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Alibaba is the world's largest online trading platform, with higher revenues than Amazon and eBay combined. Its 2012 syndicated loan was the first sizable loan for a Chinese technology company with few tangible assets. Creative loan covenants stated that the subsidiaries would repatriate 100 per cent of the distributable profits for debt service. The loan was partially used for the buyback of Yahoo!'s stake in Alibaba. In the agreement, Yahoo! would sell half of its stake back to Alibaba immediately and an additional 10 per cent during Alibaba's IPO in the next few years, and divest the remainder sometime after that. Now, Alibaba thinks it is time to tap the debt market in order to pay off the $4 billion in loans it received in 2012 and to finish the payments owed to Yahoo! for the stock repurchase.

An investment analyst needs to recommend whether her firm should become an institutional investor in HudBay Minerals Inc., which is nearing completion of an acquisition to purchase another mining company, Norsemont Mining Inc.

Provides an introduction to the fields of project finance and infrastructure finance, and gives a statistical overview of project-financed investments over the years from 2009 to 2013. Examples of project-financed investments include the the Kashagan oil field development in Kazakhstan (1997), the $1 billion Port of Miami Tunnel (2007), the $54 billion Gorgon liquefied natural gas (LNG) project in Australia (2009), and the $6 billion Oyu Tolgoi copper mine expansion in Mongolia (2014). Globally, firms financed a record $415 billion of capital expenditures using project finance in 2013, and the use of project financed-investment has grown at a compound rate of 8% over the past 15 years despite several macroeconomic crises.This note focuses primarily on private sector investment in industrial and infrastructure projects and contains four sections. The first section defines project finance and contrasts it with other well-known financing mechanisms. The second section describes the evolution of project finance from its beginnings in the natural resources industry in the 1970s, to the U.S. power industry in the 1980s, to a much wider range of industry applications and geographic locations in the 1990s and 2000s, and most recently to infrastructure finance in the 2010s. The third section provides a statistical overview of project-financed investment over the last five years (2009 to 2013) and looks at industry, project, and participant specific data. The third section also provides recent data on infrastructure investments and public-private partnerships. The final section discusses current and likely future trends.

Zeta Mining, one of the world's largest producers of metallurgical coal, operates a number of mines in the Bowen Basin, Central Queensland, Australia. The company has invested about AU$8 billion in the region. Before extracting the coal, the overburden of dirt, rock and other geological waste has to be removed, and this is usually done by draglines, which are imported from the United States and constructed on site, requiring a significant investment in time and money. In 2012, Zeta’s chief financial officer tasked the Bowen Basin project evaluation director to decide whether to walk one of the 3,400-tonne draglines six kilometres to another mine or to employ external contractors to remove that mine's overburden. To do so, the director was required to perform an incremental comparison analysis using net present value methodology. The CFO will then use the analysis and any other relevant factors in making a final decision.

Teuer Furniture is a privately owned, moderately sized chain of upscale home furnishing showrooms in the United States. By the end of 2012, it had regained its financial footing and a number of long-term investors, including several of Teuer's original non-management investors, now want to sell their shares. At the request of the board, Jennifer Jerabek, the chief financial officer of the company, and her team put together an extensive valuation of Teuer based on a discounted cash flow analysis. When the model was presented to investors, a number of them disagreed with the results. Some investors considered the value too high; others considered it too low. Not surprisingly, some of the differences of opinion were correlated with whether or not the investors wanted to sell their shares of Teuer. Jerabek was instructed to build a valuation of Teuer using a multiples approach instead.

Spreadsheet Supplement for KEL788

Pacific Coffee operated several stores in Central Hong Kong, the heart of the city's financial district. One of these stores ("Store X") was situated on the ground floor and near the main lobby of a Grade A commercial building and a five-minute walk away from Lan Kwai Fong, a popular area for drinking, dining, and clubbing frequented by the city's professionals. Store X's opening hours were from 7 a.m. to 8 p.m. daily. Profitability was constantly challenged by increased competition as well as pressures from cost inflation, including rent, labor, and raw material price increases. Jonathan Somerville, the group COO, had been contemplating a number of different strategies to optimize profitability at the store. Two other related cases in this series include: 1. Pacific Coffee Balanced Scorecard: Operationalizing Strategies 2. Pacific Coffee: Long Run Investment Decisions

Since China Resource Enterprise Ltd. (CRE) acquired a majority stake in Pacific Coffee in 2010, the coffee chain had experienced tremendous expansion particularly in mainland China. Yet, Hong Kong remained the core of the business, and Pacific Coffee could not afford to lose its leadership position in its home base. The competitive environment became more intense and Hong Kong coffee consumers became more sophisticated. Jonathan Somerville, the CEO, realized that while he needed to stay involved, and on top of the business in Hong Kong, he no longer had the capacity to be involved on a day-to-day basis. However, he needed to motivate his Hong Kong team and give them direction when implementing strategies. He decided the Balanced Business Scorecard would be an effective tool to link and align the company's strategy to its operations. Two other related cases in this series include: 1. Pacific Coffee: Making the Numbers Count. 2. Pacific Coffee: Long Run Investment Decisions.

Pacific Coffee had experienced a major expansion of its network in Hong Kong since CRE took control in 2010. By March 2018, most but not all districts in Hong Kong had Pacific Coffee stores. Yet, with turnover in leases and new potential markets, there continued to be opportunities to expand into new store locations. In March 2018, Pacific Coffee's business development and leasing team found two locations up for rent. One was a ground-floor space at a new building on the campus of the Hong Kong University of Science and Technology (HKUST), while the other option was a street-level store in Central district. For Pacific Coffee's management, the investment process did not entail just only financial return. Other intangible factors, such as brand building, were essential for the chain's long-term growth strategy. Two other related cases in this series include: 1. Pacific Coffee: Making the Numbers Count. 2. Pacific Coffee Balanced Scorecard: Operationalizing Strategies.

Spreadsheet Supplement for Product #914529.

Spreadsheet supplement for case 209097. Perry Capital owns shares in King and, to facilitate approval of the merger, buys shares in Mylan, whilst hedging out its economic exposure to Mylan's share price using derivatives. The price at which Mylan proposes to merge with King is generous to King shareholders, but the merger does not look likely to be approved by Mylan shareholders, who must vote upon it. If Perry can swing the voting in favor of the deal, it will gain handsomely on its King shares without facing any corresponding losses on its Mylan holdings since those are hedged. Carl Icahn, another shareholder in Mylan, opposed the deal and sued Perry for alleged vote buying.

Student spreadsheet for case IMD746.

This note provides an overview of Initial Public Offerings (IPOs) and addresses the methods used to value companies undergoing an IPO. It begins with a brief introduction to IPOs and the rationale behind going public, followed by an analysis of IPOs from the investor’s perspective. Next, the IPO process is outlined and explained, including the underwriter choice, selling procedure, pricing and activities in the aftermarket. Lastly, the note examines the valuation methodology used in the pricing stage of IPOs. This includes the discounted cash flow method, the use of market multiples of comparable firms, as well as other situational considerations when determining the initial price per share range and final offering price.

This case examines performance assessment in private equity (PE). Its main purpose is to familiarize students with the current guidelines regarding disclosure practices in PE and the performance metrics used to evaluate PE performance. The setting for the case is a $50 million investment in a new $1.3 billion fund (Fund III) being raised by Rhine Capital that is under consideration by the pension trustees of Illinois Teachers' Retirement System (TRS) at an upcoming meetings in January 2013. Students are asked to calculate the Since Inception-Internal Rate of Return (IRR), TVPI, DPI, RVI, and the public market equivalent (PME) for Rhine Capital's Fund II and make a recommendation about the $50 million investment in Fund III. The State of Illinois had been under serious financial pressure for some time, and TRS was $52 billion underfunded relative to its future obligations. To help reduce the shortfall in funding, TRS decided to increase its investments in PE, and it is imperative that those investments earn a satisfactory return. The case discusses the difficulty of measuring performance in PE and the relative merits and shortcomings of frequently used performance metrics.

Spreadsheet supplement for case UV6899.

Spreadsheet supplement for case 213073.

Longview Investments, an investor in alternative asset classes, had recently developed a new investment thesis to take advantage of several emerging macroeconomic themes. The strategy was premised on the belief that inflation and interest rates were likely to accelerate in the future and that digital real estate was likely to offer a superior return due to developing trends in technology and IT management. Specifically, the firm noticed greater utilization of cloud-based applications and mobile devices; the increased need for ubiquitous access to digitized data, as well as the explosion in the amount of electronic data generally; and the shifting of firms away from the use of small server closets and toward larger datacenter environments. The net result was a heightened interest in REITs specializing in digital real estate. The case is meant to demonstrate the sum of the parts valuation methodology as a capstone exercise for an introductory finance class in a first-year MBA setting. It follows an investment professional as he develops a hypothesis related to Digital Realty Trust (DLR), a publicly traded REIT specializing in digital real estate.

Goldman Sachs, a longtime venerable financial institution headquartered in New York City, had a partnership culture that was known to value its clients. But when the financial crisis hit in 2008 and Goldman Sachs emerged relatively unscathed, its public image took a large blow as people questioned the inner workings of the bank. To address the situation, Goldman Sachs CEO Lloyd Blankfein called for the creation of the Business Standards Committee (BSC) to carry out a rigorous introspection of the firm. This case explores the reactions of the executives at the bank over the short- and medium-term to public accusations and scrutiny and whether the implemented solutions devised by the BSC are sustainable. It details the themes of individual and collective accountability, reputational awareness, and client care.

This case is about options for ownership design in family businesses. The Hermès family takes the firm public in 1993 with the dual aim of enabling individual members to exit via selling shares on the market and generating funds to finance the company's growth. Fifteen years later, as LVMH prepares a hostile takeover bid for control of Hermès, the family fights to protect its ownership by creating a family trust to keep minority ownership interests in check.

This case traces the history of Goldman Sachs from its origins as it grows from a partnership to one of the most valuable franchises in the global securities industry and ultimately a listed corporation, and its transformation into a bank holding company under the regulatory oversight of the Federal Reserve. Even by the standards of the financial services sector - significantly restructured in recent decades - Goldman Sachs has undergone transformative configurations while straining to hold on to the attributes that made it an industry leader. There are successes and failures, and the case focuses on the future direction of the firm in a market and regulatory environment very different from the past.