Kaspi.kz IPO

Victoria  Ivashina; Esel  Çekin

Case | HBS Case Collection | October 2019

Kaspi.kz IPO

Abstract

This case follows Kaspi.kz, a private equity (Baring Vostok) co-owned retail bank in Central Asia that evolved into a fintech, payments and e-commerce company. It provides insights into private equity financing, portfolio company management, and initial public offering practices. In particular, the case focuses on (i) the bank’s journey from a traditional bank that serviced only corporations to an online platform, and (ii) the timing and process of preparation for an IPO. The management initially concentrated on profitability, but they soon shifted their emphasis to customer experience. The results were rewarding: Kaspi.kz became the number one player in online commerce, online payments, and consumer financing in Kazakhstan. The challenge of the IPO decisions is its timing: communicating the success of the fast transformation of the firm and its potential for further growth, especially in an emerging market like Kazakhstan, was far from trivial. From a business perspective, even a short delay of six months could potentially add millions of dollars to its value. Kaspi.kz’s private equity investor was interested in commencing a formal exit via an IPO, but the valuation was an important consideration. The case also provides a unique insight into financial fragility of the retail banking model, and how integration into an e-commerce platform interacts with the retail banking model.

Keywords: Finance; Private Equity; Initial Public Offering; Organizational Change and Adaptation; Central Asia;

Language: English

Format: Print

28 pages

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Citation:

Ivashina, Victoria, and Esel Çekin. "Kaspi.kz IPO." Harvard Business School Case 220-007, October 2019.

Global banks use their global balance sheets to respond to local monetary policy. However, sources and uses of funds are often denominated in different currencies. This leads to a foreign exchange (FX) exposure that banks need to hedge. If cross-currency flows are large, the hedging cost increases, diminishing the return on lending in foreign currency. We show that, in response to domestic monetary policy easing, global banks increase their foreign reserves in currency areas with the highest interest rate while decreasing lending in these markets. We also find an increase in FX hedging activity and its rising cost, as manifested in violations of covered interest rate parity.

Case | HBS Case Collection | October 2020

AfricInvest: A Pan-African Investment Platform

Victoria Ivashina and Youssef Abdel Aal

The case is set in December 2018, when Ziad Oueslati, co-managing director and co-founder of AfricInvest, a leading pan-African private equity firm headquartered in Tunisia, was reflecting on the future direction of his firm. AfricInvest started as a traditional small and mid-cap private equity fund, but over the years had expanded into multiple adjoined investment strategies. At the end of 2018, the team saw an opportunity in the venture capital (VC) space, but while some were adamant about the need to raise a VC fund, others were reluctant to add yet another strategy to AfricInvest's diverse investment strategies. The case presents a detailed insight into AfricInvest's journey from a $10 million Tunisian fund, to becoming a prominent regional player operating throughout the African continent with $1.5 billion of assets under management. Among other issues related to the firm’s growth, the case provides insights into the challenges of operating in such a wide and varied geography as the African continent. The case also offers details on their multiple investment strategies, ranging from small-cap SME focused funds, to sector-specific funds, cross-border funds, and private credit. The case explores the synergies and challenges associated with such a wide-reaching investment platform. This is described against the backdrop of the collapse of Abraaj, a leading emerging market private equity firm, in a scandal that shook the investment community in the region. The case also touches upon the role of development finance institutions (DFIs) as investors in emerging markets and the challenges of defining and measuring impact investing. The opportunity of launching a pan-African VC fund in the context of the recent collapse of Abraaj brings to the forefront several strategic questions for AfricInvest’s co-founders: Should they keep expanding into new strategies, or would it be better to roll back their existing ones to focus only on their flagship private equity funds? Were the synergies and opportunities that came from being a platform enough to offset the risks, or was their focus being spread too thin by operating numerous diverse strategies?

Keywords: Finance; Private Equity; Venture Capital; Strategy; Governance; Financial Services Industry; Tunisia; Africa; Middle East;

Citation:

Ivashina, Victoria, and Youssef Abdel Aal. "AfricInvest: A Pan-African Investment Platform." Harvard Business School Case 221-037, October 2020. View Details

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This case follows Prakash Melwani (HBS MBA '86), CIO of Blackstone's Private Equity Group, and his teams’ investment in the footwear company Crocs. Instead of a traditional secondary offering, Crocs opted for a unique deal structure by taking Blackstone's cash in a private investment in public equity (PIPE) deal. During the Blackstone investment, Melwani and his team drastically reworked Crocs’ strategy. The case offers insight into the operational initiatives undertaken to revitalize the Crocs brand.

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Kaspi.kz IPO

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