Risk Management

New Platforms

Changing Economy

Mitigating Currency Risks

New Customers

Regulations

Market Fragmentation

Disruption

New Entrants

New Technologies

MAC deems it crucial to demonstrate a high degree of risk awareness in all of its business activities. The apt degree of consideration of environmental and social variables plays an integral role in its internal risk assessment.

MAC ensues its risk process by identifying and evaluating qualitatively and quantitatively the key elements of risk in a MAC investment—overall economy risk, strategic risk, operating business risk, financing risk, people risk. But these risks are juxtaposed to opportunities— cost cuts, synergies, internal development, additional investments, or revenue enhancement?

How MAC May Deal with Currency Risk
  • MAC seeks out natural hedges (i.e. to select businesses that have U.S. dollar revenues and local currency costs);
  • MAC identifies portfolio companies with growth rates that offset local currency depreciation and / or to forecast substantial local currency depreciation impacts when underwriting transactions;
  • To hedge only known short-term cash flows (i.e., capital calls and distributions);
  • To disburse cash in tranches to spread currency risk over time; and,
  • To hedge at the portfolio company level (for GPs), or at the institutional level (for LPs; i.e., a currency overlay).