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Spreadsheet supplement for case 224045.

The board of Aviva Plc, one of the world's largest insurers, must review its climate risk exposures and evaluate next steps. Risk experts at the firm have conducted a robust set of analyses prepared for its regulator, the Bank of England, simulating how various climate scenarios could impact the business. Against this uncertain future-and given their history of leadership in sustainability, the board and CEO Amanda Blanc will review options for Aviva Plc to address this business and societal challenge, ranging from dealing with flood risk to working to effect large scale systems change.

Hong Kong-headquartered SenseTime Group Inc. (SenseTime) was founded in 2014 to commercialize artificial intelligence (AI) and was a global leader in deep-learning AI, with applications in Smart Business (facial recognition), Smart City (property damage and theft detection), Smart Life (interacting with the Internet of Things to improve consumer experience), and Smart Auto (autonomous driving). December 10, 2021, was supposed to be the date for setting the offer price for SenseTime shares in the company’s global initial public offering. Instead, it was the date that Xu Li, co-founder and chief executive officer of SenseTime, learned from Hong Kong Clearings and Exchange Ltd. that American President Joe Biden was about to designate SenseTime a Communist Chinese Military Company—an action that prevented American investors from legally investing in SenseTime, derailing the initial public offering. How should SenseTime alter its marketing, research and development, and listing strategies in the light of the American government’s actions? How would the increased tension affect the geographic, technological, and customer aspects of SenseTime’s efforts to drive business growth?

Student spreadsheet for Ivey product W33293.

Instructor spreadsheet for Ivey product W33294.

Spreadsheet Supplement for Case W33293

Hong Kong-headquartered SenseTime Group Inc. (SenseTime) was founded in 2014 to commercialize artificial intelligence (AI) and was a global leader in deep-learning AI, with applications in Smart Business (facial recognition), Smart City (property damage and theft detection), Smart Life (interacting with the Internet of Things to improve consumer experience), and Smart Auto (autonomous driving). December 10, 2021, was supposed to be the date for setting the offer price for SenseTime shares in the company's global initial public offering. Instead, it was the date that Xu Li, co-founder and chief executive officer of SenseTime, learned from Hong Kong Clearings and Exchange Ltd. that American President Joe Biden was about to designate SenseTime a Communist Chinese Military Company-an action that prevented American investors from legally investing in SenseTime, derailing the initial public offering. How should SenseTime alter its marketing, research and development, and listing strategies in the light of the American government's actions? How would the increased tension affect the geographic, technological, and customer aspects of SenseTime's efforts to drive business growth?

In early October 2022, the ASX-listed mineral exploration company Sheffield Resources announced its final investment decision to proceed with the Thunderbird mineral sands project, its only project under development. Olivia Montalbano’s investment banking firm had decided to provide coverage of Sheffield’s stock and asked her to determine a fair value estimate. The investor’s bankable feasibility study (BFS) provided an estimate of $1.84 per share, but the stock price was only $0.47. What troubled Montalbano was that the BFS employed a real discount rate of 8%, which seemed low, given typical mining project risk. Montalbano’s immediate task was to develop her own estimate of the project’s cost of capital.

In August 2022, a Canadian investor, Adam Eissa, was considering making an investment in Nautilus Inc. (Nautilus). Nautilus was a manufacturer of connected home fitness equipment that was experiencing financial volatility amid the COVID-19 pandemic. Before coming to a decision, Eissa wanted to analyze the financial data from Nautilus’s annual report and complete a business size-up of its corporate strategy.

On January 2, 2018, the chief executive officer of a private company in Karachi, Pakistan, Imaam Spinning Mills (Imaam), was planning to expand the company’s product line and enter the weaving business by setting up a new weaving plant. He asked his chief financial officer to conduct a financial evaluation financial evaluation of the project. To do so, she needed to calculate the weighted average cost of capital, using the comparative method to calculate the cost of capital for the unlisted firm based on financial data from Imaam and comparable firms, and determine the feasibility of the project.

In July 2017, the International Committee of the Red Cross (ICRC) launched the world's first Humanitarian Impact Bond. This innovative finance pilot was an experiment by the ICRC to engage the private sector differently and diversify funding - critical given the widening humanitarian aid gap. It was a massive undertaking. The HIB, which had a maximum potential deal size of CHF 26 million, took over four years to plan and multiple stakeholders, including governments, foundations, investors and lawyers, to put together. How did the ICRC pull this off and what possibilities does innovative finance offer the humanitarian and private sectors? Drawing on a series of proprietary interviews with key characters, various internal documents shared by the ICRC, and secondary sources such as news reports, press releases and reports by third-party organizations, this abridged case delves into the ICRC's motivations for entering innovative finance, why it chose the HIB instrument, what it was, the hurdles and challenges of designing and setting up this complex instrument, and what the ICRC did to get the project off the ground. Participants interested in innovative finance, the humanitarian and/or development sectors, cross-sectoral/industry collaboration, and social innovation will find the case particularly interesting.

Jonathan Gray, the head of Digital Assets at NorthCentral Bank, was tasked with deciding how the bank should approach the growing demand for cryptocurrency (crypto) investment products and services. As the fintech industry continued to grow rapidly and younger digital consumers expressed a desire for crypto-friendly products, the bank had to decide how to proceed. Gray considered three options: maintaining the status quo and not offering crypto products; developing investment-only products and services around digital assets; or becoming a meaningful ecosystem player by offering wallets and enabling users to acquire crypto assets and use them natively on blockchains. Each option had its own benefits and risks, and Gray had to decide which path is best for NorthCentral Bank to remain competitive in the rapidly evolving fintech industry.

In April 2023, Will Anderson, managing partner of SummitStone Capital, LP (SummitStone), received a copy of the management service agreement (MSA) between Artemis Capital (Artemis), a private equity firm, and Lucky Dice Casinos Inc., one of Artemis' recently acquired portfolio companies. SummitStone had invested in Artemis buyout funds since 2011 and was in the due diligence phase of allocating $75 million to Artemis' newest vehicle, Artemis Fund VII. But before Anderson could recommend the fund to his investment committee, he needed to understand the implications of the MSAs that Artemis was forging with its portfolio companies. The case allows students to (i) evaluate a typical MSA contract; (ii) analyze the existing evidence and academic research on MSAs; and (iii) explore possible avenues to adjust limited partnership agreements (LPAs) to align limited partners' (LPs') and general partners' (GPs') incentives in the presence of MSAs. Students can analyze the qualitative and quantitative implications of MSAs on all private equity fund stakeholders and develop a recommendation to an LP investment committee.

Spreadsheet supplement for case UV8975

Historically, the efforts of private equity firms to address leadership challenges have been limited primarily to replacing portfolio-company CEOs. Now, in an era of higher interest rates and more competition for limited acquisition targets, these firms are realizing that they need to make more-systematic investments in leadership development. The author offers a variety of prescriptions for PE firms, portfolio companies, and dealmakers, including hiring and empowering "chief human capital officers" to create a firm-level talent strategy, developing a leadership playbook, tasking portfolio companies with creating a leadership agenda, and rigorously assessing organizational effectiveness and talent during due diligence for company acquisitions.

In July 2020, the chief executive officer and board chair of Essential Coffee Group based on the Gold Coast, Australia, was perusing the company’s financials. After continuous company growth and a distressed coffee consumption industry due to the COVID-19 pandemic, it was the perfect time to explore inorganic growth opportunities. To continue to compete at a high level in the Australian coffee industry, Essential Coffee Group had to move fast by exploring opportunities to expand horizontally, such as acquiring the analogous coffee bean roasting company Coffee Time Pty Ltd. To determine the feasibility of the transaction, the Essential Coffee Group financial team would need to undertake comprehensive external, internal, and financial analyses. They would also have to complete a discounted cash flow valuation and a precedent transactions analysis to determine an appropriate offer price for the targeted firm.

Spreadsheet to accompany product W32150.