Two Seasons Garlic Business Plan — Investment Case and Returns
A 3.2x money multiple and 26% IRR to the seed round at a 6.5x EBITDA exit in FY2031.
Investment Case and Returns
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- Overview & contents
- 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. Market and Competitive Landscape
- 10. Business Model
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Management and Organisation
- 14. Strategic Plan
- 15. SWOT Analysis and Strategic Implications
- 16. Risk Analysis
- 17. ESG and Sustainability
- 18. Implementation Roadmap
- 19. Financial Model and Revenue Build
- 20. Projected Income Statement
- 21. Projected Balance Sheet
- 22. Projected Cash Flow
- 23. Capital Expenditure and Working Capital
- 24. Funding Requirement and Structure
- 25. Break-Even Analysis
- 26. Investment Case and Returns
- 27. Debt Serviceability
- 28. Sensitivity and Scenario Analysis
- 29. Key Performance Indicators and Management Dashboard
- 30. Conclusion
- A. Appendix A: Assumption Register
- B. Appendix B: Conditions Precedent to the Seed Subscription
- C. Appendix C: Glossary
- 26.1 Ownership, entry and exit
- 26.2 Valuation cross-checks
At a 6.5x EBITDA exit in FY2031 the seed round returns 3.2x and 26% IRR; a DCF cross-check supports the exit range without relying on the top of it.
26.1 Ownership, entry and exit
|
Round |
Investment (R m) |
Post-money (R m) |
Ownership at issue |
Fully diluted after trust |
Hold (years) |
|---|---|---|---|---|---|
|
Founders |
— |
— |
100% → 55% |
29.1% |
— |
|
Seed |
9.0 |
20.0 |
45.0% |
23.8% |
5.0 |
|
Series A |
15.0 |
48.0 |
31.3% |
24.1% |
3.8 |
|
Series B |
11.0 |
76.0 |
14.5% |
13.0% |
2.3 |
|
Employee share trust |
— |
— |
10.0% |
10.0% |
— |
Table 48. Capitalisation by round.
|
FY2031 exit |
EV (R m) |
Net cash (R m) |
Equity value (R m) |
Seed MOIC |
Seed IRR |
Series A MOIC |
Series A IRR |
Series B MOIC |
Series B IRR |
|---|---|---|---|---|---|---|---|---|---|
|
5.0x EBITDA |
90.0 |
3.7 |
93.7 |
2.5x |
20% |
1.5x |
11% |
1.1x |
5% |
|
6.5x EBITDA |
117.0 |
3.7 |
120.7 |
3.2x |
26% |
1.9x |
19% |
1.4x |
17% |
|
8.0x EBITDA |
144.0 |
3.7 |
147.7 |
3.9x |
31% |
2.4x |
25% |
1.7x |
28% |
Table 49. Returns by round across exit multiples. Equity value = EV less net debt at FY2031. Payback for all rounds is at exit; no interim dividends are modelled.
26.2 Valuation cross-checks
Market evidence: listed South African and emerging-market agricultural producers and fresh-produce processors have traded at EV/EBITDA multiples in the 5x–8x range; precedent transactions in vertically integrated horticulture with retail programmes sit toward the upper half of that range. The plan uses 6.5x as the mid case and presents 5.0x and 8.0x as the bounds. These are model assumptions informed by market ranges, not valuations of the company.
|
Method |
Basis |
Implied FY2031 EV (R m) |
Implied multiple |
|---|---|---|---|
|
Multiple-based (mid case) |
6.5x FY2031 EBITDA of R18.0m |
117.0 |
6.5x |
|
DCF terminal value at 14% WACC |
Normalised FY2032 FCF of R10.2m; 4% terminal growth |
105.6 |
5.9x |
|
DCF terminal value at 15% WACC |
As above |
96.0 |
5.3x |
|
DCF terminal value at 16.5% WACC |
As above |
84.5 |
4.7x |
|
Precedent-transaction range |
Vertically integrated horticulture, 6x–8x |
108–144 |
6.0–8.0x |
Table 50. Valuation cross-checks at FY2031.
The DCF terminal values at 14–16.5% bracket the 5.0x and 6.5x multiple cases, which is reassuring in both directions: the mid case is not dependent on an optimistic discount rate, and the 8.0x case should be read as upside requiring a strategic buyer. From today’s perspective, the present value of the five-year cash flows is negative (R(20.8)m) because of the build, and the present value of the terminal value at 16.5% is R39.4m, giving a DCF enterprise value today of about R18.5m against the R20.0m seed post-money. The seed valuation is therefore fair on a risk-adjusted basis rather than cheap, and the return to the seed investor is earned by carrying the trade-policy and agronomic risk that later rounds will not have to carry.