Issue: A global client wanted to create an investment mechanism that would enable it to make a one-time investment to protect biodiversity conservation in one of the conservation “hot spots”. The problem was twofold: firstly, maintaining the corpus of the investment ad infinitum while generating sufficient capital to finance conservation work and the creation of related new jobs and secondly, making sure local content is used while abiding by best practices.

Solution: GRAVITAS designed a locally registered conservation Trust Fund. As a means of providing transparency, the selected trustees were local, respected and knowledgeable in financial best practices. Using an endowment approach to trust fund management, all returns above inflation were disbursed into conservation projects. Capital preservation mechanisms were put in place to preserve the corpus of the fund ad infinitum. GRAVITAS designed a multi-fund, multi-strategy investment program that used local fund managers with public oversight. Results of the trust fund would be published in the local newspapers on a regular basis.

Through creative structuring GRAVITAS met the client’s specific requirements and achieved local financial objectives, as well.

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Issue: A central bank client wanted to create an investment benchmark which it would use to build in-house staff investment management capability. The client's return objectives were to generate consistent predictable returns.

Solution: GRAVITAS took stock of the client’s risk/return objectives and designed an investible benchmark portfolio with a calibrated risk profile. The key feature of the benchmark portfolio was that it was statistically calibrated to have a zero probability of generating negative returns in any rolling 12 month period. Furthermore, to facilitate the transition from benchmark replication to full blown portfolio management, GRAVITAS designed a risk-taking framework with oversight from the newly established Investment Committee. Moreover, GRAVITAS designed and installed a software program, the Benchmark Maintenance System ®, to help the client easily replicate the tailored benchmark portfolio. Lastly, the firm designed and executed an in-house training program that involved setting up and using Bloomberg.

By understanding the client’s intrinsic objectives GRAVITAS was able to lead them to innovative solutions and the creation of new software.

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Issue: A commercial bank client was seeking a more efficient way to manage its asset-liability ratios. With growing liquidity and few investment options, the bank wanted to maintain high liquidity while meeting benchmark returns in order to remain in the black.

Solution: GRAVITAS developed an innovative liquidity management framework that facilitated the identification of excess liquidity and enabled the bank to more efficiently generate returns while meeting its liquidity and regulatory ratios. GRAVITAS furthermore developed a multi-strategy solution that increased the probability of consistently generating sufficient returns to meet financial hurdles. Moreover, the firm proposed and created a new set of financial products which the bank could sell to its retail clients.

GRAVITAS' solutions and products provided a profitable liquidity management framework and helped the client to reposition itself.

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Issue: A multilateral organization was seeking to spur employment and regional growth by creating appropriate incentives for private banks to lend more to Small and Medium-sized Enterprises. However, the organization possessed limited resources and realized that a one time capital allocation to the project would not be sufficient. At issue was whether a mechanism could be developed to leverage the sponsor’s capital allocation ad infinitum.

Solution: GRAVITAS recommended the set up of a Fund that would manage the one time capital injection under predetermined guidelines that would permit the generation of annual returns at least equal to the annual default rate of SME loans in the region. The Fund would insure all loans made by local banks under strict guidelines, to prevent lax credit standards. The size of the guarantee would be directly proportional to the excess cumulative returns generated by the Fund. Therefore, the client could grow the insurance program as cumulative returns are generated annually.

The implications of this simple tool judiciously applied are significant in terms of credit availability and job growth. This is one way GRAVITAS adds value through in-depth understanding of client circumstance and innovative application of financial tools.

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