Aqua Firms on the Financial Stock Exchange - Research Paper Example

In a quest to diversify its portfolio, Aqua resources limited made several investments in subsidiaries such as Aqua Resources (In-Pipe) Holdings Limited, Aqua Resources Asia Holdings Limited, an exempt company incorporated in the Cayman Islands formed in October 2008 and Cooperative Aqua Netherlands Holdings UA, a Dutch co-operative company formed on 22 March 2010. In the company’s short life on the London Stock Exchange, the most significant decision was the tender offer to JPMorgan Private Equity Limited where the company sold out its ordinary shares for 29.9%. This resulted in less than 25% of the ordinary shareholding in the public which formed a clear basis for its delisting from the stock exchange market.

In this event study, we shall use the Capital Asset Pricing Method to calculate the abnormal returns of the investments made by Aqua Resources Fund for the period between 2008-2012.

Basically, the abnormal return refers to the excess returns on the expected returns realized from an investment. The Company was established pursuant to the framework introduced by the Guidance Document issued by the Guernsey Financial Services Commission.

The company’s investment manager is FourWinds Capital Management which has the responsibility for the discretionary management of its assets with a proven track record of generating returns and managing risk across natural resources investments including water-related assets The company had a subsidiary called Ranhill Water Technologies (Cayman) Limited. RWT was a fully integrated water and wastewater company with in-house expertise in the design, construction and operations of water and wastewater plants across a number of Asian countries.

This study focuses on examining the abnormal return of Aqua Resources as relates to a series of events/decisions/investment failure during its life span ( June 2008 to November 2012) in London Stock Exchange It will also be looking at both the short and the long-term shareholder wealth effect that resulted from Aqua’s Initial public offering on the London stock exchange.