International Equity Fund [IEF]
The equity funding industry is undergoing a shakeout. After years of record investment, equity funding, debt availability, and exit opportunities have decreased sharply. Now, only funds with enough committed capital—and a solid track record of above-average returns—will survive.
The key priority for most firms is to stabilize the portfolio and ensure that current investments weather the storm. On the other hand, the economic crisis has also created some attractive investment opportunities. Today, equity firms face the following important questions:
- How can we align our fund strategy with the investment criteria of the changing Joint Venture (JV) partner universe?
- How can we identify investment opportunities in an environment that is rapidly changing across all regions, industries, and capital markets?
- How can we navigate our portfolio companies through the crisis?
Our understanding and strategy entails adopting an explicit value-creation target as well as designing and aligning business, financial, and investor plans accordingly. We thereby help companies understand their sources of valuation advantage and increase returns to shareholders.
Financial management, budgeting, and reporting include all the elements needed to generate a world-class finance function. This function faces special challenges attributable to increasingly complex demands such as driving value creation, facilitating strategic decisions, and providing transparency in external reporting.
A value-creation strategy requires development of sharply defined and closely aligned business, financial, and investor plans to optimize total shareholder return over the medium to long term at both the corporate and business unit levels.
IEF General JV Terms
Net Project Capital
The Investor always provides 100% of capital needed to complete the project.
Direct Investment into the project company or through a Joint Venture Company (JV) or Special Purpose Company (SPV).
In order to qualify, the project will be required to achieve a project EBITDA of no less than 10-15 % per annum over the first 5-7 years after stabilisation of the project (after project development, construction or execution).
In order to qualify for the investment, the Investor will require up to 50% of the share capital in the project company or in any JV Company or SPV and in return will provide 100% of the required capital by the project promoter in form of a loan facility.
The Investor will make available a competitive loan for the balance of the investment after the deduction of the equity payment to the Project Promoter. This loan will attract a competitive floating US$ Libor rate plus an applicable margin. The overall interest rate currently should not exceed 3.5% (three and a half percent) per annum.
The Investor requires at least one (1) Board seat for the duration of the investment as an oversight position.
Detailed terms and conditions of any investment will be determined between the Investor and the Project Promoter in a detailed Investment Agreement or Joint Venture Agreement. The commitment of the Investor will be a long-term commitment.
All bank accounts are operated under joint signature between the Investor and the Project Promoter.
The equity investment is a fully Non-Recourse Investment, with no corporate or personal responsibility or guarantees whatsoever.
Total closing costs (Success Fees) of five per cent (5%) of the total investment amount is payable by the Project Promoter’s company respectively the JV Company and or the SPV Company. The closing costs or Success Fees are structured into the net working capital received by the Project Promoter.