Al Khabeer Capital

Assessment, feasibility, valuation and due diligence for a Saudi investment company acquiring a school in Dubai.


Plan

The buyer was presented with an opportunity to consider a real estate sale-and-lease back transaction in respect of a school in Dubai.

We identified the likely key issues, scope of the required assessment, including the real estate valuation, engineering due diligence, balance sheet and accounting implications of the structure of the transaction.

We were appointed as a lead buy side adviser by the client and advised on a consolidated basis for all key transactional areas. We underwrote and engaged all specialist due diligence providers as part of our one overall team.


Model

We modeled a 10-year forward cash flow of the school through discussions with all key personnel of the target, including the proposed sale and lease back structure cash flows. We overlaid the results of the capital expenditures and maintenance requirements from the engineering due diligence reports, modeled capacity constraints that were flagged in the RE valuation report together with sensitivities in student numbers and enrollments to ascertain a sustainable free cash flow of the target on an ongoing basis.

We derived a range of potential values and structures that could we applied in for the structuring of final negotiations.


Market

We proposed various structures that would bridge the gap between the seller’s price expectations and potential structures that may be justifiable to the investment committee of the buyer, bearing in mind the priorities of a Sharia-compliant investment structure being mandatory as part of the deal.


Close

We advised the buyer on our preferred pricing, structure and terms to be offered, including transaction impact of all due diligence items ascertained during the course of the transaction.

Whilst the investment committee of the buyer approved this bid, the transaction did not proceed due to seller’s price expectations.