Financing of Greenfield Project

Background

A group of entrepreneurs had tried unsuccessfully for 3 years to establish a beverage can factory in Nigeria. The product was sourced in the country only though imports, which were costly and fragile to ship, offering significant potential for import substitution. The sponsors required both external equity and debt financing.

Actions Taken

The Project Capital+ team further developed the concept and prepared the market assessment, financial model, recruited a management team, finalized the technology transfer agreement, and laid out the milestones for the implementation program.

The team guided the sponsors through negotiations of contracts with key technical partners and provided technical analysis to guide pricing and negotiations with major clients including Heineken Breweries and Coca-Cola.

The team marketed the transaction to international private equity funds. Three funds expressed interest, and we negotiated to maximize the pre-money valuation of the company. After closing with the equity, the team worked with the sponsors and the investor to secure debt, a combination of US-Exim Bank, HSBC and a Nigerian bank.

Outcome

• Project Capital+’s team raised a total of $75 million in financing for the project – for plant construction, equipment, working capital, and import of raw materials.

• The team raised $12 million in equity based on an agreed pre-money valuation of close to $30 million for a Greenfield project.

• Founding shareholders retained controlling interest based on a $2m equity commitment; thus, they maintained 57% of the equity for 15% of the total cash equity.

• The team also secured $60m in debt.

• The team established a technology transfer agreement with global industry leader and obtained customer commitments.

• After 3 years of operations, the company was valued at $500 million based on an investment from Standard Chartered Private Equity; representing over 100x return on the founding shareholders’ stake.

• The company is currently planning 2 new facilities, an additional plant in Nigeria and one in Kenya.