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H Partners and Six Flags
by Michael Gorzynski Robin GreenwoodRehan Jaffer, the founder of hedge fund H Partners, is considering what to do with his investment in Six Flags. H Partners had invested a significant amount of the firm's capital in the senior bonds of U.S.-based Six Flags, following that company's bankruptcy filing.
The Paris Opera Hotel
by Arthur I Segel Chad M. CarrReal estate investor Javier Faus invests in a luxury hotel development in central Paris, and must select a management company.
A New Financial Policy at Swedish Match
by Michael Norris Bo BeckerSwedish Match is a profitable smokeless tobacco company with low debt compared to other firms in its industry. The firms CFO now wants to revise the firms conservative financial policy.
SKS and the AP Microfinance Crisis
by Yannick Saleman Shawn ColeSKS, India's leading microfinance firm, is challenged when politicians declaim microfinance as exploitation of the poor and severely restrict business practices.
ATR KimEng Financial Corporation
by Michael Shih-ta Chen Li Jin Dawn LauATR KimEng is a Philippino asset management business. It is making an important decision on its own strategy going forward: should it stay independent, or be taken over by a large bank in the region. Through this case, we disuss the financial service industry in South East Asia, and study the opportunities and challenges presented by the changing global market dynamics.
Mexico City Water Shortage
by Griffin H. James Frederik Nellemann John D. Macomber Regina Garcia-CuellarIn this case, a property company, a water privatizer, and municipal engineers explore the causes of and solutions to a severe water shortage in Mexico City, a great global capital. The protagonist is a real estate investor doing due diligence on the magnitude of the crisis, the impact on the firm's operations, and the likelihood of resolution. Due diligence includes interviews with city water officials and global-scale water privatizers. This case is an excellent introduction to city scale infrastructure issues on a global level. A related case, "Water Shortage and Property Investing in Mexico City," HBS No. 210-085, contains more real estate finance and less water infrastructure finance material than this case does.
The Long and Short of Apollo Group and the University of Phoenix (A)
by Luis M. Viceira Andrew S. Holmes Damian M. Zajac Joel L. HeilprinA hedge fund is deciding whether to liquidate its position in Apollo Group, a for-profit education firm, in light of significant political and macro-economic uncertainty facing the industry. As part of the investment analysis a complete discounted cash flow analysis must be performed.
Underwater Engineer at Intel Corporation
by E. Scott MayfieldMolly Miller, an Intel employee and shareholder, must decide whether to vote FOR or AGAINST Intel's proposed 2009 option exchange program. Given recent declines in Intel's stock price, more than 99% of Intel's outstanding employee stock options are "underwater," and employee motivation and retention are serious concerns. If the program is approved by shareholders, Molly must decide whether to participate in the program and tender her underwater employee stock options. As a shareholder and an employee, Molly must assess the pros and cons of Intel's proposed exchange program from both perspectives. In addition, she must consider Intel's proposal in light of the alternative approaches pursued by other corporations that have recently confronted the problem of underwater employee stock options.
L'Occitane en Provence
by E. Scott Mayfield Bo Becker Daniela Beyersdorfer Mayuka YamazakiCosmetics company L'Occitane en Provence must decide if it is the right time to go public, and, if so, where to list. The firm could list on Euronext in Paris, close to the firm's headquarters in southern France, on one of the large exchanges in the United States, or perhaps in Asia, where much of the firm's future growth is expected. The case provides opportunities to discuss the benefits and costs of going public, including valuation implications, and illustrates the choices faced by a prospective public firm that operates in a global setting.
The Long and Short of Apollo Group and the University of Phoenix (B)
by Luis M. Viceira Andrew S. Holmes Damian M. Zajac Joel L. HeilprinSupplement
Social Finance, Inc.
by Rawia Abdel Samad Matt Berner Raluca Dragusanu Shawn ColeSocial Finance attempts to design and launch a complex new financial instrument that will entice private capital to invest in social service provision.
Edward Lundberg and the Rockville Building: Energy Efficiency Finance in Commercial Real Estate
by Frederik Nellemann John D. MacomberA commercial landlord analyzes options for funding and accomplishing energy efficiency retrofit. The situation is complicated by lease terms and uncertain effectiveness of the intervention. Students must grapple with obstacles including changing energy prices, variations in energy needed in different climate scenarios, issues in net and gross lease responsibilities, and issues in finding adequate cash flow and security to satisfy a range of possible third party funders. The business opportunity for third party funders is also discussed.
CityCenter (E): Blow up the Harmon?
by John D. MacomberCasino owner considers whether to implode, complete, or do nothing with a 26 story vacant new building on the Las Vegas Strip. This case continues a series of pieces about the progress of CityCenter, an $11bn project in Las Vegas said to be the largest private construction project in the history of the United States. As in the prior observations of this project, issues around measurement of demand, architecture, construction, scheduling, and finance all interact. At the time of the case, court hearings have just started with a possible swing in the outcomes of $600,000,000.
General Growth Properties and Pershing Square Capital Management
by John Mascari Stuart C. Gilson Arthur I Segel Zubin Malkani Thomas LangerCase
Building Cities: A Technical Note
by Arthur I Segel Oliver O. HartlebenWorld population growth and increasing urbanization will require new cities in the future around the world. This technical note attempts to systematize the key design decisions that developers and policy makers alike must make to be able to proceed.
SOHO China: Design, Development, and Social Harmony
by Arthur I Segel Mukti KhaireFounded in 1995 by Zhang Xin and her husband Mr. Pan Shiyi, SOHO China has developed into a world-class real estate development firm that has consistently delivered high-quality projects known for their cutting-edge designs and investment potential. Despite the tremendous success of the firm, Zhang Xin still looks at the future with great uncertainty. Average residential pricing in China has dropped, as government continues to put downward pressure on residential housing prices through restrictions on the number of apartments a resident is allowed to purchase, and aggressive promotion of affordable housing on the low-end of the market. Zhang Xin wonders what opportunities and threats such market conditions present to SOHO. On the sales and marketing front, SOHO China has historically been geographically-focused only on high-end, design-driven projects in Shanghai and Beijing. As the market became more competitive, Zhang Xin wondered what key strategic decisions in regards to design, financing, and sales the company would need to make in order to maintain its competitive advantage in China.
Castronics, LLC
by Royce Yudkoff Richard S. RubackPatrick Dickinson (HBS '09) and Michael Weiner (MIT's Sloan '07) acquired Castronics, a firm that specialized in threading pipe used in the oil and natural gas industry, at the end of 2009. The partners overcame significant hurdles during the first two years of ownership, which included the loss of nearly half of their workforce, the threatened entry of a formidable competitor into their market, and limited production capacity. In spite of these challenges and many other day-to-day obstacles, by the summer of 2011, the company successfully tripled production and EBITDA and the partners were deciding whether or not to sell the company.
A Note on Valuation in Private Equity
by Paul A. GompersThis note will provide an overview of valuation methodologies in private equity.
Blackstone's Investment in Intelenet
by Josh Lerner Rachna Tahilyani Sandeep BapatThree years had passed since Blackstone's investment in Intelenet Global Services, their third largest investment in India. Great progress had been made, but now a new challenge loomed. Globank, a large global bank, was Intelenet's largest customer. Intelenet's contract with Globank was set to expire in the next seven months, and all of Intelenet's assets and people working on the account, would move to Globank. Amit Dixit, managing director at the Blackstone Group, estimated that in the next four years this would result in Intelenet losing $160 million of revenue and $48 million of EBITDA. Blackstone could either channel large amounts of capital and human resources towards renewing the contract, or focus on growing third-party business at Intelenet. Dixit had to firm up his strategy quickly in order to begin negotiations with Globank.
Hudson Yards - The Other Side of the Tracks?
by A. Eugene Kohn Christopher M Gordon John D. Macomber Lisa StropeStephan Ross, CEO or Related Companies, is considering an opportunity to invest $1 billion for the air rights over the Hudson Rail Yards in New York City. The investment would allow Related to build a platform over the operating rail tracks and develop this blighted edge of New York City into one of the top tier places to live, work and shop in the world.
S&P Indices and the Indexing Business in 2012
by Luis M. Viceira Alison Berkley WagonfeldIn June 2012, Standard & Poor's Indices is finalizing a deal with the CME Group, the largest global exchange for futures and options and majority owner of Dow Jones Indexes, to combine their respective indices business into a new joint venture called S&P Dow Jones Indices. This case discusses the index provider business model through the lenses of this transaction: sources of revenue and profitability, business valuation, uses of indexes in the money management industry, types of indexes, intellectual property protection issues, and competition, marketing, and growth opportunities. The case makes special emphasis on the strategic drivers for business consolidation and combination in an environment of increased competition, trends toward self-indexation, and growth of indexing at a global scale.
Hotel Ivory
by Nicolas P. Retsinas Arthur I Segel Jonathan LoCheick Sanankoua is an MBA student who believes that he has found the perfect investment property, a small, independently-owned hotel, on the Ivory Coast. However, he has had trouble raising money for the investment beyond friends and family. Through contacts in the private equity industry, he has one last opportunity to pitch the deal to Asdar Capital. If unsuccessful, the time on Sanankoua's exclusivity agreement with the owners will run out.