Green Consultant, a Singapore-based environmental consulting firm, had worked with several financial institutions before 2023 and was aware that many were interested in expanding their loan portfolios to include more environmentally inclined clients. In January 2023, one such client, a Singapore-based small and medium enterprise (SME) named Chang & Lee Manufacturing (CLM), approached Green Consultant to prepare a business proposal on how the SME could transition to solar energy. A green finance analyst at Green Consultant had one month to deliver a proposal to CLM. He had to consider the type of solar business model, the financing option, and the CLM stakeholders to engage, alongside CLM’s operational and financial conditions, to recommend the most economically feasible solar solution for CLM.
On March 26, 2020, Singapore Airlines was reeling from the impact of the COVID-19 pandemic. To raise badly needed capital, it announced that its shareholders would be offered S$5.3 billion worth of rights shares and S$3.5 billion of rights mandatory convertible bonds, both of which would be reflected as equity on its balance sheet. Should shareholders take advantage of this offer or not? To make this decision, investors had to analyze the airline’s reasons for choosing this form of equity financing, the impact of this capital-raising exercise, Singapore Airline’s valuation, and the role of sovereign wealth funds in equity financing. Investors would have to decide the appropriate response to the rights issuances.
On September 26, 2018, the Chinese hotpot chain Haidilao International Holding Ltd. launched an initial public offering, during a time of ongoing trade tensions between the United States and China, and started trading of the company’s shares on the Hong Kong Stock Exchange. The Beijing-based company sold 424.5 million shares at HK$17.8 (US$2.27) per share, which was on the high end of the indicative price range. Its price-to-earnings ratio of 30.2 was higher than that of its peers, which ranged from 16 to 27. In addition, the CSI 300 Index, which monitored the performance of 300 stocks on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, was down 27 per cent year-to-date at that time. Another key factor was that the company’s stock would likely be included on the Stock Connect program that enabled access from Mainland China to the Hong Kong Stock Exchange. Investors had an opportunity to value the company at the time of the initial public offering launch and analyze the information provided in the company’s prospectus. Based on their assessment, investors had to decide if the company’s stock was a good investment.
On September 6, 2018, a couple was enjoying a meal at a hotpot restaurant in Weifang, Shandong Province, China. The restaurant was a branch of the popular Chinese hotpot restaurant chain owned by Xiabuxiabu Catering Management (China) Holdings Co. Ltd. (Xiabu Xiabu). Halfway through the meal, the pregnant wife found a dead rat in her soup. The news spread on social media, and according to some analysts, Xiabu Xiabu’s share price dropped US$190 million in market value. Had Xiabu Xiabu’s lack of quality assurance undermined the company’s success? How could the company improve its risk and crisis management?
Greenpac (Singapore) Private Limited (Greenpac) was a green packaging solution provider led by the founder and chief executive officer. Under her vision, Greenpac aimed to become a world-class knowledge-based company that offered innovative and environmentally friendly packaging solutions. Greenpac was also a champion of corporate social responsibility (CSR), advocating for environmental sustainability and social issues. In 2019, the head of the CSR team was tasked with evaluating the company’s current CSR efforts and suggesting strategies to advance Greenpac’s CSR efforts. She has the results of three published evaluation frameworks to use and an engagement survey of company employees and executives.
On June 8, 2020, Sembcorp Marine Ltd. (SCM) announced a S$2.1 billion recapitalization plan to be followed by a demerger from Sembcorp Industries Ltd (SCI). SCM’s business had been significantly affected by the COVID-19 pandemic and a collapse in oil prices, resulting in a critical need for liquidity. The recapitalization would be done through a rights issue. The demerger would be conducted through a subsequent share distribution of SCI’s stake in the recapitalized SCM to SCI’s shareholders.<br><br>The case seeks to provide a reasonable valuation of SCM based on its past financial performance and other relevant market information. It also analyzes the rationale of the demerger and the impact of the demerger on shareholders of SCM and SCI.
On November 3, 2016, Jacobs Douwe Egberts (JDE) launched a bid for Singapore-based food and beverage company Super Group Ltd. (Super). JDE had already acquired 60 per cent of the shares but needed another 30 per cent in order to delist the company and take it private. The minority shareholders of Super faced the task of evaluating whether the offer from JDE was reasonable and whether they should tender or hold on to their shares. Their decisions would depend on the valuation of Super’s shares, based on financial and other relevant and available market information.
In September 2018, WaterEquity, a US-based investment vehicle for both financial and social returns, had to raise US$50 million in total funding capital. The sales team had to propose sales pitches for alternative investments for three types of investors. From a financial perspective, the investment was essentially a risk-free asset with an annual return of 3.5 per cent. However, this investment could also positively affect four developing countries—India, the Philippines, Indonesia, and Cambodia—by providing clean water solutions for billions of people. Through the lending facilities of the local microfinance institutions of these four countries, WaterEquity could offer support to the poor and empower more women, generating both financial and social returns. Different groups of investors might be attracted by different levels of these social returns as well as the financial returns. The sales team planned to use a simple extension of the standard Markowitz portfolio theory framework to incorporate social returns and account for two distinct types of returns, customizing the sales pitches for each of three groups of investors.
On February 24, 2016, HTL International Holdings Ltd (HTL), a Singapore-based furniture company, announced that it had entered into a purchase agreement with Guangdong Yihua Timber Industry Co. Ltd (Yihua). According to the agreement, which was subject to approvals, Yihua would pay SG$1.00 for each share of HTL. However, the agreement required that HTL meet set profit targets in each of the next three years. A compensation agreement between HTL’s controlling shareholder and Yihua stipulated that if HTL did not make its profit targets, HTL’s controlling shareholder would make up the shortfall to Yihua. When the agreement was announced, HTL’s share price was at $0.70, and the $0.30 gap signalled uncertainty about whether Yihua’s shareholders would agree to the acquisition. Minority shareholders and potential investors, who were not bound by the profit guarantee, needed to decide whether they should buy, sell, or hold HTL’s shares.