Finance

ACWA Power – Defying Marketing Pricing

ACWA Power is a desalinated water and energy company with a difference. While its
competitors seek to maximise profit by securing contracts with the most-generous possible
margins, the Saudi Arabian developer, owner and operator of power and water plants defies
market pricing to win – a strategy that has earned it a success rate of two out of three tenders,
as well as a growing international footprint. With ACWA’s bids on solar developments reaching
record lows, Paddy Padmanathan (CEO) was coming under increasing scrutiny from analysts
and media pundits, who could not understand how they could sustain these record-breaking
prices. In the latest auction on 5th June 2017, the Dubai Electricity and Water Authority (DEWA)
announced it had received four bids from consortiums for the tender of a 200 MW Concentrated
Solar Power (CSP) tower project. The ACWA consortium submitted a price of USD 9.45
cents/kWh, nearly 40% below the previous world-record low price for electricity generated from
this technology. The three other bids ranged from USD 10.58 to 17.35 cents/kWh. As analysts
struggled to replicate this price in their own models, Paddy put his own team to work to
demonstrate to the world how ACWA Power’s unique financing structure could make the
improbable possible.

EntrepreneurshipFinance

Korzan Systems: Evaluating Venture Capital Investments

Katie had been working on the deal team at Forward Partners for little over three months. In her role as investor, she was granted a huge amount of autonomy sourcing and executing deals from day one. Forward Partners is a London-based venture capital firm making its primary investments across the pre-Series A spectrum, from solo-founders to late-seed. Being on their deal team required aptitude on a number of axes. VCs have little information to analyse – which can be uncomfortable – and there was a certain amount of skill required in getting to the right reasons to say ‘yes’ to a deal. Katie had identified a potential target in the nascent ‘modelling and simulation as a service’ (MSaaS) space, where Korzan Systems was at the cutting edge. Despite the limited information available, ahead of her next meeting with the partners, Katie was required to research the market and develop her own thesis on Korzan as a potential investment by preparing a memo that could offer a balanced assessment on the opportunity with relatively little information to go on. During the next partners meeting, she would need to be ready to present her thoughts, analysis and findings on whether this was a go or no-go investment.

EntrepreneurshipFinance

LendInvest: Credibility in a Crowded Market

LendInvest is the UK’s leading online platform for property lending and investing. Founded originally as Montello in 2008 by Christian Faes and Ian Thomas, it provides an online marketplace for people and institutions to invest in short-term loans secured against property to real-estate professionals. Today, LendInvest is a well-capitalised, well-backed and profitable company, and one of the fastest-growing businesses in UK financial services. By adopting a diversified lending model, with a healthy mix of investors, the platform is well positioned to manage the long-term risks associated with peer-to-peer (p2p) lending. Since launching the website in 2013, LendInvest investors have lent more than £640 million to hundreds of borrowers, financing 2,300 new and rebuilt homes, worth over £1 billion.

Looking ahead to the next two years, Christian and Ian had identified three main challenges to scaling up: How could they build-out LendInvest’s institutional investor base – a key component of their capital pool? If they continued expanding into the peer-to-peer lending market, how would they build a credible profile as a mainstream financial services brand, whilst distancing themselves from riskier ‘fintech’ players? Finally, to achieve scale, should they fully embrace the peer-to-peer lending market or rely on their track record to attract high net worth and institutional investors.

Finance

Bain Capital’s “Take Private” of China Fire

The case is on the 2011 buyout of China Fire, a NASDAQ-listed Chinese fire protection firm. The MBO, backed by private equity firm Bain Capital, comes amid a wave of ‘take China privates’ aimed at exploiting valuations depressed by fraud scandals at some US-listed Chinese firms. In response to the USD9 cash bid, China Fire’s board has formed a Special Committee to negotiate terms. As the committee’s financial advisor, Barclays Capital must conduct financial due diligence, including the valuing of China Fire with various methods. Learning objectives include: 1. Being able to value a company with different techniques. 2. Knowing the different rationales for a LBO. 3. Knowing what is a reverse merger and the reasons for employing this listing method. 4. Knowing why some Chinese companies choose to list on the US stock markets.

Finance

Solar PV Feed-in Tariffs: The Fast-Track Review

Solar PV power is a kind of renewable generation that depends upon light striking a panel of semi-conductor material. The most common type at present is made of crystalline silicon, with layers which have alternately been doped with phosphorus and boron respectively. When the light strikes the panel, some of the photons release electrons from the silicon, allowing them to travel towards an electrode. The silicon that has been treated with phosphorus behaves differently, in terms of electron release, from that treated with boron, which creates an electrical field at the boundary between the layers, helping the freed electrons to move towards the electrode; from there, they move around an electrical circuit, providing useful energy as they do so. The field also helps the atoms that have lost electrons and are now positively charged to move towards the panel’s positive electrode where they are recombined with electrons from the circuit.

EntrepreneurshipFinance

Abundance Generation: Is Crowdfunding Ready for the Big Leagues?

In just a few years, a small but growing number of online platforms have established themselves as intermediaries for relatively small retail investors seeking long-term, stable investment returns. This case study looks in depth at the historical growth and strategic choices facing a crowd- lending platform focused on matching investors with clean energy infrastructure investments in the United Kingdom. Abundance Generation, co-founded by Karl Harder, Bruce David and Louise Wilson, has facilitated more than £7million of investment in 8 wind and solar projects from 1,500 people in just 2 years. Meanwhile more broadly, crowdfunding has emerged as a global phenomenon with the potential to disrupt the existing ways in which modern finance is transacted. Despite these growing trends, a number of questions still remain: What is the potential for crowdfunding as an alternative source of capital for making scalable investments in renewable energy infrastructure? Over the next 5-10 years, what are the different factors – such as regulatory policy, capital constraints and the evolution of crowdfunding platforms – that will influence key decisions to be taken by senior management as it seeks to compete with mainstream banking?

Finance

UK Green Investment Bank: New Models in Renewable Energy Finance

The UK Green Investment Bank (UKGIB) became operational in October 2012, supported by £3 billion (approximately $5 billion) of government money. As part of a multifaceted climate change strategy enacted by the United Kingdom, the bank was founded with a mission of “accelerating the UK’s transition to a more green economy, and creating an enduring institution, operating independently of government”. With an experienced, professional management team in place, the UKGIB’s immediate task was to ‘crowd in’ private sector funding on new large-scale clean energy infrastructure. But while the strategic mandate for the bank was clear, a series of tactical issues remained about how to select new investments and manage its growing investment portfolio. For instance, how would the team be able to manage conflicting public and private interests? What specific type of investments would best counter market scepticism about investing in renewable energy projects? Most importantly, what investment evaluation framework would enable them to deliver on their vision of being both ‘green and profitable’?

Topics/Industry: energy businessrenewable energy

Publication date: 05/09/2017

Published by: Centre for Climate Finance and Investment, Imperial College Business School

Authors: Charles Donovan, Chris Corbishley

Length: 14 pages

Geography: Saudi Arabia

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Topics/Industry: financial modellingSaaSvaluationsventure capital

Publication date: 25/06/2017

Published by: Imperial Enterprise LabAuthors: Chris Corbishley, Matthew Bradley

Length: 14 pages

Teaching notes: Available

Geography: UK

Supplementary materials: Pdf, Excel Spreadsheet

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Topics/Industry: analyticsdata sciencePeer to Peer

Publication date: 01/06/2017

Published by: ELITE

Authors: Chris Corbishley, Nelson Phillips

Length: 10 pages

Geography: UK

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Topics/Industry: M&Areverse IPOvaluations

Publication date: 27/03/2017

Published by: Case Centre

Authors: Marc Kitten

Length: 11 pages

Teaching notes: Available

Geography: USA

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Topics/Industry: economicsenergy businesspolicypricingrenewable energyPublication date: 01/04/2015Published by: Imperial College Business SchoolAuthors: Richard GreenLength: 12 pagesGeography: UK

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Topics/Industry: cleantechcrowdfundingrenewable energy

Publication date: 01/02/2015

Published by: Centre for Climate Finance and Investment

Authors: Charles Donovan, Chris Corbishley

Length: 17 pages

Teaching notes: Available

Geography: UK

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Topics/Industry: cleantechcost of capitalpublic private partnershipsrenewable energy investmentsrisk vs returnWACC

Publication date: 01/01/2015

Published by: Centre for Climate Finance and Investment

Authors: Charles Donovan, Chris Corbishley

Length: 17 pages

Geography: UK

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This case is not available to external audiences at this time.