GS Asset ManagementBernardo I Can Value it MartinezJorge Data Entry RohanaSimran Slave Driver SinghAlejandro Garda Stein

GS Asset ManagementCase BackgroundOpportunityRisks and ConcernsValuationConclusions

Case BackgroundAsian Crisis

Pre-crisis conditions

Crisis

International Monetary Fund

Case Background

Thailand

Asset Management Industry in Thailand

Financial Services Restructuring Authority (FRA)

OpportunityBEBGS Asset Management Background

Goal Background

Stockholders Position (FRA)

Strategy

GS Asset Management

4th Largest fund in Thailand Ownership (foreign 35% and domestic 65%) Two shareholders suspended (40%) Past performance (lack of commitment) Projections & Cost cutting

Risks and ConcernsDifferent Sources of RiskCountry RisksEconomicPoliticalFinancialCompany Specific Risks

Concerns

ValuationAssumptions

Methodology

Cost of Capital Calculation

Valuation Results

Funds' Maturity

FoundTHB mio as at

Number29-Aug-97MaturityPercentageConvert to Open

11,255.71Aug-979.59%yes

21,353.89Nov-9810.34%

31,832.83Sep-9814.00%

41,145.80Sep-988.75%

52,288.72Jan-9917.48%

6405.14Jul-993.09%

7191.931.47%

81,877.03Dec-0014.33%

9320.60Sep-002.45%yes

10466.38Sep-003.56%

11238.821.82%

1233.710.26%

13267.05Apr-032.04%

1497.830.75%

1589.980.69%

16315.23Jan-052.41%

17275.05Jun-052.10%

18639.16Oct-054.88%

Total13,094.86100%

Percentage of assets matured by end Jan 199950.56%

Percentage of assets matured by end end 19993.09%

Percentage of assets matured by end of 200017.90%

Total71.55%

Assumptions made GSAM

199719981999200020012002

MM

p.a.13.00%12.00%10.00%9.00%8.00%8.00%

Bonds

p.a.6.00%8.00%10.00%11.00%11.50%11.50%

Stocks0.00%5.00%10.00%12.50%15.00%15.00%

Index502.23527.34580.08652.59750.47863.04

Provincial0.00%4.00%8.00%10.00%12.00%12.00%

Stock

Income Statement GSAM (OP)

GSAM's own projection

Projected Income Statements ('000 bhat)

(yerar end 31st Dec)

Forcaseted

199719981999200020012002

Income

Mgmt Fee.172,011148,632145,116153,888142,797153,45314,863,200.0014,511,600.0015,388,800.0014,279,700.0015,345,280.00

Registrar Fee3,08216,78711,2729,3255,6926,179

Interest and Other* Income12,3944,2325,1617,2947,3348,121

Total187,487169,651161,549170,507155,823167,753

Expenses

Personnel45,84945,63056,35057,39657,42357,558

Marketing1,8829,4456,7856,4904,4704,490

Travel & Acc500600600600600600

Stationary1,5842,0892,1542,2232,2982,375

Rental & Utilities21,79623,09922,83122,06521,53721,997

Insurance Prem.12,95818,93612,5449,662839839

Selling/Redem Fees1,6539732,9965,9566,3905,532

Other fees2,0802,2052,2212,2402,2602,282

Depn/Amort14,29614,48614,35612,94110,1837,153

Bank Charges1394242424242

Fixed Asset Writen Off360.00.00.00.00.0

Total Expenses102,773117,505120,879119,615106,042102,868

Net Profit/(Loss)84,71452,14640,67050,89249,78164,885

Corporate Tax25,41415,64412,20115,26814,93419,465

Net Profit/(Loss) after tax59,30036,50228,46935,62434,84745,419

Projected Equity Statements ('000 bhat)

Full provision set aside against deposits with GF & GCN Finance in 1997

Share Captial100,000100,000100,000100,000100,000100,000

Retained Earnings

Legal Reserve10,00010,00010,00010,00010,00010,000

Allowance for Doubtful A/c(93,000)(93,000)(93,000)(93,000)(93,000)(93,000)

R/E-Beginning26,51585,815122,317150,786186,410221,257

Net Profit for Year59,30036,50228,46935,62434,84745,419

Unapp R/E85,815122,317150,786186,410221,257266,676

Total Equity at Year End102,815139,317167,786203,410238,257283,676

* Other Income: rebates on 1996 insurance premium, reversal of company's contribution to Staff Provident

Found and Service Fees received from founds--extraordinary in nature

Scenario Summary

Scenario Summary

OptimisticBase CaseWorst Case

Created by Fuqua School of Business on 2/16/00Modified by Bernardo Martinez on 2/16/00Modified by Fuqua School of Business on 2/17/00Modified by Bernardo Martinez on 2/22/00Created by Fuqua School of Business on 2/16/00Modified by Fuqua School of Business on 2/17/00Modified by Bernardo Martinez on 2/22/00Created by Fuqua School of Business on 2/16/00Modified by Fuqua School of Business on 2/17/00Modified by Bernardo Martinez on 2/22/00

Changing Cells:

Total_Fund_9814,863.2013,094.8611,839.15

Total_Fund_9914,511.609,784.244,812.57

Total_Fund_0015,388.809,561.412,148.76

Total_Fund_0114,279.009,561.412,148.76

Total_Fund_0215,345.289,561.412,148.76

Capex_98(1,000.00)(1,000.00)0.0

Capex_99(1,000.00)(1,000.00)0.0

Capex_00(1,000.00)(1,000.00)0.0

Capex_01(1,000.00)(1,000.00)0.0

Capex_02(1,000.00)(1,000.00)0.0

Result Cells:

Equity_Value$5,769.26$1,004.29$(4,813.68)

GSAM_25$1,442.31$251.07$(1,203.42)

Notes: Current Value columns represent values of changing cells at

time Scenario Summary Report was created. Changing cells for each

scenario are highlighted in gray.

Valuation Analysis

SENSITIVITY ANALYSIS OF 25% GSAM

Worst Case

AssumptionTerminal Growth

(1,210)3.00%3.50%4.00%4.50%5.00%

Management Fee (% Assets Managed)1%WACC in 200213.50%(1,614.37)(1,678.49)(1,749.35)(1,828.09)(1,916.09)

Tax rate stay at30%14.50%(1,502.87)(1,556.09)(1,614.37)(1,678.49)(1,749.35)

Terminal Growth3%15.50%(1,409.21)(1,454.09)(1,502.87)(1,556.09)(1,614.37)

Spot Rate (THB/US$)47.0016.50%(1,329.42)(1,367.78)(1,409.21)(1,454.09)(1,502.87)

Change in WC equal 25% of change of Total fund17.50%(1,260.64)(1,293.80)(1,329.42)(1,367.78)(1,409.21)

18.50%(1,200.73)(1,229.69)(1,260.64)(1,293.80)(1,329.42)

19.50%(1,148.08)(1,173.58)(1,200.73)(1,229.69)(1,260.64)

20.50%(1,101.46)(1,124.08)(1,148.08)(1,173.58)(1,200.73)

21.50%(1,059.87)(1,080.08)(1,101.46)(1,124.08)(1,148.08)

22.50%(1,022.55)(1,040.72)(1,059.87)(1,080.08)(1,101.46)

Funds under Management (MM THB)

Optimistic Scenario14,863.2014,511.6015,388.8014,279.0015,345.28

Base Case Scenario13,094.869,784.249,561.419,561.419,561.41

Worst Case Scenario11,839.154,812.572,148.762,148.762,148.76

Total Fund_98Total Fund_99Total Fund_00Total Fund_01Total Fund_02

Worst Case11,839.154,812.572,148.762,148.762,148.76

Forcaseted

199719981999200020012002

Income (thousands)

Mgmt Fee.172,011118,391.5048,125.7021,487.6021,487.6021,487.60

Registrar Fee3,0824,000.002,680.002,200.001,340.001,340.00

Interest and Other* Income12,3942,400.002,400.002,400.002,400.002,400.00

Total Income187,487124,791.5053,205.7026,087.6025,227.6025,227.60

Expenses

Personnel45,84945,630.0056,350.0057,396.0057,423.0057,558.00

Marketing1,8829,445.006,785.006,490.004,470.004,490.00

Travel & Acc500600.00600.00600.00600.00600.00

Stationary1,5842,089.002,154.002,223.002,298.002,375.00

Rental & Utilities21,79623,099.0022,831.0022,065.0021,537.0021,997.00

Insurance Prem.12,95818,936.0012,544.009,662.00839.00839.00

Selling/Redem Fees1,653973.002,996.005,956.006,390.005,532.0014,863.20Optimistic Case

Other fees2,0802,205.002,221.002,240.002,260.002,282.0013,094.86Base Case

Depn/Amort14,29614,486.0014,356.0012,941.0010,183.007,153.0011,839.15Worst Case

Bank Charges13942.0042.0042.0042.0042.00

Fixed Asset Writen Off360.00.00.00.00.0

Total Expenses102,773117,505.00120,879.00119,615.00106,042.00102,868.00

EBT84,7147,286.50(67,673.30)(93,527.40)(80,814.40)(77,640.40)

Corporate Tax25,4142,185.95(20,301.99)(28,058.22)(24,244.32)(23,292.12)

EAT59,3005,100.55(47,371.31)(65,469.18)(56,570.08)(54,348.28)

+Depreciation14,29614,486.0014,356.0012,941.0010,183.007,153.00

- Change Working capital125.57702.66266.380.00.0

-Capex0.00.00.00.00.0

Free Cash Flow (Equity) bath19,712(32,313)(52,262)(46,387)(47,195)

Forward rates (US$/Bath)0.0269520.0270210.0265570.0259760.025424

Free Cash Flow (Equity) US$531(873)(1,388)(1,205)(1,200)

Cost of Capital28.33%22.29%19.23%19.07%18.33%

0.780.820.840.840.85

Present Value Factor0.640.530.450.38

Present Value of Each cash Flow$414.00$(556.36)$(741.75)$(540.83)$(455.14)

Net Present Value$(1,880.08)

Terminal Value$(3,057.99)

Excess Cash$96.62

Equity Value$(4,841.45)

25% GSAM$(1,210.36)

28.33%22.29%19.23%19.07%18.33%

Funds' Maturity (2)

FoundTHB mio as at

Number29-Aug-97MaturityPercentageConvert to Open

11,255.7119979.59%yesEnd 9813,094.86

21,353.89199910.34%End 999,784.24

31,832.83199914.00%End 1009,581.67

41,145.8019998.75%End 1019,581.67

52,288.72199917.48%End 1029,581.67

6405.1420003.09%

7191.931.47%

81,877.03200114.33%

9320.6020012.45%yes

10466.3820013.56%

11238.821.82%

1233.710.26%

13267.0520032.04%

1497.830.75%

1589.980.69%

16315.2320052.41%

17275.0520052.10%

18639.1620054.88%

Total13,094.86100%

Percentage of assets matured by end 199833.09%

Percentage of assets matured by end of 199920.57%

Percentage of assets matured by end of 200017.90%

Total71.56%

Income Statement GSAM (OP) (2)

GSAM's own projection

Projected Income Statements ('000 bhat)Cost of Equity15%

(yerar end 31st Dec)Terminal Growth

Forcaseted

19971998199920002001200220032004200520062007

Income19981999200020012002200320042005200620072008

Mgmt Fee.172,011120,00090,00090,00081,90080,00088,000.0096,800.00106,480.00117,128.00128,840.80Net Income6,226.50(18,059.30)(17,510.50)(14,281.40)(13,389.60)(17,992.05)(10,149.44)(1,233.31)8,872.3620,295.47

Registrar Fee3,0824,0002,6802,2001,3401,340+Depreciation14,486.0014,356.0012,941.0010,183.007,153.004,123.001,093.00000

Interest and Other* Income12,3942,4002,4002,4002,4002,400-Change in Working Capital(4,441.11)(3,330.83)(3,330.83)(3,031.06)(2,960.74)(3,256.81)(3,582.50)(3,940.75)(4,334.82)(4,768.30)

-Capex0.00.00.00.00.000000

Total187,487126,40095,08094,60085,64083,74092,114.00101,325.40111,457.94122,603.73134,864.11Free Cash Flow to Equity Holders16,271.39(7,034.13)(7,900.33)(7,129.46)(9,197.34)(17,125.87)(12,638.94)(5,174.06)4,537.5415,527.17

ExpensesNet Present value($13,732.28)

Personnel45,84945,63056,35057,39657,42357,558Terminal Value29,425.27

Marketing1,8829,4456,7856,4904,4704,490Equity Value15,692.99

Travel & Acc500600600600600600

Stationary1,5842,0892,1542,2232,2982,375

Rental & Utilities21,79623,09922,83122,06521,53721,997

Insurance Prem.12,95818,93612,5449,662839839

Selling/Redem Fees1,6539732,9965,9566,3905,532

Other fees2,0802,2052,2212,2402,2602,282

Depn/Amort14,29614,48614,35612,94110,1837,1534,1231,0930.00.0Assumption

Bank Charges1394242424242Revenue Growth 2003-200710%

Fixed Asset Writen Off360.00.00.00.00.0Expenses Growth 2003-20073%

Tax rate stay at30%

Total Expenses102,773117,505120,879119,615106,042102,868105,954.04109,132.66112,406.64115,778.84119,252.21

Net Profit/(Loss)84,7148,895(25,799)(25,015)(20,402)(19,128)-13840.04-7807.2612-948.7010366824.8937329215611.9019249077

Corporate Tax25,4142,669(7,740)(7,505)(6,121)(5,738)(4,152)(2,342)(285)2,0474,684

Net Profit/(Loss) after tax59,3006,227(18,059)(17,511)(14,281)(13,390)(17,992)(10,149)(1,233)8,87220,295

Projected Equity Statements ('000 bhat)

Full provision set aside against deposits with GF & GCN Finance in 1997

Share Captial100,000100,000100,000100,000100,000100,000

Retained Earnings

Legal Reserve10,00010,00010,00010,00010,00010,000

Allowance for Doubtful A/c(93,000)(93,000)(93,000)(93,000)(93,000)(93,000)

R/E-Beginning26,51585,81592,04266,24341,22820,826

Net Profit for Year59,3006,227(25,799)(25,015)(20,402)(19,128)

Unapp R/E85,81592,04266,24341,22820,8261,698

Total Equity at Year End102,815109,04283,24358,22837,82618,698

Assumptions

1. The management fees is falling because for every found that matures, we assumed that only

50% of the assets transfer to other founds managed by the company and no new funds launched.

2. The entaire sum of 93,000 THB mio due from GF and GCN is writen off.

3. We have taken the expenses as given as it is difficult to predict which projections are accurate and

which are not

4. We have assumed flat income from interest because as the years progress the company is likely to

face cash flow difficulties

5. In loss-making years no tasation assumed

6. No dividen payment

Financial Status

GASM -Financial Status

199219931994199519961997

Particulars(Mar-Dec)(September)

Total AssetsMillion Baht140.432212.444276,047.000288.298264.201107.413

Total LiabilitiesMillion Baht20.39642.79070.84479.82277.68617.743

Net WorthMillion Baht120.036169.654205.203208.476186.51589.670

Total RevenueMillion Baht49.399144.986288.888286.855296.973145.280

Total Operating ExpensesMillion Baht20.76273.869166.675167.893127.91379.201

Reserve for Doubtful A/C *Million Baht93.100

Net Profit (Loss) After TaxMillion Baht20508683118(46.845)

Earnings Per ShareBaht259812(4.685)

Dividend Per ShareBaht5.0008.0008.00011.000

Book Value Per ShareBaht12.00416.96520.52020.84818.6528.967

MBD000DAE64.doc

Deposit with our two shareholders, GFS and GCN-F, whose operations had been suspended by the Ministry of Finance since June 27, 1997, until their rehabilitation plans are to be approved by the Financial Restructuring Agency

10 Million of ordinary shares of 10 THB each = 100,000,000

ConclusionsVery difficult to value opportunities under crisis conditions

Cost of Capital ?Turnaround?Buying cheap?

Q & A

What HappenedBEB decided not to buy the 25% of the GSAM

Post crisis Thai market conditions and currencyOther StockholdersAsset Management Industry after the crisisNew funds launched by GSAM