Distressed Acquisition Support: APAC Investment Bank Case Study

CLIENT CHALLENGES

The client – an APAC-based investment bank working on an acquisition mandate for a coal-powered power plant in Indonesia
The whole sale process was disorganised, as a major sponsor had dropped out owing to political issues, and the project construction was on hold due to the lack of funding
The end-client saw an opportunity to work with local partners and acquire the asset at a significant discount, but the delay in closing the deal was leading to cost escalation
The base project model was prepared at the time of project initiation, which underwent multiple iterations by different stakeholders, leading to multiple schedules, broken links and hard-coded values. Besides, the framework did not capture the complexity of the changed situation
Key requirements were the following:
- Transforming the model to enable easy understanding and facilitate wide-ranging analyses by stakeholders
- Reworking the capital structure to include new capital and investors with different funding options for additional capex
- Providing flexibility in the payment structure with an option for up-front payment and structuring purchase via milestone payments
- Overall, ensuring a structure that provides equitable returns to all stakeholders – new investors and existing local partners that invested directly in the business as well as through the group-level entity

Acuity Knowledge Partners assigned a pair of expert financial modellers to the project, who worked under the guidance of a subject matter expert with extensive experience in complex deal structures
The materials shared – the project model and existing discussion materials to understand project economics, key drivers, existing situation and the proposed deal structure, among others – were reviewed
The model was audited thoroughly to identify and iron out existing gaps and variations
A new flexible capital structure was incorporated, along with variable funding and exit options, to facilitate multiple scenarios for all stakeholders to analyse exclusively

As the client was engaged in multiple transactions, it benefited from Acuity Knowledge Partners’ expertise in this complex deal modelling and structuring
The team identified and fixed the previously unknown gaps in the existing model, as well as simplified the existing complexity for quick analysis
The flexible project model helped the client and other participants run multiple scenarios to arrive at an agreeable structure and price range
Market insights were provided to the client to build a case on the final proposed transaction structure
Acuity team provided real-time support on the transaction, enabling the client to execute the transaction and resuscitate the project in a timely manner

Download as PDF

Your file will start downloading automatically

If it does not download within 1 minute,

Share this on