Blue Haven Initiative: The PEGAfrica Investment
Harvard Business School Case 318-003
Courseware 318-705
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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.

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)

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

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

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

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

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
Industry Code
Description
Revenue (TTM) – $M
Net Income (TTM) – $M
EBITDA (TTM) – $M
Enterprise Value
EV/Revenue
EV/EBITDA

UT Bank (UTB)
Accra, Ghana
Regional Banks
Owner and operator of a universal bank. The company specializes in foreign accounts, investment products, loan products, electronic banking, consumer finance, corporate banking and international money transfers.
93
4
316
153
1.64x
0.48x

Mandala Multifinance (MFIN)
Jakarta, Indonesia
Consumer Finance
Provider of consumer finance services. The company is engaged in providing financial services such as consumer financing, factoring and credit card services to its clients in Java, Sumatera, Sulawesi and Kalimantan.
108
19
158
188
1.74x
1.19x

Macro Bank (BMA)
Buenos Aires, Argentina
Regional Banks
Provider of banking products and services to individuals, entrepreneurs, companies, and corporate customers in Argentina.
2,404
457
244
5,435
2.26x
22.29x

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
168
1,565
2.37x
9.30x

Metro Development Bank (METRO)
Pokhara, Nepal
National Banks
Provider of financial support services. The company is engaged in providing loans and advances, home, auto, real estate, trading, commercial, retirement, social, term, hire purchase, consortium, foreign employment, education, travel, medical, contract, overdraft, share, staff, insurance, time, consumer, and deprive sector loans to its clients in Nepal.
2
0
50
5
2.38x
0.11x

Krungthai Card (KTC)
Bangkok, Thailand
Consumer Finance
Provider of financial services. The company is engaged in providing personal loan and credit card services and other allied services for its customers in Thailand.
430
74
322
2,358
5.49x
7.32x

Shriram City Union Finance (532498)
Chennai, India
Thrifts and Mortgage Finance
Provider of various consumer financing products and services. The company offers finance for used commercial vehicles to small road transport operators and consumer durables, two-wheelers, three-wheelers, tractors and commercial and non-commercial vehicles. It also provides personal and small business loans and loans against gold.
713
88
289
4,424
6.20x
15.28x

Boubyan Bank (BOUBYAN)
Kuwait City, Kuwait
Asset Management
Provider of commercial banking and financial services. The company provides a range of products and services, including consumer finance, credit cards, deposits, and other branch related services to individuals and institutional customers and also provides trade service, and other related services to business and corporate customers.
301
140
62
3,060
10.15x
49.04x

Average

4.03x
13.13x

Median

2.38x
8.31x
Comparables Data – Financial Technology Firms

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

SS&C Technologies Holdings, Inc. (NasdaqGS:SSNC)

Fintech

$ 10,478
6.4x
17.2x

ACI Worldwide, Inc. (NasdaqGS:ACIW)

Fintech

$ 3,281
3.2x
17.0x

PayPal Holdings, Inc. (NasdaqGS:PYPL)

Fintech

$ 77,025
6.2x
32.9x

Fiserv, Inc. (NasdaqGS:FISV)

Fintech

$ 32,236
5.7x
18.3x

Fair Isaac Corporation (NYSE:FICO)

Fintech

$ 5,217
5.6x
24.7x

Jack Henry & Associates, Inc. (NasdaqGS:JKHY)

Fintech

$ 8,955
6.2x
20.0x

The Western Union Company (NYSE:WU)

Fintech

$ 11,247
2.1x
8.3x

OneMain Holdings, Inc. (NYSE:OMF)

Fintech

$ 17,256
9.1x

MoneyGram International, Inc. (NasdaqGS:MGI)

Fintech

$ 1,451
0.9x
6.4x

Fidelity National Information Services, Inc. (NYSE:FIS)

Fintech

$ 40,494
4.4x
16.0x

Xero Limited (NZSE:XRO)

Fintech

$ 2,822
11.8x
-106.5x

LendingClub Corporation (NYSE:LC)

Fintech

$ 1,072
1.9x

On Deck Capital, Inc. (NYSE:ONDK)

Fintech

$ 1,041
6.1x

Square, Inc. (NYSE:SQ)

Fintech

$ 14,286
7.0x
-578.4x

Nets A/S (CPSE:NETS)

Fintech

$ 6,302
5.2x
18.5x

Average

5.45x
-42.14x

Median

5.75x
17.07x

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