Speaker Presentations from Amity School Leadership Summit 2019

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TOPIC
SUB HEADING
Financing For
Growth
Rakesh Gupta
Managing Partner, LoEstro Advisors LLP
Supported by

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The School Fundraising Survey: Findings
Respondents: Investors – School Management Sample Size: 30
83% 17%Yes No
01
Are you looking to
Raise Capital ?
25%
50%
25%
02
How Long have you
been looking to raise
capital ?
Last
6 months
6-12
months
More than
12 months
33% 67%
03
Do you have an
Investible Structure?
Yes No
04
Governance Index*
65%
25%
0 to 5
6 to 8
9 and 10
10%
05
Do you have a
documented business
plan?
10% 90%Yes No
* Composite index Board Composition, Decision Making Process, Audit Process, Compliances

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The School Investment Survey: Findings
Respondents: Investors Sample Size: 12
01
Are you looking to Invest in K-12
Sector?
67% 33%Yes No
02
In the last 12 Months have you
invested in any K-12 Business?
17% 83%Yes No
03
Key Challenges in Funding K-12
Businesses ?
1. Not For Profit Structure
2. Commercials Mismatch
3. Governance Issues
4. Scale

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Financing For Growth: A Journey
‘Grooming’
The Business
Business
Planning
Fundraising
Post Investment
Management

6. Journey:
Grooming The Business

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Journey: ‘Grooming’ The Business
Attractive Funding Opportunity
Investible
Structure
Governance
Practices
Intangibles Track
Record
Core Business FundamentalsA
B C ED

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Grooming: Business Fundamentals
Team
• Experience
• Core Values
• Vision, Mission, Strategy &
Execution Plan
Offering
• Target Market
• Business Model
• Competition
• Differentiators
Metrics
• Revenue
• Profitability
• Growth
• Cashflows
• Return on Capital
Attractive Funding Opportunity
A
B C ED

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Grooming: Investible Structure
“Not For Profit”
Licenses / Core
Business
Real Estate
IBrand / IP
Auxiliary Services
Investment
Attractiveness:
Low
Leakage: Low
OpCo - PropCo
Licenses / Core
Business
Real Estate
Brand / IP
Auxiliary Services
Investment
Attractiveness:
Medium
Leakage:
Medium
OpCo – PropCo – ManCo
Licenses / Core
Business
Real Estate
Brand / IP
Auxiliary Services
Investment
Attractiveness:
High
Leakage: High
Society / Trust /
Section 8 Company
Property
Company
Management
Company Rental
Agreement
Services
Agreement
Attractive Funding Opportunity
A
B C ED

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Grooming: Governance Practices
Board Composition
• Board Composition is a
signal towards quality of
governance – Get reputed
experts from diverse
background
• Not ‘Paper Tiger’ – Give
oversight and control to the
Board through MIS and
governance process
Business Practices
• Trade-off between Tax
Leakage and Value
Creation: Avoid “off the
books” Transaction
• Internal control given the
nature of the business
Compliances
• High Quality Internal and
Statutory Auditors to
generate confidence on the
accounts and practices
• Strong secretarial and
Regulatory compliances
Attractive Funding Opportunity
A
B C ED

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Grooming: Intangibles
People
• Build the right organization
structure to Manage
• Right people to fill the key
roles in the structure at the
right time
• Right environment and
incentive structure for
driving success
Process
• SOPs and Process Audits to
run, manage and scale the
business
• ISO and other process
certifications
• Technology for efficiency
and efficacy
Brand
• Strength of Brand
• School Community :
• Strength of Alumni
• Employee Satisfaction
• Parent Relationships
Attractive Funding Opportunity
A
B C ED

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Grooming: Track Record
Funding Track-Record
• Prior track record of raising
capital in the same or other
business
• Smaller rounds to generate
confidence and opportunity
for larger rounds
Investor Relationships
• Track record of
relationships with
• Investors
• Business Partners
• Property Partners
• Others
Delivery Track-Record
• Proven ability to commit to
contracts and aptitude to
deliver on contracts
• Track Record of delivering
promised / projected
commitments and numbers
Attractive Funding Opportunity
A
B C ED

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Case Study 1: ‘Grooming’ The Business
Context • K-12 group run and managed by first generation entrepreneurs.
• Huge aspiration and aptitude to grow, but didn’t have sufficient capital
• Private equity in India was still emerging, Equity investment in K-12 space was unheard of; Debt was very rare
Solution Investment in people/process
• Build a strong corporate team
• Balanced score cards to track
performance
• Created SOPs and invested in
technology solutions
Investible structure
• Investible Stucture :Propco-Opco-
ManCo
• Arms length with no common director
/ society members
Corporate governance
• Big 4 as Statutory Auditor ; Reputed Internal Auditor
• Professional Board with specialist independent
directors
• Advise / Consultations from experts in each area of
business function
Built a track record
• Networked and diligently tried all potential fund raise
channels including IPO
• Started with a NCD of 20 Crs followed by multiple
rounds of equity, bank loans and debentures.

14. Journey:
Business Planning

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Journey: Business Planning
The planning Process
Where are we now? – “Situation Analysis”
Company
Summary
Strengths &
Weaknesses
Opportunities &
Threats
Competitive
Environment
My Competitive
Advantages
Where are we going? – “Mission, Vision, Goals & Objectives”
Mission & Vision Goals & Objectives
How are we going to get there? – “Strategies & Action Plans”
Creative
Direction
Marketing &
Sales
Finance &
Accounting
Production &
Operations
Facilities &
Studio
Mgmt. &
Organization
How will we know we have arrived?
Track Progress
Measure Programs &
Initiatives
Monitor Financial Results
Why
How
When
Where
What
Why does the business need money ? What is
the Purpose / Utilization ?
How much money does the business need ?
When does the business need money ? When
can the business repay ?
Where will the money take the business ? What
are the key milestones / targets ?
What Type of Financing will suit the
business? Choose the ‘Color’ of Money

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Journey: Choosing The Right ‘Color’ Of Money
Debt
Asset
Monetization
Equity –
Financial
Partner
Equity –
Strategic
Partner
Others –
Grants /
Endowments

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Journey: Choosing The Right ‘Color’ Of Money
Debt
Asset
Monetization
Equity –
Financial
Partner
Equity –
Strategic
Partner
Cost
Availability
Tenure
Purpose
Operational
Freedom
Risk Sharing
9-14%
Available
3-12 Years
Restrictive
High Degree
No Risk Sharing
11-16%
Growing
Perennial
Un-Restricted
High Degree
Limited
Varies
Growing
Perennial
As Per Business Plan
Low
High
18-25%
Growing
3-5 Years
As Per Business Plan
Medium
Medium

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Case Study 2 : Right ‘Color’ of Money
Context • ABC International School, Tier 1 City in South India
• Illustrious Founder with strong experience and brand-name in the sector
• Campus Financed through :
• Land using costly personal loans from money-lenders
• Building using Bank Loans
Challenge • Started Facing Financial Challenges
• Operating Cash < Principal and Interest Repayment
• Downward Spiral : Replacing Bank Loans with Costly Personal Loans to avoid default
Solution • Asset Monetized : Sold land and building to a fund – Money used to repay all lenders
• Strong Operations ensured smooth rent payment for ABC
• Operational Freedom and De-leveraged for long term

19. Journey:
Fundraising Process

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Journey: Fundraising Process
• Depending on the type of
capital to be raised an
appropriate set of collaterals to
be prepared. Primarily including
• Financial Model
• Introductory Teaser
• Detailed Information
Memorandum
• Time Frame : 45-60 Days
Collateral
Preparation
• Long List of target investors
depending on type of funding
• Filter based on initial interest
towards sector, size, fund
availability and geography
• Initial discussion, Basis Data
sharing and Management
meetings
• Time Frame : 30 – 45 Days
Deal
Marketing
• Initial Term-Sheet Negotiation
and Signing
• Due Diligence (Primarily for
Equity)
• Definitive Documentation
• CPs and Closure
• Time Frame : 60 Days+
Closure

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LoEstro: We are There to Help You In the Journey
‘Grooming’
The Business

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LoEstro: Contact Us
CONTACT US
Rakesh Gupta
Managing Partner,
LoEstro Advisors LLP
rakesh.gupta@loestro.com
+91 9948426111