12 May ONLY FINANCE AND EXCEL SHEETS EXPERTS KNOCK ME PLEASE. I want a case study project and it is very important. High budget work. all the
ONLY FINANCE AND EXCEL SHEETS EXPERTS KNOCK ME PLEASE.
I want a case study project and it is very important. High budget work. all the instructions and everything are in the attached files. You will work on the excel sheet. please read everything carefully and do it accordingly. just work on the 3 yellow charts in the excel sheet, Financial projection, ev multiples and ev dcf. from those charts, you will calculate the things which are marked in yellow.
Case assignment: Blue Haven Initiative (BHI)
Due Date: Sunday, May 8th Midnight (11:59PM)
Deliverables: Completed excel sheets and written answers to the questions (Word or PDF format only)
Group Project
Total Points: 25 or 25%
Supplements:
· Excel template
· Basic VC method
· Video: I will post it later
Case Summary
This case examines Blue Haven Initiative (BHI), an impact investing fund and family office, and one of its investments, PEGAfrica (PEG). BHI founder Liesel Pritzker Simmons' motivations for using her family wealth to start a family office focused on impact investing, as well as BHI's approach and strategy, including direct and indirect investments, fund manager selection, total returns, sourcing and due diligence of direct investments, and other aspects. The case explores a specific investment decision in depth. In May 2017, Pritzker Simmons and BHI Director of Private Investments Lauren Cochran were considering whether to invest an additional $1 million in PEG's upcoming $5 million Series B round, at a $20 million pre-money valuation. PEG offered pay-as-you-go (PAYG) financing plans that allowed customers to make small payments via mobile money to pay off financing for the solar equipment over time. The case details PEG's business model, growth strategy, financial structure, and the landscape of investment capital in West Africa during the time of the case.
Objectives:
Perform a valuation analysis and consider the potential financial and impact returns of an early- stage social enterprise venture in an uncertain developing market
Assignment questions: Guidance
1. What do you think of the total portfolio approach? Is BHI’s way of defining and measuring impact appropriate? What are the associated costs and benefits?
a. PEG’s ability to build trusting relationships with customer households represents a broader opportunity to improve customer access to financing and grow local economy
b. PEG has already begun offering access to insurance and healthcare products, which may indicate commitment impact goals
c. PEG’s target market and business model align with BHI’s stated goals of investing in companies working with underserved segments and of increasing financial inclusion.
2. Is PEG’s business model and strategy sound? What are the drivers of its financial performance? How is the company driving impact? Assess the sustainability of its financial thesis. What are the risks?
a. PEG’s value proposition is strong. Saving customers $1,000 while paying off the financing in just 18 months
b. How the Ghanian and broader West African market?
c. PEG’s margin of 30% are strong and stand to improve further with the switch in suppliers
d. How is the relationship with customers and the potential to expand product offering using the same PAYG model. PEG is already started offering health insurance policies using mobile money to make premium payments.
e. Can PEG potentially offer PAYG financing for additional products?
f. Low capex business with recurring revenue stream
g. Expand on its differentiation: focusing on financing and colleting household date rather than focusing on the home solar technology
h. Issues like high level of working capital need due to paying SHS manufactures upfront but collecting revenue over time. Does it have any impact on margin
FCF is negative for the entire projection period through 2021.
i. Explain currency risk by purchasing inventory in US dollars while collecting revenue in Ghanaian cedi. How devaluation of cedi impact in margin
j. Address the constant need for capital given projected negative FCF. Are you concerned about sufficient source of funding?
k. Is there a concentration risk by being exposed to M-KOPA.
3. What is PEG’s enterprise value? Is the valuation of $20 million pre-money reasonable? Use the excel template provided to perform the following analysis
a. Comparable company analysis on revenues and EBITDA multiple
b. Discounted cash flow analysis. Use Blue have post series B % of 10% not 12% (I made a mistake). Net debt = Debt – Cash, additional cash should be added. Equity value increase by that amount. Use exit ownership if 12%. Use EBIT (2021)
c. Valuation based on “basic venture capital formula”
Use 30% IRR $1 million investment, apply an appropriate EBITDA multiple to terminal EBITDA and find the ownership.
4. Should BHI participate in Series B or not? Why? If so, should it provide the bridge, and in what form?
The term sheet for the bridge must protect the BHI
a. Talk about governance: board seat, right to approve/veto business decisions if certain performance thresholds are not first met
b. Exit rights: right to exit if PEG is not successful in bringing on additional investors. Right to preferential liquidation over later investors
c. Establish ESOP. High quality local sales people are essential to PEG’s success. The ESOP should incentivize them.
d. Should BHI negotiate for a $1 million investment based on a lower pre-money valuation, thereby increasing its stake. Should they include anti-dilution provisions to protect against any down round.
e. Should the bridge financing be structured as a convertible bond.
f. Should PEG develop and report on impact measures?
,
Copyright
| Blue Haven Initiative: The PEGAfrica Investment |
| Harvard Business School Case 318-003 |
| Courseware 318-705 |
| This courseware was prepared solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2018 President and Fellows of Harvard College. No part of this product may be reproduced, stored in a retrieval system, used in a spreadsheet or transmitted in any form or by any means—electronic, mechanical, photocopying, recording or otherwise—without the permission of Harvard Business School. |
Instructions
| Instructions: | |
| This courseware was created to allow students to determine PEGs enterprise value (EV) in early 2017. Yellow cells indicate where students provide inputs. The other worksheets provide information to help students make decisions about their inputs. |
Financial projection
| PEG Africa Financial Statements and Blue Haven Projections | ||||||||
| $ in US Dollars | 2015A | 2016A | 2017 E | 2018 E | 2019 E | 2020 E | 2021 E | |
| Income Statement | ||||||||
| Revenue | ||||||||
| Unit Sales | 6000 | 9,200 | 20,000 | 40000 | 74000 | 127465 | 205744 | |
| Y/Y Growth | 100% | 85% | 72% | 61% | ||||
| Rev/sale (USD) | 209.90 | 250 | $ 300 | $ 425 | $ 425 | $ 425 | $ 425 | |
| Total Revenue | 1,259,376 | 2,300,000 | 6,000,000 | 17,000,000 | 31,450,000 | 54,172,625 | 87,441,388 | |
| Cost of Goods Sold | ||||||||
| Total Cost of Goods Sold | 818,594.40 | 1,610,000 | 3,600,000 | 8,500,000 | 15,725,000 | 27,086,313 | 43,720,694 | |
| % of Revenues | 65% | 70% | 60% | 50% | 50% | 50% | 50% | |
| Gross Profit | 440,782 | 690,000 | 2,400,000 | 8,500,000 | 15,725,000 | 27,086,313 | 43,720,694 | |
| 35% | 30% | 40% | 50% | 50% | 50% | 50% | ||
| Operating Expenses | ||||||||
| Total Operating Expenses | 881,563 | 1,700,000 | 2,900,000 | 4,387,182 | 5,329,647 | 6,557,149 | 8,202,226 | |
| % of Revenues | 70% | 74% | 48% | 26% | 17% | 12% | 9% | |
| Write-off expense | (200,000) | (575,000) | (1,500,000) | (1,700,000) | (3,145,000) | (5,417,263) | (8,744,139) | |
| % of Revenues | 25% | 25% | 10% | 10% | 10% | 10% | ||
| EBITDA | (640,782) | (1,585,000) | (2,000,000) | 2,412,818 | 7,250,353 | 15,111,901 | 26,774,329 | |
| Depreciation | (30,000) | (90,000) | (105,859) | (129,000) | (150,000) | (175,000) | ||
| EBIT | (640,782) | (1,615,000) | (2,090,000) | 2,306,960 | 7,121,353 | 14,961,901 | 26,599,329 | |
| Cash Flow Statement | ||||||||
| Net Working Capital | 2150000 | 4,500,000 | 12,750,000 | 23,587,500 | 46,046,731 | 71,701,938 | ||
| % of Sales | 75% | 75% | 75% | 85% | 82% | |||
| PBT | – | (2,090,000) | 2,007,055 | 6,195,577 | 13,016,854 | 23,141,417 | ||
| Depreciation | – | 90,000 | 105,859 | 129,000 | 150,000 | 175,000 | ||
| Increase In Net Working Capital | – | 2,350,000 | 8,250,000 | 10,837,500 | 22,459,231 | 25,655,207 | ||
| Cash flow from Operating activities | (4,350,000) | (6,137,086) | (4,512,923) | (9,292,378) | (2,338,791) | |||
| Capex | (142,863) | (142,863) | (155,245) | (156,832) | (164,619) | (186,576) | ||
| % of Sales | 2.38% | 0.91% | 0.50% | 0.30% | 0.21% | |||
| Net cash from investing activities | (142,863) | (142,863) | (155,245) | (156,832) | (164,619) | (186,576) | ||
EV-Multiples
| PEG Ghana Estimated Series B Returns – Multiples Exit Analysis | ||||||
| $ in US Dollars | 4/15/16 | 6/1/17 | 12/31/19 | 12/31/21 | ||
| EBITDA Multiples Analysis | ||||||
| Forecasted EBITDA | Year 2021 | |||||
| Multiple | 4.5x | |||||
| Enterprise Value | ||||||
| Less net debt* | 0 | |||||
| Equity Value | – 0 | |||||
| Blue Haven ownership at exit * | 12% | |||||
| Blue Haven Cash Flows* | -1000000 | -1000000 | -2500000 | 0 | ||
| IRR | ||||||
| Revenue Multiples Analysis | ||||||
| Forecasted Revenue | year 2021 | |||||
| Multiple | 2x | |||||
| Enterprise Value | ||||||
| Less net debt* | 0 | |||||
| Equity Value | ||||||
| Blue Haven ownership at exit * | 12% | |||||
| Blue Haven Cash Flows* | ||||||
| IRR | ||||||
| *Key Assumptions: BH invests an additional $2.5M in a series C resulting in 12% ownership at exit (See "BH Cap Table"); assumes zero net debt as all cashflow requirements funded by equity | ||||||
EV-DCF
| PEG Ghana Estimated Series B Returns – DCF Analysis | |||||||||
| Dicount rate (WACC) | 30% | ||||||||
| Exit EBIT Multiple | 4.5x | ||||||||
| Period | 0 | 1 | 2 | 3 | 4 | 5 | Terminal value | ||
| Year | 4/15/16 | 6/1/17 | 12/1/18 | 12/1/19 | 12/1/20 | 12/21/21 | exit multiple x 2021 ebit | ||
| Discount Factor | |||||||||
| EBIT | |||||||||
| Less taxes (@13%) | |||||||||
| Plus depreciation | |||||||||
| Less Increase in net working capital | |||||||||
| Less capex | |||||||||
| FCF | |||||||||
| Present value of FCF | |||||||||
| Present value of Terminal Value | |||||||||
| Present Enterprise Value of PEG* | |||||||||
| Less net debt (plus) | |||||||||
| Equity value | |||||||||
| Blue Haven onwership, post Series B | 10% | ||||||||
| NPV of Blue Haven equity | |||||||||
| Blue Haven ownership at exit* | 12% | ||||||||
| Blue Haven Cash Flows | |||||||||
| IRR | |||||||||
| *Key Assumptions: BH invests an additional $2.5M in a series C resulting in 12% ownership at exit (See "BH Cap Table"); Present value estimated as of January 2017 for simplicity | |||||||||
| SENSITIVITY ANALYSIS – Present Enterprise Value of PEG, USD Millions | |||||||||
| Student Input | |||||||||
| Terminal Value Exit Multiple | Discount Rate | ||||||||
| – 0 | 25% | 30% | 35% | 40% | |||||
| 3.50x | |||||||||
| 4.00x | |||||||||
| 4.50x | PV of the FCF+PV of (EBIT x 4.5)/(1+.30)^5 | ||||||||
| 5.00x | |||||||||
| 5.50x | |||||||||
BH Cap Table
| Series A-2 | Current Series B | Assumed Series C | Exit | ||
| Pre Money Valuation | 8,500,000 | 20,000,000 | 60,000,000 | ||
| Total Equity Investment | 4,336,332 | 5,000,000 | 15,000,000 | ||
| Post Money Valuation | 12,836,332 | 25,000,000 | 75,000,000 | ||
| Pre-Money Shares Outstanding | 36,648,223 | 46,192,031 | |||
| Shares Issued | 9,543,808 | 11,929,760 | |||
| Post Money Shares Outstanding | 36,648,223 | 46,192,031 | 58,121,791 | ||
| Fully diluted Prior Round Price / Share | 0.3503 | 0.5239 | |||
| Post Money Price / Share (prior to post money stock options) | 0.5239 | 1.2574 | |||
| Premium to Prior Round | 50% | 140% | |||
| BH Investment, $ | 1000000 | 1000000 | 2500000 | ||
| BH Ownership | 8% | 10% | 12% | ||
| BH Shares | 2855039 | 4763800 | 6752094 | ||
| Estimated ownership at exit, assuming subsequent rounds | 12% | 12% | |||
| $ in US Dollars | 4/15/16 | 6/1/17 | 12/31/19 | ||
| Blue Haven Investment per round | 1000000 | 1000000 | 2500000 | ||
Ex 4 Balance Sheet
| Balance Sheet | ||||
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 300,000 | 352,863 | ||
| Goodwill | 3,300,000 | 3,300,000 | ||
| Current Assets | ||||
| Receivables | 1,500,000 | 4,200,000 | ||
| % of Sales | ERROR:#REF! | 70% | ||
| Inventory | 800,000 | 900,000 | ||
| % of Sales | ERROR:#REF! | 15% | ||
| Cash | 2,900,000 | 6,200,000 | ||
| Total current assets | 5,200,000 | 11,300,000 | ||
| TOTAL ASSETS | 8,800,000 | 14,952,863 | ||
| Equity | ||||
| Stated capital | 9,500,000 | 14,500,000 | ||
| Retained earnings | -1,600,000 | -4,190,000 | ||
| Total shareholder's fund | 7,900,000 | 10,310,000 | ||
| Liability | ||||
| Debt | 750,000 | 3,625,000 | ||
| Total non-current liabilities | 750,000 | 3,625,000 | ||
| Payables | 150,000 | 600,000 | ||
| Other liabilities | 417,863 | |||
| Total liabilities | 900,000 | 4,642,863 | ||
| TOTAL EQUITY AND LIABILITIES | 8,800,000 | 14,952,863 | ||
Ex 9 Comparables
| Blue Haven Initaitive Select Comparables | ||||||||||
| Company Name | Headquarters | Industry Code | Description | Revenue (TTM) – $M | Net Income (TTM) – $M | EBITDA (TTM) – $M | Enterprise Value | EV/Revenue | EV/EBITDA | |
| KCB Group (KCB) | Nairobi, Kenya | Banks | Provider of banking services. The company provides current accounts, fixed deposits, overdrafts, loans, mortgage finance and treasury services to its clients in Kenya. | 797.0 | 193.0 | 462.9 | 1,195.8 | 1.5 | 2.6 | |
| CAL Bank (CAL) | Accra, Ghana | Banks | Provider of investment banking services. The company is involved primarily in meeting the banking needs of small, medium and large corporations. It provides retail banking, investment banking, corporate and institutional banking and other private banking services. | 111.5 | 2.4 | 77.4 | 231.4 | 2.1 | 3.0 | |
| Equity Group Holdings (Kenya) (EQTY) | Nairobi, Kenya | Banks | Provider of mortgage financing financial services. The company offers retail banking, microfinance and related services such as fixed deposit, custody investment, asset finance, money transfer, remittance processing, cheque clearing, banker's cheque, share trading, money transfer and mobile banking services. | 659.8 | 162.0 | 351.7 | 1,564.9 | 2.4 | 4.4 | |
| Mauritius Commercial Bank (MCBG) | Port Louis, Mauritius | Banks | Provider of commercial banking services. The company provides banking products like current account, savings accounts, fixed deposits, loans and advances and other allied services in Mauritius. | 450.6 | 164.1 | 316.0 | 2,592.1 | 5.8 | 8.2 | |
| Capitec Bank Holdings (CPI) | Stellenbosch, South Africa | Banks | Operator of a holding company in the banking sector. The company through its subsidiary is a retail bank focused on providing accessible banking services to its clients by the use of technology. | 1,126.5 | 288.3 | 755.3 | 6,952.5 | 6.2 | 9.2 | |
| ACI Worldwide, Inc. (NasdaqGS:ACIW) | Fintech | 3,281.3 | 3.2 | 17.0 | ||||||
| OneMain Holdings, Inc. (NYSE:OMF) | Fintech | 17,256.1 | 9.1 | |||||||
| On Deck Capital, Inc. (NYSE:ONDK) | Fintech | 1,041.0 | 6.1 | |||||||
| Nets A/S (CPSE:NETS) | Fintech | 6,302.4 | 5.2 | 18.5 | ||||||
| Average | 4.6 | 9.0 | ||||||||
| Median | 5.2 | 8.2 | ||||||||
| See below for additional comparables | ||||||||||
| Comparables Data – African Financial Institutions | ||||||||||
| Date Sourced: | 5/24/17 | |||||||||
| Source: PitchBook, Capital IQ | ||||||||||
| Company Name | Headquarters | Industry Code | Description | Revenue (TTM) – $M | Net Income (TTM) – $M | EBITDA (TTM) – $M | Enterprise Value | EV/Revenue | EV/EBITDA | |
| National Bank of Kenya (NBK) | Nairobi, Kenya | National Banks | Provider of banking services. The company offers personal banking, business banking, corporate banking, agent banking and bank assurance services for individuals, small-to-medium companies and businesses and large corporations. | 124 | 2 | 52 | 20 | 0.16x | 0.39x | |
| CBZ Holdings (CBZ) | Harare, Zimbabwe | Asset Management | Operator of a holding company. The company through its subsidiaries engages in providing banking services and insurance products along with asset management services to its clients in Zimbabwe. | 234 | 24 | 136 | 97 | 0.42x | 0.71x | |
| Trust Bank Gambia Company (TBL) | Banjul, Gambia | National Banks | Provider of commercial banking services. The company provides commercial banking services to the general public in the form of receiving deposits, provision of loans, system of payments and clearing, dealing in financial instruments of the money market in Gambia. | 20 | 4 | 12 | 20 | 0.98x | 1.69x | |
| GCB Bank (GCB) | Accra, Ghana | National Banks | Provider of commercial banking services. The company provides commercial and retail banking services and products to the Ghanaian traders, business people and farmers. | 230 | 67 | 132 | 314 | 1.37x | 2.38x | |
| KCB Group (KCB) | Nairobi, Kenya | Regional Banks | Provider of banking services. The company provides current accounts, fixed deposits, overdrafts, loans, mortgage finance and treasury services to its clients in Kenya. | 797 | 193 | 463 | 1,196 | 1.50x | 2.58x | |
| Access Bank (ACCE) | Lagos, Nigeria | International Banks | Provider of international banking services in Nigeria. | 1,369 | 274 | 819 | 2,108 | 1.54x | 2.58x | |
| Diamond Trust Bank Kenya (DTK) | Nairobi, Kenya | Regional Banks | Operator of a regional bank. The company operates as a regional bank that provides various banking services which include corporate, retail and commercial banking services. | 330 | 64 | 244 | 666 | 2.02x | 2.73x | |
| Standard Chartered Bank Kenya (SCBK) | Nairobi, Kenya | International Banks | Provider of commercial banking services. The company is engaged in providing banking services such as accepting deposits, originating loans, offering deposit instruments and other related banking services. | 314 | 89 | 204 | 635 | 2.02x | 3.11x | |
| CAL Bank (CAL) | Accra, Ghana | International Banks | Provider of investment banking services. The company is involved primarily in meeting the banking needs of small, medium and large corporations. It provides retail banking, investment banking, corporate and institutional banking and other private banking services. | 112 | 2 | 77 | 231 | 2.07x | 2.99x | |
| African Bank Investments (AXL) | Midrand, South Africa | Other Commercial Banks | Operator of a holding company in the banking sector. The company operates businesses within the Republic of South Africa and in the neighboring countries of Zambia, Botswana, Lesotho, Namibia and Swaziland. It provides finance, banking and insurance services to individuals and corporations. The subsidiaries of the company include African Bank Limited, which provides unsecured personal loans to formally employed South African residents; Ellerine Holdings Limited, which engages in the business of retailing furniture and appliances for cash and credit to the markets spanning all living standards measure (LSMs); The Standard General Insurance Company Limited, which provides credit life products to clients of African Bank Limited; Theta Investments (Pty) Limited; and Relyant Insurance Company Limited, which engages in the sale of insurance to customers of Ellerines Group who purchase furniture and appliances on credit. | 861 | (420) | 57 | 1,903 | 2.21x | 33.15x | |
| Bank Of Africa-Benin (BOAB) | Cotonou, Benin | Regional Banks | Provider of commercial banking services. The company provides various banking and financial services like loans, savings and insurances to its customers in Benin. | 102 | 21 | 62 | 233 | 2.29x | 3.73x | |
| Equity Group Holdings (Kenya) (EQTY) | Nairobi, Kenya | National Banks | Provider of mortgage financing financial services. The company offers retail banking, microfinance and related services such as fixed deposit, custody investment, asset finance, money transfer, remittance processing, cheque clearing, banker's cheque, share trading, money transfer and mobile banking services. | 660 | 162 | 352 | 1,565 | 2.37x | 4.45x | |
| Co-operative Bank of Kenya (CBK) | Nairobi, Kenya | Asset Management | Provider of banking services. The company provides corporate banking services, retail banking services, investments and asset management services to its clients in Kenya. | 513 | 124 | 322 | 1,433 | 2.79x | 4.45x | |
| Banque Marocaine pour le Commerce et l'Industrie (BMCI) | Casablanca, Morocco | National Banks | Provider of banking and financial services. The company provides retail and corporate banking services. It also provides investment, insurance, credit and other services. | 319 | 51 | 168 | 1,804 | 5.66x | 10.72x | |
| Mauritius Commercial Bank (MCBG) | Port Louis, Mauritius | National Banks | Provider of commercial banking services. The company provides banking products like current account, savings accounts, fixed deposits, loans and advances and other allied services in Mauritius. | 451 | 164 | 316 | 2,592 | 5.75x | 8.20x | |
| Capitec Bank Holdings (CPI) | Stellenbosch, South Africa | Other Commercial Banks | Operator of a holding company in the banking sector. The company through its subsidiary is a retail bank focused on providing accessible banking services to its clients by the use of technology. | 1,126 | 288 | 755 | 6,953 | 6.17x | 9.21x | |
| BICI CI Banque Internationale pour le Commerce et l'Industrie de la Cote d'ivoire (BICC) | Abidjan, Ivory Coast | National Banks | Provider of commercial banking services. The company provides general banking, retail and wholesale banking to businesses and individuals in Ivory Coast. | 93 | 15 | 52 | 702 | 7.56x | 13.51x | |
| Average | 2.76x | 6.27x | ||||||||
| Median | 2.07x | 3.11x | ||||||||
| Comparables Data – Emerging Markets Consumer Finance | ||||||||||
| Date Sourced: | 5/24/17 | |||||||||
| Source: PitchBook, Capital IQ | ||||||||||
| Company Name | Headquarters</
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