International Investor, The:  Islamic Finance and the Equate Project

Benjamin C. Esty; Mathew M Millett

Case | HBS Case Collection | October 1999 (Revised April 2003)

International Investor, The: Islamic Finance and the Equate Project

by Benjamin C. Esty and Mathew M Millett

Abstract

Equate Petrochemical Co. (Equate) is a joint venture between Union Carbide Corp. and Petrochemical Industries Co. (PIC) for the construction of a $2 billion petrochemical plant in Kuwait. The sponsors began construction in August 1994, using a bridge loan, and are in search of permanent, nonrecourse finance. As part of the permanent financing, the sponsors want to use a tranche of Islamic finance--funds that are invested in accordance with Islamic religious principles known as Sharia. The sponsors hired Kuwait Finance House which, in turn, approached The International Investor (TII is a Kuwaiti investment bank) to assist in structuring and underwriting the Islamic tranche. The case is set in early December 1995, as members of The Institutional Investor's Structured Finance Group are deciding which Islamic structure to use, how to resolve various conflicts between the Islamic and conventional tranches, and how large a commitment to make on behalf of their investors.

Keywords: International Finance; Project Finance; Religion; Investment; Finance; Mining Industry; Energy Industry; Kuwait;

Format: Print

22 pages

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Citation:

Esty, Benjamin C., and Mathew M Millett. "International Investor, The: Islamic Finance and the Equate Project." Harvard Business School Case 200-012, October 1999. (Revised April 2003.)

Teaching Note | HBS Case Collection | April 2019

The a2 Milk Company

Benjamin C. Esty and Daniel Fisher

The a2 Milk Company (a2MC) became the most valuable company listed on the New Zealand stock exchange in 2018 by capitalizing on a biochemical discovery related to the protein composition of cow's milk. Because many people find the A1 protein difficult to digest, and that protein may be related to other health problems (e.g., diabetes), a2MC sells dairy products containing the A2 protein only primarily in Australia and China. With sales of NZ$730 million in 2017 and a desire to grow, a2MC formed a strategic relationship with Fonterra, the world's sixth largest dairy company, in February 2018. But one month later, Nestle, the world's largest dairy company, confirmed that it had begun selling A2 infant formula in China and people speculated that it would start selling A2 products in Australia and New Zealand later in the year. a2MC's retiring CEO Geoffrey Babidge and newly appointed CEO Janyne Hrdlicka must decide how to respond to Nestle's entry. Can this successful entrant become an incumbent with a sustainable competitive advantage?

Keywords: Judo economics; Market entry; innovation; barriers to response; industry attractiveness; advantage horizon; sustainability; first-mover advantage; scope; strategy execution; strategic evolution; biochemistry; genetics; branding; commodity; milk; Dairy; infant formula; Farming; Porter's Five Forces; Market Entry and Exit; Disruption; Innovation and Invention; Competitive Advantage; Corporate Strategy; Value Creation; Competition; Brands and Branding; Five Forces Framework; Consumer Products Industry; New Zealand; Australia; China;

Citation:

Esty, Benjamin C., and Daniel Fisher. "The a2 Milk Company." Harvard Business School Teaching Note 719-428, April 2019. View Details

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In August 2017, MoviePass dramatically lowered its subscription price from $50 per month to just $10 for up to one movie per day. The idea was to rapidly scale the business to the point where they could generate incremental revenue streams from related businesses (e.g., a share of ticket and concession revenues from theaters, advertising revenue from movie studios, and revenue from ride-sharing companies). Within two days, Moviepass had gotten 150k new subscribers; within six months, they had more than 2 million. But as of February 2018, the company faced three challenges: theaters were resisting the concept, investors were shorting the stock in record numbers, and competitors were beginning to appear. Could CEO Mitch Lowe convince investors that they did, indeed, have a viable business model and could monetize their growing subscriber base? At the same time, Lowe had to decide whether to raise subscription prices to cover the growing losses or keep prices low to attract subscribers as quickly as possible.

Approximately 80% of the wineries in the U.S. break even or lose money. An even greater percentage lose money on an economic basis (i.e., after a charge for the cost of equity). Tegan Passalacqua is a successful, young, Californian winemaker who specializes in making “old vine” wine (i.e., wine from vines that are at least 60 and up to 100+ years old). By day, he is the head winemaker at Turley Wine Cellars, a leading Zinfandel producer. In his spare time, however, he runs his own winery called Sandlands, which produces premium wines using historic, out-of-favor grape varieties such as Carignane, Mataro, and Chenin Blanc. Despite the odds, Sandlands appears to be succeeding. The question is why and whether his performance is sustainable. The case is set in December 2017 as Passalacqua was deciding whether to buy a building and develop a winery at a cost of up to $500,000. Because he already owns an old vine vineyard, and has limited resources, he must decide if this is the right investment to make next.

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International Investor, The: Islamic Finance and the Equate Project

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