Accuracy uses its financial due diligence and business modelling skills to assist a large investment fund in its decision to invest in an energy company in Luxembourg.
Context
Our client, a large French investment fund, was looking to acquire a stake in a Luxembourg-based energy group with operations in Western Europe. The group focusses on electricity and gas transmission and supply as well as power generation. The group holds a leading position in Luxembourg with strong growth potential in the surrounding markets.
How we helped
Our work began with an initial review of the available information on the company’s operations and financial structure. Upon learning the complexity of the target’s operations, the team split into German and French sub-teams to cover the different business units and perform due diligence on a legal-entity basis.
Our team also assisted the fund with building its business model of the target. This was important as it provided the expected yield and IRR and would ultimately be the basis for their investment decision.
Outcome
Two main issues arose from the due diligence: (i) understanding how different market regulations influenced profitability and (ii) understanding the pricing structures of the various entities. The team therefore worked closely with the fund to communicate the implications of accounting treatments and regulations influencing the target’s performance—a key value-add on the engagement.
We helped our client to understand how the business worked, how profits could be modelled and identified key risks and the main issues relevant to the transaction. Thanks to our input, the fund was able to rely on the figures necessary to make an informed decision.
