On a base-case 7.0x EV/EBITDA exit in Year 5, the platform supports an equity value of approximately US$1,193m — but the return is materially dependent on the exit multiple and on delivering the EBITDA ramp.
15.1 Exit valuation
We value the Group on an EV/EBITDA basis at exit, bridging to equity value by deducting core net debt and adding the net equity in the self-funding finance book. Integrated Southern African agribusinesses have historically traded in a mid-single-digit to high-single-digit EBITDA range; we adopt 7.0x as a base case, with 5.5x and 9.0x as the downside and upside.
|
Year-5 exit metric (US$m unless stated) |
Value |
|---|---|
|
Year-5 EBITDA |
190 |
|
Base-case EV multiple |
7.0x |
|
Enterprise value (base) |
1,330 |
|
Less: core net debt |
(215) |
|
Add: net finance-book equity |
78 |
|
Equity value (base) |
1,193 |
|
Gross equity MOIC (base) |
5.96x |
|
Illustrative gross IRR (base)* |
42.9% |
15.2 Return scenarios
Analyst flagReturns are exit-multiple and execution dependent
Across a 5.5x–9.0x exit range the illustrative gross IRR spans roughly 35%–51%. These are gross, pre-fee, single-exit proxies on a five-year hold; they exclude fund fees, carry and any interim distributions, and they assume the full EBITDA ramp to US$190m is delivered. A shortfall in EBITDA delivery compresses returns faster than any other single variable.
15.3 Sensitivity analysis
The tornado below isolates the drivers of Year-5 equity value. Exit multiple and EBITDA delivery dominate; funding cost and finance-book credit quality are second-order but still material on a leveraged balance sheet.
15.4 Scenario analysis
Bringing the exit-multiple range together with the bridge to equity value gives three coherent scenarios. All three hold the Year-5 EBITDA at the sponsor’s US$190m; the differentiator is the multiple the market assigns to a de-levered, infrastructure-backed agri platform at exit. Even the downside case returns well above a typical private-equity hurdle, which is the core attraction of entering at the construction stage.
|
Scenario |
Exit multiple |
Enterprise value |
Equity value |
Gross MOIC |
Gross IRR |
|
|---|---|---|---|---|---|---|
|
Downside |
5.5x |
1,045 |
908 |
4.54x |
35.3% |
|
|
Base case |
7.0x |
1,330 |
1,193 |
5.96x |
42.9% |
|
|
Upside |
9.0x |
1,710 |
1,573 |
7.86x |
51.1% |
|
|
ANALYST FLAG — The multiple is the risk; EBITDA delivery is the floor The spread between downside and upside equity value, roughly US$908m to US$1,573m, is driven almost entirely by the exit multiple, which the Group does not control. What the Group does control is EBITDA delivery, and a shortfall there would lower every column at once. The scenarios above assume the full ramp to US$190m is achieved; investors should treat that ramp, not the multiple, as the covenant they most need management to hit. |
||||||