Distressed Acquisition Support for APAC-based Investment Bank

  • Provided complex transaction modelling and structuring support

  • Provided real-time support for the deal

  • Ensured fast turnaround for a time-sensitive transaction

  • Output used by the client for all deal participants


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
OUR APPROACH
  • 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
IMPACT DELIVERED
  • 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
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