GreenScape Landscapes Business Plan — Investment Case and Returns
The return profile, valuation basis and exit assumptions, and what the numbers do and do not support.
Section 21 of 25
Investment Case and Returns
Jump to section
- 1. Executive Summary
- 2. Investment Thesis
- 3. Company and Business Overview
- 4. Problem, Customer Need and Value Proposition
- 5. Products and Services
- 6. Industry Analysis
- 7. Market Analysis
- 8. Customer Analysis
- 9. Competitive Landscape
- 10. Business Model
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Management and Organisation
- 14. Strategic Plan
- 15. SWOT Analysis
- 16. Risk Analysis
- 17. ESG and Sustainability
- 18. Implementation Roadmap
- 19. Financial Plan
- 20. Funding Requirement and Use of Funds
- 21. Investment Case and Returns
- 22. Sensitivity and Scenario Analysis
- 23. KPIs and Management Dashboard
- 24. Conclusion
- 25. Appendices
Base-case returns are high but execution-contingent; the risk-adjusted case rests on a solvent, positive-return downside — this is a growth SME opportunity, not a de-risked yield play.
21.1 Valuation
The opportunity is valued on two complementary bases: a discounted-cash-flow (DCF) valuation of the business today, and an exit-multiple valuation at the end of Year 5 for the purpose of estimating investor returns.
Table 42. Valuation summary, ZAR ’000 unless stated
|
Measure |
Value |
Basis |
|---|---|---|
|
WACC (discount rate) |
18.5% |
Risk-adjusted cost of capital for a growth-stage SME |
|
PV of explicit FCF (Years 1–5) |
R3,142 |
Discounted unlevered free cash flow |
|
PV of terminal value |
R18,249 |
3.0% perpetuity growth |
|
Enterprise value (DCF, today) |
R21,391 |
PV of FCF plus PV of terminal value |
|
Exit enterprise value (Year 5) |
R60,164 |
5.0x Year-5 EBITDA |
|
Exit equity value (Year 5) |
R67,089 |
Exit EV less Year-5 net debt (net cash) |
The DCF enterprise value of approximately R21,391k today, against R6,500k of committed capital, indicates substantial value creation if the plan is delivered. The exit valuation applies a deliberately conservative 5.0x EV/EBITDA multiple — within the range at which small-cap South African services businesses transact — to Year-5 EBITDA to estimate proceeds to the investor.
21.2 Investor returns
On the base case, an investor subscribing R2,000k for a 40% equity stake realises proceeds of approximately R26,835k on a five-year exit — a money multiple of 13.4x and an IRR of roughly 68%.
Table 43. Investor returns by scenario (five-year hold, 40% stake for R2.0m)
|
Scenario |
Exit multiple |
Year-5 EBITDA |
Exit equity value |
Investor proceeds |
MOIC |
IRR |
|---|---|---|---|---|---|---|
|
Downside |
4.0x |
R6,765 |
R19,394 |
R7,758 |
3.9x |
31% |
|
Base |
4.5x |
R13,370 |
R67,089 |
R26,835 |
13.4x |
68% |
|
Upside |
5.0x |
R20,256 |
R120,916 |
R48,366 |
24.2x |
89% |
21.3 Which investors this suits
Table 44. Suitability by investor type
|
Investor type |
Fit |
Why |
|---|---|---|
|
Growth / SME private equity & angels |
Strong |
Asymmetric returns, clear scaling model, defined exit |
|
Development-finance & impact capital |
Strong |
Formal job creation, skills, water efficiency, environmental benefit |
|
Commercial lenders (asset & term) |
Good, with structure |
Secured assets and recurring cash flow; needs the ramp-year moratorium |
|
Income / yield-seeking investors |
Weak |
No early distributions; value is in the five-year build and exit |
21.4 Proposed key investment terms
The indicative terms below provide a starting point for negotiation. They are intended to align the incoming investor with the founders around growth, governance and a clear path to exit.
Table 45. Indicative key terms (subject to negotiation and due diligence)
|
Term |
Indicative basis |
|---|---|
|
Instrument |
Ordinary equity (or a convertible instrument by agreement) |
|
Amount & stake |
R2,000k for a 40% shareholding |
|
Board representation |
One investor-nominated non-executive director |
|
Information rights |
Monthly management accounts and quarterly board reporting |
|
Reserved matters |
Customary investor consents over budget, new debt, material capex and share issues |
|
Use of proceeds |
Restricted to the use of funds set out in this memorandum |
|
Founder commitment |
Founders retain majority control and full-time executive involvement |
|
Dividend policy |
Earnings reinvested during the growth phase; distributions once covenants and buffers permit |
|
Exit horizon |
Trade sale, secondary or refinancing within approximately five years |
|
Anti-dilution & pre-emption |
Customary pre-emptive and tag-/drag-along rights |
21.5 Debt serviceability
Debt-service cover is the most important structural test of the funding plan, and the model is candid about it: cover is tight in the ramp years and strengthens rapidly thereafter.
Table 46. Debt-service and leverage metrics (base case)
|
Metric |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
DSCR (EBITDA / debt service) |
-1.00x |
1.00x |
2.60x |
4.40x |
6.10x |
|
Interest cover (EBITDA / interest) |
-1.70x |
1.80x |
7.40x |
15.50x |
27.00x |
|
Net debt / EBITDA |
n/m |
3.40x |
0.60x |
-0.10x |
-0.50x |
The finding is stated plainly: EBITDA does not cover debt service in Years 1–2 (DSCR below 1.0–1.0x), and the shortfall is bridged by the equity buffer, the 24-month principal moratorium and a nominal working-capital-facility draw. Cover then rises above 2.5x from Year 3 and exceeds 6x by Year 5. A senior lender should therefore expect ramp-year covenant relief or a structured hold-back; conversely, from Year 3 the business comfortably supports its debt and moves to a net-cash position by Year 4.
