Equity returns
On the base-case ramp, the business generates R48.8 million of EBITDA by Year 5. At food-sector exit multiples of 6×–10× EV/EBITDA, and after deducting modest net debt, the equity value at a Year-5 exit ranges widely, implying strong multiples on the R18.2 million invested. These returns are attractive but must be read alongside the findings below: they are contingent on delivering an aggressive ramp and on the exit multiple achieved, and the headline figures are amplified by a small equity base scaling into a large EBITDA.
|
Measure |
6× exit |
8× exit |
10× exit |
|---|---|---|---|
|
Year-5 EBITDA (R m) |
48.8 |
48.8 |
48.8 |
|
Enterprise value (R m) |
293 |
390 |
488 |
|
Equity value (R m) |
324 |
422 |
519 |
|
MOIC (×) |
17.8× |
23.2× |
28.5× |
|
Equity IRR |
105.4% |
119.4% |
131.1% |
Key findingRead the returns with discipline
The headline MOIC is exceptional because R18.2m of equity scales into R48.8m of EBITDA in five years. That is only true if the ramp delivers. Investors should underwrite the downside case below, a 30% slower ramp still produces a healthy outcome, and treat the base-case multiple as upside rather than entitlement. Exit routes include a trade sale to a food or franchise group, a private-equity recapitalisation, or continued owner-operated cash generation.
Exit strategy and value realisation
The Company is being built to be acquirable. The most probable liquidity route is a trade sale to an established food or franchise group (of the kind that has historically consolidated South African QSR and bakery brands), for whom a proven premium brand, a modern manufacturing asset and a national franchise network are strategically valuable and immediately synergistic. A private-equity recapitalisation offers an alternative partial-liquidity route once the network and cash flows are established, and continued owner-operated cash generation, with dividends funded by the net-cash balance sheet from Year 3, is a credible default that does not force a sale into a weak market. Value realisation is maximised by reaching scale (outlet count and EBITDA), institutionalising the brand and systems so the business is not founder-dependent, and demonstrating two to three years of consistent franchise-network growth before a formal process.
Scenario analysis
|
Parameter |
Downside |
Base |
Upside |
|---|---|---|---|
|
Year-5 revenue (R m) |
150 |
215 |
247 |
|
Year-5 EBITDA (R m) |
30.3 |
48.8 |
54.7 |
|
Ramp / margin |
30% slower; −3 pts |
Sponsor plan |
15% faster; +2 pts |
|
Working-capital facility |
Drawn |
Undrawn |
Undrawn |
Sensitivity
Equity returns are most sensitive to the exit multiple and the revenue ramp, then to EBITDA margin and franchise-rollout pace; capex and interest-rate movements are second-order. The pattern reinforces the central message: value is created by delivering the ramp and building a business a strategic buyer will pay a full multiple for, operational execution, not financial engineering.
Year-5 EBITDA sensitivity grid
The grid below shows Year-5 EBITDA (R m) under combinations of revenue achievement (share of the Year-5 target) and EBITDA margin. It frames the range a lender or investor should hold in mind: even at 80% of the revenue target and a 20% margin, the business generates meaningful EBITDA, while the base case (100% / 22.7%) and upside populate the upper cells.
|
Revenue vs target → |
70% |
85% |
100% |
115% |
|---|---|---|---|---|
|
Margin 18% |
27.1 |
32.9 |
38.7 |
44.5 |
|
Margin 20% |
30.1 |
36.6 |
43.0 |
49.5 |
|
Margin 22.7% (base) |
34.2 |
41.5 |
48.8 |
56.1 |
|
Margin 25% |
37.6 |
45.7 |
53.8 |
61.8 |