This case, described as the last big merger in the global beer industry, involves a valuation of the merged company using a basic discounted cash flow (DCF) methodology. Students are asked to calculate and compare the value of the merged entity with the standalone valuations of the respective companies to see if there is indeed value in merging. An additional consideration is the impact of a large net cash position on the company's stock price when growth stalls.
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
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 case explores the organizational practices of GitLab, an "all remote" company with more than 1,000 employees located in 59 countries. GitLab solves the challenges of employees working in an online-only environment by relying extensively on asynchronous modes of coordination. The case presents a set of prototypical situations to show how this is achieved: the onboarding of a new member, internal modes of dividing and integrating tasks, and modes of internal and external communication. With plans to go public in the year that COVID-19 is spreading around the world, Gitlab has attracted the attention of several investors. But can the core ingredients of its thriving "all remote" organizational design withstand the pressures of a sudden expansion of the workforce and stronger market scrutiny and competition? And what can organizations in other sectors learn from its approach?
The Kolo Nafaso programme was started in 2009 in Burkina Faso by AAK, a 140-year-old Swedish supplier of vegetable fats and oils. AAK created a direct link with the producers - women in West Africa who traditionally harvested shea nuts - and cut out the middlemen. The aim was to improve productivity and pay a fair price. As a cocoa butter equivalent, the oil from the nuts was a major ingredient for chocolate manufacturers, who could then claim that their products were made from traceable ingredients and a sustainable supply - a growing concern for consumers and investors. As the programme expanded from Burkina Faso to Ghana, AAK met several obstacles: maintaining the loyalty of the shea producers when local competitors offered higher prices, operational challenges associated with expansion, ensuring a stable supply despite political unrest in Burkina Faso, rising costs, and realising the potential brand value of Kolo Nafaso.
Garmin 2019 is the second in a two-part case. Case A reviews the history of Garmin from 1991 to 2008, when the personal navigation device (PND) industry is disrupted by the entry of smartphones with mapping applications. Garmin 2019 covers the decade until 2019, describing how Garmin and other major players responded to shifting consumer preferences, new developments in digital mapping and satellite networks, and the race to develop self-driving cars. In the face of a massive decline in the PND market in this period, Garmin staged a remarkable recovery, shifting focus to spread over diverse products segments, each with its own threats and opportunities. The core of the case is management's reassessment of corporate strategy across the portfolio of businesses.
For over 60 years, Bluebell, a major actor in the luxury B2B ecosystem, has been helping Western luxury brands such as Louis Vuitton, Davidoff, Moschino, Manolo Blahnik or Jimmy Choo enter key Asian markets. However, the luxury industry is experiencing digital disruption and increased competition fuelled by the rise of online e-commerce and international travel, along with increasingly connected consumers. While Bluebell's role as a link between the brand and the local consumer is still vital, it needs to alter its business model to remain in the game. Its adaptability has been the reason for its success so far, but to add value in the future it needs to evolve from a predominantly transactional role centred around distribution to one with greater connectedness, integrating new channels such as social commerce, and anticipating evolving customer tastes.
In April 2010, infrastructure fund Njord Gas Infrastructure AS bought ExxonMobil's 9.428% stake in Norwegian gas pipelines Gassled. Njord was interested in Gassled's steady returns and Norway's regulatory/political consistency and transparency. Once built, pipelines were seen as a relatively safe investment as tariffs to transport natural gas were usually fixed for many years (whether prices rose or fell) and bookings were made years in advance. Others followed Njord's lead in 2011 and 2012 to buy into Gassled - four infrastructure funds owned 44% of Gassled after the acquisitions. It came as a shock when a year after the transactions went through, the Norwegian government decided that returns were too high and decided to cut the tariffs charged by Gassled to transport gas by 90%.
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.
The case focuses on AccorHotels' ambitious digital transformation, aiming to put the customer back at the center of its strategy and operations. Responding to a powerful wave of digital disruptions in the hospitality ecosystem, from the emergence of review websites, online travel agents and active forums to the rise of new competitors such as Airbnb, the transformation entailed: (1) designing and implementing an innovative content marketing strategy (including online content creation or co-creation, curation and dissemination) (2) incorporating e-reputation as a core business objective, and (3) creating and/or adapting organizational structures - from management to operations - to support this new dynamic and maximize value creation. The case starts in Fall 2015, when Olivier Arnoux, SVP Customer Satisfaction at AccorHotels, and his team, are asked to devise an ambitious plan to address the new challenges facing major players in the hotel industry brought about by digital disruptions. It follows the decision-making process step by step, from (1) understanding the nature and impact of online content in the customer journey, to (2) building a strategic plan to integrate online insights into AccorHotels' core business objectives (in particular the importance of e-reputation), (3) redefining where and how value is created, and creating incentive structures aligned with the new objectives. Participants have multiple opportunities to put themselves in the shoes of the protagonists so as to understand the logic behind the decisions taken. What is novel is the systematic articulation of how digital and social media impact the customer journey, as well as the integration of online content into marketing strategy (i.e., content marketing) and organizational design (i.e., team structure, incentive system), underlining how embracing the digital revolution entails breaking traditional silos between functions such as marketing, strategy, finance and human resources.
In September 2014, the Indiana Toll Road (ITR) in the US Mid-west, privatized as a 75-year concession at an impressive price of US$3.8 billion only nine years earlier, filed for Chapter 11 bankruptcy , having chalked up US$6.3 billion of debt. In the subsequent sell-off the ITR managed to attract an even bigger bid than before - of US$5.72 billion.
Aarong, the retail arm of BRAC, a non-profit development organization based in Bangladesh, was created in 1978 to provide employment, income generation and social development opportunities for underprivileged women through the revival and promotion of Bangladeshi handicrafts. Profits from Aarong were used to extend such opportunities to more low-income producers and to cross-subsidize BRAC programmes for the poor. In 30 years, from a single shop, Aarong had grown into one of Bangladesh's biggest retail chains. Its products ranged from clothing, household items, gifts and fashion accessories to children's toys. The competition, however, was intensifying, both from local retailers in individual categories as well as foreign players, such as from India. How could Aarong compete in a global market? How could it leverage the brand, improve quality to match machine-made consistency, and keep prices competitive, while maintaining its social mission?
The case discusses the public-private partnership to build the New Royal Adelaide Hospital (NRAH) (replacing the outdated Royal Adelaide Hospital) at a cost of A$1.7 billion in 2009. The 35-year concession was eventually awarded to a consortium, the South Australian Health Partnership (SAHP), and the government agreed to make an annual service payment to the consortium of A$397 million a year once the hospital was completed in 2016. Rising state debt in the wake of the global financial crisis led to protests by opposition politicians when the cost of the NRAH was said to have ballooned.
The case discusses the public-private partnership to build the New Royal Adelaide Hospital (NRAH) (replacing the outdated Royal Adelaide Hospital) at a cost of A$1.7 billion in 2009. The 35-year concession was eventually awarded to a consortium, the South Australian Health Partnership (SAHP), and the government agreed to make an annual service payment to the consortium of A$397 million a year once the hospital was completed in 2016. Rising state debt in the wake of the global financial crisis led to protests by opposition politicians when the cost of the NRAH was said to have ballooned.