Client Name

JS Global Capital Limited

Faculty Advisor

Mr. Ammar Habib

SBS Thought Leadership Areas

Investment Decision Making

SBS Thought Leadership Area Justification

Investment decision-making is about allocating capital under uncertainty, from identifying opportunities to choosing between competing strategies. Our ELP reflects this process from start to finish.

We began with a capital allocation question: which sector of Pakistan's economy offers the most compelling investment opportunity? Answering it required a structured screening framework across eight sectors, followed by a 25-year financial model built from NEPRA regulatory documents, with NPV analysis at a 19.43% CAPM-derived hurdle rate. These are the tools professional investors use daily, and applying them to a real asset gave us a very different understanding of investment analysis compared to a classroom case study.

What made the project feel genuinely like investment decision-making was the strategic choice at the end. The IPO versus private placement question does not have an obvious answer, and our conclusion, recommending private placement after starting with an IPO mandate, came from following the evidence rather than defending the original brief. Being willing to update a recommendation based on what the analysis actually shows is probably the most important practical lesson we took from this project.

The broader insight was that investor-asset fit matters as much as asset quality, and that is not something we found in a textbook. It is something we worked out through the analysis itself.

Aligned SDGs

GOAL 7: Affordable and Clean Energy

Aligned SDGs Justification

SDG 7 is about ensuring access to affordable, reliable, and clean energy for everyone. Pakistan sits right at the heart of this challenge. The country faces a structural energy deficit of 3,000 to 5,000 MW, millions of households still experience prolonged load shedding, and a significant portion of the population remains without reliable electricity access.

Our ELP focused on HNDS Energy, a 50 MW solar IPP delivering clean electricity to Pakistan's national grid under a 25-year government-backed agreement. By analysing how this project is financed, valued, and brought to market, we were directly engaging with the question of how private capital gets mobilised into renewable energy infrastructure in a developing economy. That mobilisation question is essentially what SDG 7 is about in practice. Clean energy targets do not get met through policy alone. They require investors to find these projects financially attractive enough to fund, which is exactly what our financial model and investment strategy were designed to demonstrate.

The private placement recommendation we arrived at is also relevant here. Connecting HNDS with the right institutional investors, particularly DFIs with explicit clean energy mandates like FMO and IFC, creates a pathway for further renewable energy development in Pakistan beyond this single project. Every well-structured solar IPP transaction that closes successfully makes the next one easier to finance.

NDA

No

Abstract

This paper focuses on a comprehensive investment analysis that was performed in the context of an Experiential Learning Project (ELP) at the Institute of Business Administration (IBA) Karachi. The project's initial mandate was to find a good prospect for Initial Public Offering (IPO) on Pakistan Stock Exchange (PSX). We examined eight sectors across Pakistan — automobile, renewable energy, power, food and consumer goods, insurance, information technology, financial services and healthcare — and applied four investment criteria – regulatory clarity, growth potential, capital market readiness, and risk profile – to them to evaluate and score each one.

The power sector was chosen as the most investment-worthy opportunity and within the power sector solar independent power producers (IPPs) were identified as the best sub-segment on the basis of the speed of construction, capital efficiency, no fuel risk, low O&M complexity and good ESG credentials. HNDS Energy (Pvt.) Limited, a 50 MWp solar IPP in Goth Gagawara, Sukkur, Sindh, under NEPRA Case No. TRF-479/HNDS-2019, was identified as a case study company for detailed financial modelling and analysis.

A 25-year financial model was developed based on the NEPRA tariff determination using the same billing structure (CPP/EPP), quarterly FX and CPI indexation mechanisms, projected cash flows and USD debt service. Key findings: a consistently high DSCR of over 2.0x throughout the debt tenor, year 1 EBITDA of PKR 2,300 million with a margin of 49.8%, and equity returns well above the NEPRA approved ROE of 15% which is largely due to the depreciation of PKR due to the rise in the price of Rupees. This plant has an exchange reference rate of PKR/USD 105 as the reference rate.

The paper suggests that this analysis should guide a Private Placement (PP) of 20-40% equity stake in the PSX to institutional investors, namely Development Finance Institutions (DFIs), private equity funds focussed on infrastructure and strategic renewable energy investors, rather than a PSX IPO. This is due to the structure of the project finance revenue model, the nature of the Year 15 tariff step down and the lack of a deep base of infrastructure investors on the PSX

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

Notes

We will be attaching our financial model and Our report

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