimaan JBT Solar menurut logbook kapal (Analisis Logbook
11 110.610.000
Kapal) 110.610
Koreksi Volume JBT Solar oleh BPH TW IV Tahun 2020 pada Fungsi Coporate Sales
12 3.983.050.000
dan Retail Sales belum diperhitungkan sebagai pengurang realisasi penyaluran 3.983.050

  Jumlah 14.913.770.000
14.913.770
 MAJOR SOURCES OF CAPITAL

There are fundamentally three sources of capital:

Equity Hybrid Bonds,

shares avenues loans

Instrument
Ownership s with Lending
instruments mixed instruments
features
 MAJOR SOURCES OF CAPITAL

The sources are as per the status of the capital provider. These may be
classified as per the purpose of use. Status of Capital Provider

Long- Short- Long-term

term and short-
term term Investment in fixed,
Capital Capital Investment in working capital mix i.e. minimum
Investment in long- capital for temporary compulsory working
term assets purposes capital and fluctuating
or seasonal working
capital
 MAJOR SOURCES OF CAPITAL

The types of capital can also be described as per the role of an entrepreneur.
Types of Capital as per Entrepreneur’s role

Capital to be directly Capital required by a Capital required by a

deployed in business financier lessor

By a manufacturer, trader, For a banker, venture- For investment in long-term

service-provider and farmer capitalist, money-changer, etc. assets to be used by a lessee

Direct Investor Direct Financier Indirect Investor

 MAJOR SOURCES OF CAPITAL

Presently, a popular categorization of capital is happening worldwide, based on the ownership and
accountability attached to it. This categorization may be very complex, as definition of accountability
is a subjective matter. Capital categorization as per Ownership and Accountability:

Ownership capital with

Ownership capital with limited Ownership capital with limited
unlimited liability and unlimited
liability and unlimited returns liability and limited returns
returns

Selective cases in Limited participation in

Traditional Equity
developed economies corporate results
 Where Does all the Capital Flow From?

The traditional and latest sources of capital are many. Especially after 1991, multiples of sources are
being explored by corporations. A few important sources can be mentioned as:
1. Capital from the owners, i.e., share capital
2. Loans from banks and financial institutions
3. Loans and deposits from public
4. Foreign loans and foreign equity
5. Loans from industrial developments institutions
6. Capital or loan from a participating government (either state or central)
7. Capital from mutual funds, pension funds and provident funds
8. Loan through securitization, factoring, bill discounting
9. Short-term loans from the market in the form of inter-corporate deposits, commercial papers, etc
10. Long-term loans through debentures, bonds and notes
11. Loan through a special purpose vehicle (SPV)
12. Funds raised internally by reinvesting the profit and through provision for depreciation
13. Segmental or directed loans
14. Capital with or without unlimited liability and operational participation
15. Capital in the form of technical know-how tangible and intangible assets
16. Venture finance and vulture finance
 Where Does all the Capital Flow From?

17. Take-away finance

18. Stand-alone finance/structured finance
19. Capital as a hedging instrument
20. Funds from other stakeholders like employees, vendors and distributors
 Important Factors to be Considered While Raising Funds

Corporation has to consider various primary and secondary factors while

raising the required funds. They are as follows:
1. Rate of interest or dividend to be offered
2. Amount of fund
3. Period (tenure) for which the fund is required
4. Security or mortgage to be offered
5. Foreign exchange ratio of today and tomorrow for a foreign fund
6. Conversion of loan into equity time, price for conversion, changed rate of
return, etc.
7. Periodicity for payment of interest of dividend
8. Instalments of repayment of the fund procured
9. Government’s rules, subsidies and other conditions and exemptions
10. Flexibility of the rate of interest or dividends
11. Other sweeteners to be offered to the investor
12. Premium at which shares and debentures are to be issues and redeemed
 Important Factors to be Considered While Raising Funds

13. Voting right for the investors

14. Impact of income tax and other tariffs or taxes
15. Complexity of the instrument to be used for raising the fund
16. Maturity of the investors
17. Increase/decrease in the ownership and control by the promoters
18. Nature of the fund to be collected as an asset, technology, etc.
19. Exit route, in case the fund is to be repaid early
20. Socio-economic and socio-political factors influencing both the counties
from where the fund is raised and collected.
 Sumber Dana / Modal

1.Setoran Pemilik
2.Pinjaman Bank / Lembaga Keuangan
3.Kerjasama Operasional
4.Sekuritisasi Asset & Saham
 Detailed Discussion on Each Source of Capital

1. Capital from the owners

Capital from the owners

Plain equity capital

Non-voting equity capital

Redeemable equity capital

Preference share capital

 Detailed Discussion on Each Source of Capital

2. Loans from banks and financial institutions

• Tujuan Pinjaman (Loan Purpose)

• Loan Requirements (Persyaratan Pinjaman)

CAMEL
PEARLS
(Achsanul Qosasi-Unair 2021)
 Detailed Discussion on Each Source of Capital

3. Kerjasama Operasional

Kerja Sama dilaksanakan dengan prinsip:

• Kerja Sama dilakukan dengan berdasarkan asas

transparansi, kemandirian, akuntabilitas,
pertanggungjawaban, kemanfaatan, dan kewajaran, serta
sesuai dengan ketentuan peraturan perundang-undangan;

• Kerja Sama dilakukan untuk jangka waktu tertentu yang

dicantumkan dalam perjanjian dan tidak diperkenankan
melakukan Kerja Sama tanpa batas waktu, kecuali untuk
Kerja Sama dalam bentuk perusahaan patungan (joint
venture company)
 Permen BUMN No 7/2021:

a. kuasa kelola;
b. perusahaan patungan (joint venture company);
c. pendirian dana kelolaan investasi (fund);
d. sewa menyewa aset;
e. kerja sama operasi;
f. bangun guna serah (build operate transfer);
g. bangun milik serah (build own transfer);
h. bangun serah guna (build transfer operate);
i. bangun pelihara serah (build maintain transfer);
j. lengkapi guna serah (equip operate transfer);
 Detailed Discussion on Each Source of Capital

4. Sekuritisasi Asset & Saham

• IPO

• Revaluasi Asset

• Reksadana & RDPT

 A Simple Model For Assessment of Total Portfolio of Funds Collected

A corporation normally has a portfolio of its funds that have

been collected from various sources.

Its very important to assess the total portfolio using various

parameters with appropriate weightages. This assessment
is to be done both individually and collectively by the top
executives.

A sample model can be used for such assessment

periodically. Let us look at an illustration to understand the
entire exercise of assessment:
A Simple Model For Assessment of Total Portfolio of Funds Collected
A Simple Model For Assessment of Total Portfolio of Funds Collected
A Simple Model For Assessment of Total Portfolio of Funds Collected
A Simple Model For Assessment of Total Portfolio of Funds Collected
Projecting The Resource Requirement
Projecting The Resource Requirement
Projecting The Resource Requirement
 Strategy of Financing Incremental Investment

There are two clear approaches available to finance the incremental investment
of $63 million after 2 years in the given illustration. The first is using internally
generated funds. Surplus cash available on the last day of second year is quite
substantial, i.e., around $75 million. Although this approach would reduce the
present debt/equity mix substantially, it would be much costlier than the second
approach of financing through fresh long-term borrowing.

Conclusion
We should reach an obvious conclusion that the funding of incremental
investment, in illustration 5.2, can be done by borrowed fund, provided internal
funds can be invested elsewhere at a higher rate of return. Projected sales
volume of years 3,4, and 5 are quite adequate to give enough cash flows
required for utilizing the present and incremental debt. This approach of
financing offers very advantageous ‘trading on equity’ to the shareholders.
 SUMMARY

• Globalization on economic activities has made available thousands of types

of funds, both own and loan. A lo of innovative financial engineering is
happening, which designs and implements complex structures of financing
such as stand-alone finance and take-away finance. Investment banking has
become the most favored business for the bankers. Let us look at the various
sources of finance.
• Among the various sources of finance, the most popular are non-voting
equity shares and flexi-rate bonds. Public deposits are still treated as safe
investments by the conservative investors. Primary and secondary stock
markets have become much more active and participative.
• many Indian companies and entrepreneurial families are acquiring foreign
corporations using foreign funds at cheaper costs. These deals of acquisition
are designed very innovatively for long-term sustenance.
• Corporations are now doing careful strategic planning for sourcing and
deploying funds during the next 8-10 years. While doing so, the position of
the corporation and its product in their life cycle is considered strategically.
 SUMMARY

• Corporations now welcome a moderately aggressive approach of financing to

maximize the shareholders’ value. Therefore, different types of moderately
optimal sources of borrowed funds are now considered without any
hesitation. Globalization has reduced the cost of funds and has increased the
availability of funds considerably. With such funds, many new global
corporations are emerging.
• Business models are frequently altered to take maximum advantage of the
dynamism in the processes of sourcing and using various types of finance.
Many multinational corporations use different business models in different
developing economies to maximize their profit and consolidate their position
for sustainable performance.
• There are many key factors deciding the choice of source of fund. The tree
most important factors (applicable to almost all circumstances) are rate of
cost of capital, amount of capital and ease in repayment of such capital. The
three supportive factor are tax saving, dilution in ownership and
administrative cost. Tax saving becomes the most important factor while
funding the acquisitions and mergers. Hence, an innovative approach to
sourcing the fund becomes very important for such inorganic growth.
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TERIMA KASIH

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