Chase’s Strategy for Syndicating the Hong Kong Dis
FINA 3088 Case Study 1 ---- Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan (A)&(B)
Bid Strategy of the First Round
The first round bid was to show its commitment and price, while detailed proposal would be submitted after being shortlisted. Thus, Chase had mainly three kinds of concern at that stage: risk, profit and reputation.
Reputation
From Exhibit 6, there is no doubt that Chase was the top bank in syndicated finance in the US and over the world. However, it recorded limited performance in Asian market though Chase had put numerous resources into its global group. At the same time, Chase was among Disney’s top relationship banks and Disney as well as its project in Hong Kong had a noticeable market signal. Thus, Chase should catch this opportunity to expand its success from US market into Asian market as the Asia was expected to have a great potential growth in the coming few decades. If Chase gave it up, those local banks would definitely have a better life while Chase would face a more severe competition in syndicated business in Asia.
Risk
Whether Chase should “bid to win” or “bid to lose” depends on the risk and return of the syndication. The first question is whether Hong Kong Disneyland could generate enough revenue to cover all liabilities. As Hong Kong was just returned to China and experienced financial crisis, the Chinese government would release several policies to support Hong Kong’s economy. For example, encourage Mainland residents to visit Hong Kong since tourism is one of the main industries of Hong Kong. In addition, the performance of Tokyo Disneyland was strong evidence that Disneyland was profitable in East Asian countries.
Although the Disney theme park in Paris had faced trouble, the main reason might be aggressive plan and financial structure or strong employee rights, which was totally different in Hong Kong. The loan amount was less than 30% of the whole project (exclude government loan as it started
Bid Strategy of the First Round
The first round bid was to show its commitment and price, while detailed proposal would be submitted after being shortlisted. Thus, Chase had mainly three kinds of concern at that stage: risk, profit and reputation.
Reputation
From Exhibit 6, there is no doubt that Chase was the top bank in syndicated finance in the US and over the world. However, it recorded limited performance in Asian market though Chase had put numerous resources into its global group. At the same time, Chase was among Disney’s top relationship banks and Disney as well as its project in Hong Kong had a noticeable market signal. Thus, Chase should catch this opportunity to expand its success from US market into Asian market as the Asia was expected to have a great potential growth in the coming few decades. If Chase gave it up, those local banks would definitely have a better life while Chase would face a more severe competition in syndicated business in Asia.
Risk
Whether Chase should “bid to win” or “bid to lose” depends on the risk and return of the syndication. The first question is whether Hong Kong Disneyland could generate enough revenue to cover all liabilities. As Hong Kong was just returned to China and experienced financial crisis, the Chinese government would release several policies to support Hong Kong’s economy. For example, encourage Mainland residents to visit Hong Kong since tourism is one of the main industries of Hong Kong. In addition, the performance of Tokyo Disneyland was strong evidence that Disneyland was profitable in East Asian countries.
Although the Disney theme park in Paris had faced trouble, the main reason might be aggressive plan and financial structure or strong employee rights, which was totally different in Hong Kong. The loan amount was less than 30% of the whole project (exclude government loan as it started