Case study: Acquisition & capital raise
The client was looking at diversifying its investment portfolio and hold real estate
It was decided to look at a unique opportunity to pick up prime land at distressed rates of an existing business that could be leased out with the added advantage of currency appreciation.
As against conventional wisdom to look at real estate close to where the client was located, Veekes & Company (V&C) suggested that the client acquire a running hotel in a prime area of Sri Lanka given its economic situation. V&C arranged to get a top 3 hotel chain in India to lease this property for 30 years
The currency, as expected, appreciated 25%
The land is expected to appreciate 50% when normalcy returns which is thought to be a year away and
The leading hotel is expected to generate twice the income due to its higher realization and use of its extensive marketing network adding Inr 50 cr to the company’s topline
This deal was a 100% leveraged deal with a leading Indian bank and structured such that there was zero outflow from the client besides the margin
Case study: Trade finance
The client was looking to arrange for a letter of credit (LC) for a metal trading opportunity between companies in Africa and India.
There were multiple challengers in this however. These were to do with tighter regulations on LCs, the fact that this was a new business line the client was venturing into, the deal size being large and trade was taking place with Africa, a relatively unknown eco-system for a new entrant.
These challenges necessitated that the LC value had to be backed by a collateral to the extent of the entire traded value and not just a % as margin
Via the establishment of an international trading office, V&C were able to arrange for an international trade finance partner who not just certified the seller but also provided the LC against the entire value against the goods being shipped without needing the client to raise collateral to the extent of $ 6 million.
Case study: Alternative investments
The family office of a large manufacturing business family had a bevy of bankers and wealth managers approach them to invest in the equity and debt markets. V&C were asked to evaluate them.
We saw a pattern in their recommendations and it occurred to us after analyzing the underlying performance drivers of the suggested companies , that the scrips that were suggested were companies that they could invest or participate in in a more direct fashion – franchising manufacturing, leasing or retailing etc. This was more in keeping with their business orientation, rather than invest in the markets.
Using our extensive contacts with the Tata’s we spoke to senior management at a few of these companies and got them to offer franchising opportunities to our client with IRRs greater than 20%.
Opportunities included a OLB overseas hotel project with Lemon Tree, a jewellery franchise with Titan, and an automobiles dealership with Tata Motors