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Master limited partnerships (MLPs) are limited partnerships that trade on public exchanges in the form of units, similar to common stock. MLPs have several advantages relative to traditional C corporations (C-corps) that have resulted in their frequent use to finance energy-infrastructure assets. The general partners (GPs) retain control of the assets placed in the MLP, can drop down assets to the MLP, often at advantageous prices, and receive incentive distribution rights (IDRs). IDRs increase the GPs' share of the distributions over time, which in turn affects the MLPs' cost of capital. MLPs do not pay taxes at the entity level, which increases the amount of cash that can be paid to GPs and unitholders. MLPs trade on the basis of their yield and the stability and growth of their distributions. This technical note provides a brief history of MLPs, a description of their key features and terms, and several approaches to valuing them.

Due to Argentina's vast energy resources, its modern political history has been deeply intertwined with its "energy" history. In its many military coups and political uprisings, typically each government used artificially low energy prices to keep the population subdued and the revenues from YPF to finance these subsidies or worse to line their pockets. Many of the interventionist measures that Argentina's governments imposed on the energy sector, such as price controls and at the most extreme nationalization, made it nearly impossible for private sector energy players to succeed or for the public sector to invest in its development. After severe blackouts in the summer of 2014, many Argentines in the country's most populous cities were outraged and went to the streets in protest. These blackouts were specifically due to the increased power usage for air conditioning in the summer months but were more generally caused by the removal of subsidies for power companies and a dearth of public and private infrastructure investment. Into this environment, President Macri was elected and he made energy reform one of the key pillars of his administration. Furthermore, he invited the private sector back into Argentina to immediately alleviate its power generation deficiencies. In this case, the students will examine the ways in which Bruce Wayne and his team may structure and diligence this electric power infrastructure deal. Particularly, the students should come to understand how the deal structure could allow EFC to both gain the most benefit but also shift the risks away from their company. Key questions that will be explored include: What makes investing in infrastructure particularly risky? Can private investment close the world's infrastructure gap? Can political risk be mitigated?

In December 2015, Susan Chen, an equity analyst, was preparing a valuation of Hong Kong electric utility China Light and Power Holdings (CLP). In Part A of the case, Susan considered ways to incorporate environmental, social and governance (ESG) factors into the equity valuation. She believed that including these factors in the valuation framework could help to identify undervalued shares, in cases where ESG factors had not been fully priced in by the markets. Susan decided to focus on the ESG key performance indicators (KPIs) for the electric utility industry, and assess those that are financially material for the CLP's valuation. As such, she planned to create a "materiality matrix" plotting the size against the likelihood of each KPI's impact on the share price. Part B of this two-part case focuses on the valuation process. It describes ways of incorporating environmental, social, and governance (ESG) into company valuation. At first, Susan would make use of the materiality matrix. Only the KPIs of large size and high likelihood of happening should be integrated into the valuation process.

Part B of this two-part case focuses on the valuation process. It describes ways of incorporating environmental, social, and governance (ESG) into company valuation, and provides forecasted cash flows and a weighted average cost of capital (WACC) for the Hong Kong electric utility China Light and Power Holdings (CLP). The case concludes as Susan was preparing to calculate a base-case valuation, a valuation adjusted for ESG factors, and a sensitivity analysis.

Excel spreadsheet for students.

Connecting life insurance policyholders with potential investors (called Life Settlement Providers), Ashar Group plays a pivotal role in the industry. Its current position is however increasingly being challenged by consumer-direct models, led by major providers seeking to shortcut brokers. Ashar faces a strategic dilemma in cooperating --- but also competing --- with these providers. Maintaining a mutually beneficial dynamic with policyholders, downstream intermediaries and other actors thus constitutes a balancing act. The context of this case is an underdeveloped market whose reputation has suffered from broker misconduct. In light of the market's legacy issues and competing business models, this case study explores strategies Ashar may pursue to secure and enhance its market position. Discussions emerging from this case study have the potential to illuminate directions for market transformation.

Alice Monroe, a 30-year-old married mother of two, was an admissions officer at the Kellogg School of Management at Northwestern University. She was just completing her first year of service at Northwestern and qualified for the university's 403(b) retirement plan. It was early October 2017, and she had until the end of the month to decide if and to what extent she would participate in Northwestern's retirement plan--that is, how much of her salary should she put into the retirement plan, and into which mutual fund or funds should she allocate her savings? The case includes background on defined contribution and benefit plans as well as mutual funds. It goes into detail about Northwestern's retirement plan, including data on the performance of 15 of the plan's core mutual funds. The case also provides each fund's strategy, Morningstar Rating and Morningstar Category, expense ratio, assets under management, turnover rate, and historical performance for the last 10 years. Using modern portfolio theory (diversification and risk-return trade-off) and with an understanding of mutual fund fees and the tax advantages of retirement savings, students will decide how much Alice should invest and in which mutual funds.

Exhibits (student spreadsheet) for case KE1056.

Supplement to case KE1056. Alice Monroe was an admissions officer at the Kellogg School of Management at Northwestern University. It was early January 2017 and Alice had enrolled in Northwestern's 403(b) retirement plan two months earlier. After spending a considerable amount of time examining the mutual funds available through the university's retirement plan, Alice had picked two to invest in: a large-cap equity growth fund and a mid-cap equity fund. (See the related case "Selecting Mutual Funds for Retirement Accounts (A).") Her initial allocations were 50% of her investment dollars in each fund. Upon further reflection, however, she realized these initial allocations were somewhat simplistic. She recalled, from an investments class she had taken at college, the topic of modern portfolio theory, which held that by adding more funds to her portfolio she might be able to achieve greater diversification and thereby reduce the overall risk of her portfolio and/or achieve a higher expected return. Alice now was considering adding an intermediate-term bond fund and a real estate fund to her retirement account. She hoped to use modern portfolio theory to prove that these new funds would indeed help her diversify her portfolio. If they did, she would also reassess her portfolio weights to determine the optimal allocation.

Exhibits (student spreadsheet) for case KE1061.

Snapchat's initial public offering, which provided shares with no voting rights, is a culmination of the growing trend of dual-class shares. It contradicts the precept of one-share, one-vote that is essential for corporate democracy. Snapchat's action caused an uproar among influential investors. In January 2017, a coalition of the world's biggest money managers, which together control more than $17 trillion in assets, demanded a total ban on dual-class shares. We reason that the increasing prominence of dual-class stock is explained by the confluence of three economic trends: the growing importance of intangible investments, the rise of activist investors, and the decline of staggered boards and poison pills. A dual-class structure offers immunity against proxy contests initiated by short-term investors. It enables managers to ignore capital market pressures and to avoid myopic actions such as cutting research and development, which hurt companies in the long term. Thus, a dual-class structure is optimal in certain scenarios. We put forth alternatives to dual-class structure that enable managers to maintain control while retaining focus on sustainable value creation.

Investors have long relied on information intermediaries-from financial analysts and advisors to the business press, credit rating agencies and auditors-to acquire timely and value-relevant information regarding the prospects of stocks. However, with the rise of the Internet and social media, individual investors are increasingly relying on each other as peer-to-peer sources of information. The author describes his research, which indicates that Twitter is another embodiment of the wisdom of crowds and that the aggregate opinion from individual tweets does help to predict earnings.

Tianqiao Chen, founder and CEO of Shanda Group, has set up his family office in the U.S. in 2016 after exiting from Shanda's Internet games business in China in 2014, again pioneering an unconventional approach to the management of a family office.

Spreadsheet supplement for case 218004.

In 2017, Peter Tang must prepare the economic analysis of a proposal to insource production of certain parts currently purchased by the Tower and Lattice (TAL) division of Akron Crane Works (ACW), a world leader in heavy lifting machinery. The primary motivations for the proposal were rising costs due to vendor price increases and long vendor lead times. The TAL division believed internal production would cost less and that, with increased control of production, the division could reduce lead times and even reduce working capital needs.

Student spreadsheet for case UV7448.

In 2012, Strategic Global Capital ("SGC") was founded by Bryan Kuhn, his wife Cathy and his mother Dorothy as a secondary debt market for micro finance notes. Using the founders' money, SGC launched a pilot program in Ecuador that proved their concept worked. Leveraging on their success, Bryan and his family wanted to further expand the business. In order to grow SGC with the most optimal capital structure Bryan and his family would need to consider all the existing financial conditions and potential risks. What would be the best overall capital structure in terms of the proportion and type(s) of debt and equity that should be utilized by the company? How (or should) the company raise equity based capital? How (or should) the company raise debt based capital?

Spreadsheet supplement for case 217018.