Hedge fund manager finds new opportunity in microfinance
Bear Stearns first groaned under the weight of bad investments in June 2007 — the first signs the investment bank would ultimately collapse. But inside the 83-year-old institution, one of the largest and seemingly strongest financial houses in the world, Ron Dadina, managing director of the International Debt Capital Markets Group, was confident the company would hold.
“I was not in the Mortgage CDO group. I was very much in the emerging-markets group, and we were doing well,” the FinanceLadder member recalled. “We had a good plan of deals, so I thought we would weather the storm and things would be OK a few months down the line. But unfortunately, it was not the case.”
Bear Sterns collapsed in March 2008 after months of bruising deficits tied to losses in the Mortgage CDO ( collateralized debt obligations ) group, and the company was acquired by JP Morgan Chase for less than 10 percent of its peak value. JP Morgan Chase would eventually initiate deep layoffs, including Dadina, who was let go in June when prospects looked most bleak for the unemployed in the finance industry.
Despite a competitive job market, Dadina found work and a more personally rewarding livelihood as the managing director and senior credit officer at Minlam Asset Management LLC. This New York investment firm puts a unique twist on microfinance, one corner of the financial sector that is still performing well. Microfinance funds are for-profit organizations that make small, low-interest loans for no collateral to needy groups or individuals, usually in emerging markets. Minlan manages a hedge fund that invests client’s funds in microfinance engagements. It provides financial solutions for emerging markets, where Dadina is able to capitalize on his previous experience as someone able to structure and manage comprehensive deals.
It’s a job he never considered, and his was a pedigree Minlam never pursued, but a recruiter paired them. His experience turned out to be what Minlam needed, and microfinance afforded Dadina a safe room amid collapsing financial houses.
“There are many wealthy individuals who want to invest money,” Dadina said. “They are not donating money: they want to invest money and make a good return, but at the same time it has a social aspect to it.” This, according to Dadina, places Minlam in a “sweet spot.”
When Dadina, of Dobbs Ferry, N.Y., entered the job market in June, he encountered a crowded pool of job seekers and few jobs. He applied for one job at the World Bank, where he was told more than 1,000 candidates had applied and only 12, including Dadina, were interviewed. “For any job these days, there are not just a few dozen but hundreds of people applying,” he said. “There are times when things are tough and you feel like you are never going to get a job. But if you keep at it, it will come to pass.”
Finding the right job is seldom a straight line, he said.
“The main thing is to explore every opportunity,” he said. “Don’t leave any stone unturned in terms of finding a job. Things come to a head. For it to build up, it takes time. But once you have the momentum going, once you try to corner things from different angles, there comes a point in time when things work out.”
Dadina discussed job-search avenues with friends who suggested career Web sites specializing only in financial careers. As a MBA graduate of The University of Chicago’s Booth School of Business, he enrolled on the university’s Web site and several sites for Chartered Financial Analyst and the Emerging Markets Association. He joined FinanceLadder and almost missed the job at Minlam.
“I did not see the ad for this job. I had missed it,” he said. Instead, the firm found Dadina on FinanceLadder and began a months-long, exhaustive application process.
Minlam had received 237 applications for the position and was already considering another candidate with experience in microfinance, something he lacked.
“Before me, they had interviewed quite a few candidates – they told me that they had had an exhaustive process. So I was probably among the last few that they were seeing.” Several meetings with other partners, the CEO and the London office followed as well as a detailed background check and a psychological test. “So it was a very intensive process. There were calls or meetings every other day for about two weeks. But all along they moved quickly.”
What impressed Minlam despite Dadina’s lack of microfinance experience was the breadth of his experience in emerging markets. For 15 years Dadina has led emerging-market debt transactions from start to finish, a process that includes analyzing the client company, meeting management, doing the necessary due diligence, preparing underwriting reports, structuring the deal, making sure all the covenants are in place and preparing the required legal documentation.
“[Minlam] was looking for someone with experience to run with a deal from start to finish: someone who has the loan documentation and the credit experience, someone who has the emerging background and understanding, someone who has done due diligence in a variety of countries,” he said. “So in terms of my background and experience, it fit very well.”
“They are a young firm of only about a year old,” he said. “They have significant growth plans, so they are looking to me to implement all the systems and procedures and to take care of all the credit and investment activities.”
Minlam has a unique product and business model Dadina said he considers very attractive to many institutions abroad. The company offers local currency financing to these institutions, so they are able to receive financing in the same currency as the original assets.
“There are many government and non-government agencies that provide hard-currency financing,” he said. “So basically, if a small local institution in another country receives dollars or euros, they are providing the money to the local borrowers in local currency. So that is a big risk issue, and Minlam takes that risk.”
Minlam has a good handful of investors and expects more capital, he said.
“They expect to raise more funding this quarter. And they also have support from some government agencies who have agreed to provide them with funding,” he said. “I think that they are well connected with the right channels.”
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