When staff as well as investors participate in a profitable exit by a global private equity firm, the industry pays attention. KKR's sale of CHI, a garage door manufacturer, for a 9.8X multiple of invested capital (MOIC) made headlines in early 2022 as one of KKR's highest returns since the 1980s and for CHI's hourly workers and truck drivers for whom the pay-out would be life changing. More than 600 strong blue-collar workforce got an average of US$175,000 each, rising to US$800,000 for the longest serving employees. KKR had acquired the company in 2015 for US$700 million, and sold it to Nucor Corp for US$3 billion in early 2022. The celebrations were the result of a movement led by Pete Stavros, Chairman of CHI, and also Co-Head of the Americas Private Equity platform at KKR, who had worked with CHI management to give every employee an equity stake in the company, allowing them to participate in its growth as well as a substantial return upon KKR's exit. The case shows the power of equity ownership and incentive structures, as well as the challenges of implementing such fundamental changes in any business, setting the scene for discussions that go beyond DEI (diversity, equity and inclusion) to tackle issues such as social justice and the equitable distribution of wealth. https://publishing.insead.edu/case/kkr-chi
When staff as well as investors participate in a profitable exit by a global private equity firm, the industry pays attention. KKR's sale of CHI, a garage door manufacturer, for a 9.8X multiple of invested capital (MOIC) made headlines in early 2022 as one of KKR's highest returns since the 1980s and for CHI's hourly workers and truck drivers for whom the pay-out would be life changing. More than 600 strong blue-collar workforce got an average of US$175,000 each, rising to US$800,000 for the longest serving employees. KKR had acquired the company in 2015 for US$700 million, and sold it to Nucor Corp for US$3 billion in early 2022. The celebrations were the result of a movement led by Pete Stavros, Chairman of CHI, and also Co-Head of the Americas Private Equity platform at KKR, who had worked with CHI management to give every employee an equity stake in the company, allowing them to participate in its growth as well as a substantial return upon KKR's exit. The case shows the power of equity ownership and incentive structures, as well as the challenges of implementing such fundamental changes in any business, setting the scene for discussions that go beyond DEI (diversity, equity and inclusion) to tackle issues such as social justice and the equitable distribution of wealth. https://publishing.insead.edu/case/kkr-chi
The case explores the direct investment strategy of CPP Investments, one of the largest and most influential pension funds and private equity investors globally. Through an analysis of its acquisition and later sale of a controlling stake in GlobalLogic, students follow the Canadian Pension Fund's private equity and venture capital investing strategy.
This case describes the ESG journey of Pro-invest Group, an asset management and investment firm specialising in private equity real estate across the globe. It begins in 2017, when the Group is launching its second hotel fund, Pro-invest Australian Hospitality Opportunity Fund II (in parallel to managing Fund I) and there is a growing appreciation of the financial and competitive benefits of strong environmental, social and governance considerations. As investor interest in ESG standards rises, Dr. Sabine Schaffer, co-founder and co-CEO Europe, commits to implementing them at every level of the company. The case describes how she drove these efforts, from achieving the GRESB Real Estate Assessment (formerly Global Real Estate Sustainability Benchmark) to the adoption of a standardized third-party-administered ESG certification scheme across the Group's hotel assets in Australasia. The case ends in 2021 with Pro-invest looking at certification schemes for potential investments in the UK and Europe. It highlights the decisions that were taken, the challenges faced, and the key learning along the way.
Banking Circle (A): EQT, a global investor in private equity, infrastructure, real estate and venture had a long track-record of supporting the development of companies with significant growth potential. Its Venture equity unit had discovered Banking Circle, a fintech involved in the underlying payments infrastructure and disrupting the traditional correspondent banking industry. However, it passed on the investment. After Banking Circle showed significant growth, EQT Private Equity unit re-looked at the potential investment and had to figure out the right structure to hold the investment. Banking Circle (B): EQT invested in Banking Circle, and held it across two of its funds - a Venture fund and a Buyout Fund. It also led to a Growth strategy. After good growth from EQT, it was time to decide what to do with the investment - take profit and sell, or hold for the long term.
Banking Circle (A): EQT, a global investor in private equity, infrastructure, real estate and venture had a long track-record of supporting the development of companies with significant growth potential. Its Venture equity unit had discovered Banking Circle, a fintech involved in the underlying payments infrastructure and disrupting the traditional correspondent banking industry. However, it passed on the investment. After Banking Circle showed significant growth, EQT Private Equity unit re-looked at the potential investment and had to figure out the right structure to hold the investment. Banking Circle (B): EQT invested in Banking Circle, and held it across two of its funds - a Venture fund and a Buyout Fund. It also led to a Growth strategy. After good growth from EQT, it was time to decide what to do with the investment - take profit and sell, or hold for the long term.
This experiential case simulates an investment committee (IC) meeting at the private equity (PE) firm Bridgepoint, a leading European mid-market private equity firm. In the first quarter of 2011, with Europe in a recession following the global financial crisis, forecasters are predicting the start of an economic recovery. The firm is midway through investing its €4.85 billion fund, Bridgepoint Europe IV ("BEIV"), looking specifically for market-leading European companies with potential to grow through geographic expansion or operational improvement, strategy refocusing and add-on acquisitions. Three senior partners (Charlotte, Andrew and Bengt) from its offices in Germany, London and Sweden are preparing to present potential investment opportunities to the committee - respectively, Charlie, a German chemicals company with global plants; Alpha, an industrial firm listed on the London Stock Exchange; and Bravo, an elderly-care company based in Sweden. All three have submitted written papers to the members of the IC, including Harriet, a senior partner at Bridgepoint, who regularly spends her weekends analyzing information in preparation for the Monday morning meeting. Students are asked to either pitch one of three companies to Bridgepoint's investment committee or to play the role of the IC and ask their classmates questions to clarify the rationale for putting them forward.
The case focuses on the risks and rewards of early-stage investing in a successful emerging market consumer start-up (i.e. non-tech), from seed funding in 2004 to raising expansion capital in 2019. We observe the founder of Sula Vineyards, a winemaker from the Nasik Valley in India, as he makes decisions about external fundraising. Case (A) takes the seed investor perspective. It follows Deepak Shahdadpuri, who stays invested in Sula for 13 years, gradually reducing his equity stake along the way. Cases (B) and (C) follow the company as it raises successively larger rounds of funding to fuel its growth and international expansion. As the Sula brand and CEO Rajeev Samant become increasingly well-known, the company attracts the attention of diverse investors ranging from European family offices, Asian institutional investors, venture capital and growth equity, and sovereign wealth funds. Given its emerging market setting, the case can be used to explore investment risks from political and regulatory uncertainty, and currency risk for US$-based institutional investors.
The case focuses on the risks and rewards of early-stage investing in a successful emerging market consumer start-up (i.e. non-tech), from seed funding in 2004 to raising expansion capital in 2019. We observe the founder of Sula Vineyards, a winemaker from the Nasik Valley in India, as he makes decisions about external fundraising. Case (A) takes the seed investor perspective. It follows Deepak Shahdadpuri, who stays invested in Sula for 13 years, gradually reducing his equity stake along the way. Cases (B) and (C) follow the company as it raises successively larger rounds of funding to fuel its growth and international expansion. As the Sula brand and CEO Rajeev Samant become increasingly well-known, the company attracts the attention of diverse investors ranging from European family offices, Asian institutional investors, venture capital and growth equity, and sovereign wealth funds. Given its emerging market setting, the case can be used to explore investment risks from political and regulatory uncertainty, and currency risk for US$-based institutional investors.
Private equity firm Clayton, Dubilier & Rice (CD&R) is preparing a bid for leading US car rental agency Hertz. By replacing Hertz's top managers, improving capital management and driving down operating costs, CD&R sees an opportunity to nearly double EBITDA. However, the turnaround involves significant risks, which CD&R must weigh in preparing its bidding stategy. Students are required to assess and value the business, evaluate a post-acquisition operating turnaround plan requiring new leadership, select a financial structure to mitigate significant cyclicality, and craft a winning bidding strategy in the context of a competitive auction. Please visit the dedicated case website "https://cases.insead.edu/turnaround-of-hertz/" to access supplementary material.
In 2010, ACTIS embarked on an ambitious project to build a pan-Middle East and Africa (MEA) payments platform. It had purchased Mediterranean Smart Cards Company (MSCC), a bankcard issuer with operations across Africa, and had identified a follow-on target, Visa Jordan Card Services (VJCS) as part of its buy-and-build strategy, and another potential acquisition in South Africa. These could enable the ACTIS platform to capture the entire value chain in the payments business in the MEA region. However, not long after the purchase of MSCC, political turmoil engulfed the Arab world, prompting the ACTIS investment committee in London to question the viability of creating a payments platform in MEA.
Careem, a Dubai-based ride-hailing company, was founded in 2012 in the United Arab Emirates (UAE) by two ex-McKinsey consultants who saw a gap in the transport market. Started as a web-based car booking service for corporate clients, Careem had evolved into a leading application-based booking service in the Middle East and North Africa (MENA) region, with a differentiated business model tailored to the tastes and preferences of Middle Eastern consumers. Fuelled by venture capital funding rounds in September 2013 and December 2014, Careem was again on the fundraising trail in 2015 for a Series C investment round to further scale its existing business and continue its roll-out across MENA. The Abraaj Group, a leading emerging markets private equity investor, was interested, but with Uber competing fiercely in the MENA region, it had to decide whether Careem could compete with its well-funded global competitor.
In May 2012, private equity firm KKR is considering the buyout of WMF group (WMF), a diversified kitchenware and professional coffee machine manufacturer headquartered in Geislingen, Germany. The deal seems a potentially compelling investment opportunity, with various options for value creation - expanding WMF's well-established brand to other geographies as well as reducing costs. Priorities must be set, however, to generate an attractive return by the end of the investment period. The deal team has to decide which business segments are worth putting more resources into and which to divest, which brands should be kept and which to trim off, and how to take up any operational slack without affecting the overall strategy.
In 2011, Partners Group is nearing the end of a year-long quest for a new mandate from a European pension fund, Future Plan. The fund has struggled with its 6-year old PE programme, consistently falling short of its target allocation to the asset class and generating poor returns, seemingly always one step behind the opportunity in the market. Future Plan has built its PE programme by investing in closed-end funds of PE products managed by two executives, one focused on European markets, the other on global markets. But the fallout from the global economic crisis wreaked havoc with Future Plan's PE programme and something has to change. With an interest in expanding its PE activity to include secondary and direct investment strategies, Future Plan begins a manager search process with one goal in mind: to achieve the target return to the asset class by 2014. The case charts Partners Group's role in the selection process and how its expertise and services, along with a novel holding structure, offer a way to achieve Future Plan's goals. Please visit the dedicated case website http://cases.insead.edu/partners-group to access supplementary material.
In 2011, Ingersoll-Rand (IR) decided to divest its refrigeration equipment subsidiary, Hussmann International. However, the routine auction process for the non-core asset went awry when both Hussmann's performance and external finance markets weakened significantly during the due diligence period. IR's agent, JP Morgan, sought interest from potential buyers and focused on a few leading buy-out firms that submitted bids. After not seeing eye-to-eye with the initial auction winner, Ingersoll-Rand engaged exclusively with a lower bidder, the private equity firm Clayton, Dubilier & Rice. The challenge for CD&R is to develop a deal structure that can meet both parties' needs, offering enough value to Ingersoll-Rand to keep them from walking away, yet taking into account the increased riskiness of Hussmann's recent performance to justify CD&R's valuation. The student takes the perspective of CD&R. Please visit the dedicated case website http://cases.insead.edu/hussmann to access supplementary material.
The case describes how the Pro-invest Group - a boutique investment firm specialising in private equity real estate and real estate asset management - built its business and raised a first-time private equity fund. The Pro-invest founders had boot-strapped the business since its inception in 2013, but in-house funds were running out by mid-2014 and they needed third-party capital to take the venture to the next level. After deciding on a suitable fund structure, the Pro-invest team hits the fundraising trail. Turmoil erupts when a potential investor pulls out at the last minute, leaving the team in shock to re-evaluate its fundraising options. The case explores the pros and cons of each option in detail. Please visit the dedicated case website http://cases.insead.edu/pro-invest to access supplementary material.
Supplement to case IN1231. This two-party case is designed to teach negotiation within the context of turnaround management, stakeholder management, change management or public sector negotiation. The negotiation between Sudhir Kumar, Officer on Special Duty to the Minister of Railways, and Gaurav Malik, Chief Engineer, is about how to maximise revenues for the ailing Indian Railways, notably by increasing rolling stock axle loads without compromising safety. The case emphasizes the tension between commercial gains and social needs, but also lends itself to discussions about safety, corruption, government and business in India.