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Senior Lecturer Vikram S. Gandhi, Program Director Caitlin Reimers Brumme (Impact Collaboratory), and Case Researcher Amram Migdal (Case
Research & Writing Group) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the
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effective or ineffective management.

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V I K R A M S . G A N D H I

C A I T L I N R E I M E R S B R U M M E

A M R A M M I G D A L

Blue Haven Initiative: The PEGAfrica Investment

In May 2017, Blue Haven Initiative (BHI) Cofounder and Principal Liesel Pritzker Simmons and
Director of Private Investments Lauren Cochran reviewed the PEGAfrica (PEG) investment memo.
BHI, the family office of Pritzker Simmons and her husband, Ian Simmons, engaged in investments
across asset classes that generated positive environmental and social impact along with healthy
financial returns. BHI’s direct investment strategy focused on investing in companies, like PEG, that
had the potential to contribute to regional economic development as they grew.

BHI was in the second year of its investment in PEG, which sold solar home systems in Ghana and
Côte d’Ivoire (CDI, or Ivory Coast). PEG offered pay-as-you-go (PAYG) financing plans that allowed
customers to make small payments via mobile moneya to pay off financing for the solar equipment
over time. In April 2016, BHI invested $1 million in PEG’s Series A-2 fundraising round for a 7.8%
ownership stake. Now, Pritzker Simmons, Cochran, and the rest of BHI’s investment committee (IC)
were considering whether to invest an additional $1 million in PEG’s upcoming $5 million Series B
round, at a $20 million pre-money valuation. Post-transaction, BHI would own 10% of PEG’s equity
and gain a seat on the board.

PEG had the potential to make a substantial impact by introducing PAYG financing for a range of
widely needed products beyond just solar equipment across West Africa. However, as they analyzed
PEG’s valuation, Pritzker Simmons and Cochran still had doubts about the Series B. Even after the
round’s completion, PEG would need to raise at least a large Series C in order to reach profitability.
International energy conglomerate TOTAL (headquartered in France, with a market capitalization of
more than $115 billion1) had recently opted to delay a planned investment in PEG, worrying Cochran
and Pritzker Simmons. Ultimately, BHI’s returns depended on TOTAL or another large investor
coming to the table, as did PEG’s ability to execute its ambitious growth and product strategy. Pritzker
Simmons and Cochran ran through the risks, tweaking their model to determine if a $1 million
investment fit BHI’s long-term capital reserve strategy for PEG (reserving capital for follow-on
funding), how it would affect exit prospects, and the extent of PEG’s potential impact in the region. In
addition, if BHI planned to invest in the Series B, it would need to let PEG Cofounders Hugh Whalan
and Nate Heller know as soon as possible. PEG anticipated running out of cash before the Series B
would close, and had asked BHI to provide $500,000 in immediate bridge financing.

a Mobile money referred to using mobile phones to transfer money and/or make payments, deposits, and withdrawals.

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318-003 Blue Haven Initiative: The PEGAfrica Investment

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Becoming an Impact Investor: Liesel Pritzker Simmons
Born in 1984, Pritzker Simmons was a member of the Pritzker family, founders of the Hyatt Hotel

chain and owners of hundreds of other companies and real estate holdings, who were known for deep
engagement in philanthropic activities. During and after college, Pritzker Simmons volunteered with
international development causes and at microfinance institutions (MFI). In 2008, she and her mother,
Irene Pritzker, endowed the IDP (Innovation, Development, and Progress) Foundation, which
partnered with MFIs in Ghana and Kenya to finance low-income schools. (See Exhibit 1 for
biographies.)

Until 2007, Pritzker Simmons’s asset portfolio—managed by a large financial institution—was
invested using a risk-conscious, profit-maximizing strategy, with minimal attention to sustainability
or social impact. “I realized the market-based mechanisms that enable sustainable development had
very little to do with the markets in which I was invested,” she said. “I’m an inheritor of wealth, and I
started searching for avenues beyond traditional philanthropy to do something meaningful and
significant in the world.” When Pritzker Simmons asked her advisors to invest her assets in
opportunities that generated development and environmental impacts in addition to financial returns,
they asked, “How much money do you want to lose?” She wondered, “Why aren’t MFIs, which are
explicitly intended to attract profit-seeking investors, suitable investment options according to private-
wealth managers’ investment models?”

Pritzker Simmons sent her advisors examples of effective and profitable impact investment
strategies. “After the financial crisis of 2008–2009, when our portfolio suffered at the hands of
‘traditional’ investing, I was more confident in pushing back on my advisors and their fancy models,”
she recalled. Environmental, social, and governance (ESG) reporting was increasingly prevalent at
publicly traded companies, and social enterprise and impact investing b strategies were becoming more
popular. Pritzker Simmons found that such strategies frequently overlapped with those of traditional
value investors. “I learned that maximizing social and environmental impact is often just good business
in the long term,” she noted. “Looking at the totality of what your investment is doing is not brand
new.”

BHI: A Family Office
In 2012, Pritzker Simmons and her husband established Blue Haven Initiative, a family office

focused on impact investing. BHI managed only Pritzker Simmons’s and her husband’s assets, not
those of other members of the Pritzker family or outside investors. The core of BHI’s mission was
“helping mission-driven projects and companies achieve scale, supporting entrepreneurs whose
innovations spur change, and partnering with other investors to accelerate economic progress.” 2
Pritzker Simmons explained, “We want the same financial performance we were always shooting for,
but we want fund managers and strategies that also specifically target social and environmental
issues.”

b “Impact investing” was coined as a phrase at a 2007 Rockefeller Foundation conference and, according to a United Nations
report, referred to “investments that are made to generate a measurable social and environmental impact alongside financial
returns.” In 2012, a Global Impact Investing Network (GIIN) survey found family offices and high-net-worth individuals were
among the most active impact investors. (Sources: UNDP Regional Service Centre for Africa’s (RSCA) Inclusive Growth and
Sustainable Development Cluster (IGSDC), through its Private Sector (AFIM) Unit, “Impact Investment in Africa—Trends,
Constraints & Opportunities,” United Nations Development Programme, November 2015, https://goo.gl/yyKEcU; and Devin
Thorpe, “Leader Argues for Impact Investing,” Forbes, October 30, 2014, https://goo.gl/GJKus4, accessed June 2017.) D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

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The bulk of BHI assets were invested taking the cofounders’ social values into account, but within a
traditional capital allocation framework spanning public and private equity (PE) funds, real assets, and
fixed-income holdings. Pritzker Simmons believed that investing in a broad set of asset classes, while also
funding philanthropies and nonprofits, increased overall impact. Therefore, BHI also set aside capital to
make investments directly into early-stage companies (see Exhibit 2 for portfolio) and for grant-making.

Indirect Investments

In 2012, BHI hired the Caprock Group, a multifamily office that specialized in impact investing, to
advise on managing the bulk of its assets—approximately $500 million. Caprock helped establish a
risk-return profile and asset allocation strategy based on BHI’s financial goals, without at first giving
special attention to impact considerations. Pritzker Simmons explained:

Impact was introduced in manager selection. We’re not looking for managers who
label themselves as impact investors. It’s not ticking boxes. It’s evaluating how a manager
engages in discussions and how they formulate their strategy. Do they mention special
knowledge of how to serve a particular market with solar and have an edge? From an
impact perspective, finding the right manager is a matter of “know it when we see it,” not
requiring a strict definition. We did not start with an impact thesis and say, “We want to
reduce carbon by X%, or plant X number of trees, or invest in strategies to reach X number
of adolescent girls.” Being that descriptive would limit our investment universe and make
it harder to build the portfolio.

BHI also considered the demographic diversity among funds’ management. “We consider a
homogenous group of investment professionals to be a risk,” Pritzker Simmons said.

Fund managers did not submit impact-specific reports to BHI. “We ask back-of-the-envelope
questions,” Pritzker Simmons remarked. “’How much carbon was saved by a fund’s investments?
We’re less interested in the book report afterward and more interested in how the impact is embedded
in their strategy.” BHI required that investments contribute to regional infrastructure or service needs
in underserved industries and regions. Reporting reflected its belief that many models and data did
not fully capture the “nuance to these investments and their impacts,” explained Pritzker Simmons.
“We don’t have a glossy impact report. We just want to understand for ourselves. There is tremendous
nuance to these investments. You have to have the patience to sit through the lengthy conversation
with your advisors and read the 20-page report to understand it.”

In 2015, Goldman Sachs acquired impact investment firm Imprint Capital (Imprint), which had $550
million in assets under management (AUM).3 That year, BHI shifted its advisory services from Caprock
to Goldman Sachs. In addition to benefitting from Imprint’s knowledge of funds and fund managers
aligned with BHI’s investment values, Goldman Sachs’ advisory services were better suited for
accounts of BHI’s size.

Direct Investments

In 2014, BHI allocated $50 million to be deployed via direct private investments and hired Cochran
to manage the direct investment portfolio. In mid-2016, Cochran hired Grace Horwitz to join her as an
associate. “To make an impact, it had to be more than just me out there with my checkbook, as it had
been for several years. That’s not a great way to do venture capital,” Pritzker Simmons pointed out.
Direct investment activities were overseen by a dedicated IC, whose members overlapped with BHI’s
overall IC. The direct IC consisted of Pritzker Simmons, Simmons, Cochran, and Paul Breloff. D
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318-003 Blue Haven Initiative: The PEGAfrica Investment

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Cochran, a former private equity associate, had begun working in the development field in 2006 at
the William J. Clinton Foundation Health Access Initiative (CHAI), where she focused on healthcare
infrastructure throughout sub-Saharan Africa. Cochran explained, “At CHAI, my work involved trying
to figure out how many drugs to order for children across 40 countries, but our funding was only for
two years. The children would need these drugs indefinitely. It was frustrating.” As she traveled across
the African continent and in each capital city, Cochran was struck by the number of opportunities that
would have been relevant to her former life in PE. “Progress was obvious, and the potential for private
investors was clear,” she recalled. In 2007, she left CHAI to earn her MBA at Wharton and transition to
an investment role that still aligned with her philanthropic development ideals. In 2009, never having
heard the term “impact investing,” she joined Imprint, where she built and managed an emerging and
frontier-market portfolio on behalf of Imprint’s clients. In 2014, she seized the opportunity to join BHI’s
founders, who had a particular interest in Africa, in building a dedicated international direct-
investment portfolio.

Direct Investment Process

Pritzker Simmons and Cochran believed that sub-Saharan Africa offered attractive direct-
investment impact deals of the right size, affording BHI the opportunity to find multiple investments.
(See Appendix for development information about Africa.) Cochran looked for early-round companies
that offered the chance for a follow-on investment and that would attract co-investors. As with its
indirect investments, BHI did not apply a narrowly defined concept of impact to deals. “We don’t have
an artificial threshold, like only investing in businesses targeting a specific low-income population,”
Pritzker Simmons noted. Rather, BHI sought investments that contributed to formalizing economies,
which could in turn facilitate further investment opportunities. Cochran explained:

As Series A investors, we sometimes support the seed-stage ecosystem through small
investments in funds that can then help build BHI’s pipeline, which is only as good as the
seed investors in our markets. We also focus on businesses that serve people and that are
underserved by existing infrastructure. Businesses that recognize and bring informal
markets into the formal economy are especially important, particularly if they help
workers and businesses become creditworthy. That’s a huge deal.

BHI aimed to hold investments for five to seven years and exit with at least a 30% internal rate of
return (IRR). Before investing, Cochran and Horwitz spent up to a year or as little as a few months
getting to know founders and their companies. The BHI team started with in-person meetings or phone
calls and, if convinced of the investment’s potential, asked for a limited set of materials, including any
available financials, customer lists, market-sizing reports, and snapshots of key performance
indicators. BHI’s team also conducted market research to assess competitor platforms and products,
seek out references to vouch for management, and talk to existing and potential customers.

Cochran invested time in getting to know regional start-up scenes and was known among
entrepreneurs and capital providers. “I spend tons of time in Nairobi and elsewhere in Africa just
sitting with entrepreneurs,” Cochran said. “I give informal advice, see how they hire and build out
their teams. It’s due diligence to see how they operate over time, to observe entrepreneurs when they’re
not fundraising, and to gain their trust by providing small acts of service.” She focused on the energy
sector and increasingly on financial services and mobile money, which she called “the backbone for
other businesses to develop.”

If an opportunity looked promising, the BHI team wrote an investment screening report for the IC,
which included the potential impact and financial returns. If the IC also felt positively, Cochran and
Horwitz met the full management team, spent time with customers, met key suppliers, and visited key D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

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operational sites over the course of a multiday visit. Simultaneously, BHI drafted a term sheet,
including ongoing investor rights, board seats, amounts, and valuation. Most entrepreneurs provided
guidance based on collective management ownership, 18-month cash-need projections, and prior-
round valuation. Early in the process, BHI discussed valuation expectations with founders. Cochran
warned, “Often, based on current ownership and cash required, the valuation that would be needed to
make everyone happy far exceeded the basic fundamentals of the business at the time. We don’t like
to waste time if we aren’t even going to get close to an entrepreneur’s target.”

Horwitz then compiled a set of comparable companies, which, given the lack of data in Africa, were
usually public companies in the developed world or private transactions that BHI could analyze via
paid database resources. BHI accounted for the company’s future cash needs before exit and
determined whether those needs could be realistically met within the existing ecosystem of investors.
“In developed markets, as long as a start-up meets its growth targets and doesn’t kill anyone, it’s likely
there’s another check coming from somewhere. In Africa and other developing markets, founders have
to be more concerned with making it to breakeven—there may not be a bigger investment check
coming,” noted Cochran. She explained that BHI conservatively adjusted all assumptions provided by
management: “We heavily discount all the information the entrepreneurs give us. We haircut them—
but we come in earlier than others and take on more risk so that uncertainty is expected.”

BHI typically invested between $500,000 and $1 million per company to start, with the potential to
invest up to $7 million per portfolio company over time. Not all companies received follow-on
investments, and the decision was made on a case-by-case basis. By 2017, BHI had made 10 direct
investments and deployed nearly half of its $50 million direct investment allocation (see Exhibit 2).

PEG: Getting Started in Financing Home Solar
Having worked on international development issues at a series of nonprofits, by 2007 Nate Heller

had doubts about the nonprofit sector’s capacity to produce sustainable, scalable, efficient solutions to
the most pressing development challenges. He shifted his career to social enterprise and for-profit
approaches. Separately, in 2009, Hugh Whalan launched a nonprofit crowdfunding platform for
microloans in Africa for items such as solar lamps and clean cook stoves, attracting lenders from 35
countries. Whalan worked with MFIs but soon learned they were not ideal channel partners to reach
customers in remote areas. Energy lending required more face-to-face interactions to educate
borrowers about financing and technology than typical MFI lending. The platform did not raise enough
funds, though, and Whalan resolved to apply the lessons he had learned to a for-profit model. (Refer
to Exhibit 1.)

In 2011, Whalan started Impact Energies, a for-profit company seeded by friends and family that
distributed and financed solar home systems (SHS) in Ghana. SHS used solar panels to collect energy
that customers then used to power household devices. Impact Energies licensed and imported systems
from foreign manufacturers and provided customer education and after-sales service. Whalan
managed the customer side of the business and partnered with MFIs to finance sales. He explained:

The MFIs only had to provide the loan to customers, and we would provide the
service. It was a bolt-on offering for the MFI, an added loan that would make them more
competitive. MFIs had infrastructure and capacity to provide energy loans, but they
lacked energy product knowledge, which we had. MFIs didn’t understand physical
products. Their loan officers only knew cash loans. The people who need solar light the
most have no collateral or credit record—they didn’t overlap with the MFI user base, so
we thought it was a good opportunity for the MFIs to also expand their customer bases. D
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318-003 Blue Haven Initiative: The PEGAfrica Investment

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Impact Energies worked with eight of Ghana’s largest MFIs, which together had a combined
customer base of 500,000 people, many living off the electrical grid or with unreliable service. Whalan
trained MFI field sales teams and structured compensation packages to reflect the differences between
straightforward cash loan sales and more complex SHS financing sales.

In 2012, Heller left an MFI partner to join Impact Energies. “It was a great opportunity to finance
home solar for people buying kerosene and dirty fuels, who walk miles to the nearest town just to
charge their phones. Home solar systems were so much better and so much cheaper,” Heller said. By
2013, Impact Energies had distributed to 30,000 primarily Ghanaian households, and New York-based
investment firm Persistent Energy Partners (Persistent) made a $1.3 million offer to buy Impact
Energies. “It was an early example of a successful exit scenario resulting for a social enterprise in Africa,
and the first sale of a sub-Saharan off-grid solar company,” Whalan commented.

Rising Sun: Founding PEGAfrica
PEG is the evolution of prior experiences. From lessons we learned the hard way, we control the customer

experience, which means we do everything in-country—we provide financing, after-sales service, branding, etc.
We license tech from other companies that do it better than us—all three of my companies did it that way.

— Hugh Whalan

In mid-2013, Whalan sold Impact Energies to Persistent, on the condition that they put $1.3 million
toward a new for-profit venture cofounded by himself and Heller, called PEGAfrica. Persistent would
be a key shareholder with their investment. PEG, headquartered in Accra, planned to introduce PAYG
financing for SHS in Ghana and other West African markets. Mobile money enabled PAYG financing
and technology, including metered SHS that could be remotely disconnected if customers missed
payments. By 2014, mobile money was ubiquitous in East Africa, and 20 solar energy companies sold
PAYG systems there. Mobile-money penetration was more limited in West Africa, but growing. In
Ghana, from 2012 to 2015, mobile-money accounts grew from 3.8 million to 13.1 million, a compound
annual growth rate (CAGR) of 51.1%, including 4.9 million active users. West Africa had one
household-level PAYG solar company, Azuri, a U.K.-based company in seven African markets.
Whalan explained PEG’s model:

Early, we saw that PAYG home solar was where the market was going. Off-grid
customers that need a solar home system also need financing. But they are challenging
customers for banks because they have no credit history and no collateral, and it’s
expensive to travel to them in faraway locations to collect small amounts of repayment. A
system that allows you to remotely control and shut off the assets in the field through the
mobile phone networks eliminates collateral issues, because it is its own collateral, and
eliminates collection issues by using mobile money.

Our business model is to license hardware and software and develop a strong presence
in the market with a commissioned sales team and full-time sales team management.
These are face-to-face, time-consuming sales. We’re just like telco [telecommunications]
companies that don’t develop their own phone technology or software—they just have
on-the-ground distribution muscle, marketing, and customer access.

In Ghana, 1.5–2 million households were off the grid. These primarily unbanked customers lacked
steady employment and earned $5–$10 per day, spending about one-third of their incomes on low-
quality fuels like kerosene, which 72% of unbanked households used for light. 4, 5 “These customers are D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

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aspirational,” Heller observed. “They desire everything their cousins have in the city and don’t want
to miss out because they’re too remote.”

Licensing the Technology

After piloting two SHS technologies, PEG signed a licensing deal with M-KOPA, an East African
PAYG provider and SHS manufacturer that Whalan called “the biggest, most sophisticated supplier.”
BHI was an M-KOPA investor, and, as of March 2016, M-KOPA was the largest position in its direct
investment portfolio. PEG was M-KOPA’s sole licensee and sold its MK III and IV models, which came
with solar panels, converters, lights, cell-phone chargers, and ports to power appliances like televisions
(see Exhibit 3). The MK IV supplied enough power for an average household, sufficient to charge a
phone and radio once per day and provide four hours of lighting per night. PEG’s licensing deal with
M-KOPA was scheduled to last through December 2017. The landed cost of each system—including
sea freight from the manufacturing site in China, customs, in-country distribution costs, and a per-unit
licensing fee that was set to decline as sales scaled up—was around $100 per unit.c Heller explained:

We believe home solar technology will become commoditized over time—we’re
already seeing it. It made more sense for us to license than to do product development,
engineering, field testing, and all the rest. It’s the same on software—it will be
commoditized. Over time, licensing fees go down, too, because commodity systems have
to compete on price.

M-KOPA systems connected directly to cellular networks via embedded SIM cards. Customers
made payments via mobile money, and M-KOPA’s software sent an unlock message that enabled
recharging and access to stored energy. Real-time data collection helped call center staff troubleshoot
issues and allowed PEG to analyze usage and performance. When customers missed payments, PEG
remotely switched off their systems, typically leaving the deactivated devices at customer households.
Customers paid for SIM cards and data expenses themselves and had to bring the system within range
of a mobile network to make payments and unlock the system. However, many customers’ homes were
located outside of network coverage and transporting the system to coverage areas created challenges.

Selling Home Solar

Customers paid 13% down—about $30, depending on the SHS model and exchange rates. d They
signed contracts to pay off the balance—around $225—over 12 months; actual repayment times ranged
from 18 to 24 months. Using mobile money, customers made daily payments that totaled around $15
per month. PEG framed PAYG financing as a loan, at the end of which customers owned the system
outright. PEG aimed to reach a 95% repayment rate by 2017, and total revenue per unit averaged $250
over the course of the loan, according to PEG Director of Finance Abdi Adawe Sigad. PEG sales agents
earned $9 commission per unit, while centralized sales support staff earned $4 per unit. Fixed costs—
direct wages and salaries—totaled $3 per unit, and financing costs were 12%, roughly $30 per unit.
Cost of goods sold (COGS) were around $175 per unit, resulting in average gross margins of 30%,
depending on the model. PEG recognized the full value of a unit sale, net of provision for bad debt, on
the day the unit was sold.

c Certain PEG financial figures and metrics have been disguised throughout the case.

d Prices given in U.S. dollars. From 2012 to 2016, the Ghanaian cedi lost approximately 51% of its value against the dollar; PEG
priced in a 20% annual depreciation in the currency into its prices, in line with historical experience. D
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318-003 Blue Haven Initiative: The PEGAfrica Investment

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Direct sales reps were typically young, semiliterate local male residents, who interacted with
customers at their homes or in the local marketplace. Siddiqui Habib, Ghana Director of Sales, had
ample experience as a sales manager in the telecom sector. In training, PEG emphasized educating
customers and clearly communicating the need to pay off the entire loan in order to own the system.
“The first sale to a customer, to get them to buy the solar home system, is very tough,” Whalan
acknowledged. “The rep has to convince the customer that they will save them money and explain that
they will own the asset over time.” Once customers completed payments on the initial loan, PEG
offered smartphones and other products, such as solar-powered cook stoves, radios, and televisions.
“They are like an MFI themselves,” said Cochran about PEG. “Their strength is understanding the
customer relationship, presenting the sale as a loan, not PAYG, and then slotting in different products
over time.” PEG hired a dedicated manager to coordinate with telephone companies and expand
mobile-money networks. Sales reps were registered mobile-money agents who could sign up
customers for mobile-money accounts, if necessary, and assist with transactions and making payments
easier.

Powering the Enterprise: Financing PEG
During its first year, PEG secured $300,000 in credit in addition to Persistent’s initial $1.3 million

investment. In September 2015, PEG raised a Series A-1 round of $3.2 million from Persistent;
Investisseurs & Partenaires (I&P), a West Africa-focused investor in early-stage companies; and Engie,
an operator of electricity, natural gas, and energy-services businesses. By March 2016, PEG was Ghana’s
biggest PAYG financing company, having sold 6,000 units in 2015, 450 of which had been fully repaid.
It had 120 full-time employees in sales, customer care, and technology and 200 sales agents in 27
distribution centers across seven regions.

In March 2016, Cochran and Whalan met at one of the first Global Off-Grid Lighting Association
(GOGLA) events held in New York, both speaking on panels. Cochran was impressed by PEG’s goal
to build a PAYG business model that leveraged existing best-in-class companies from East Africa,
rather than replicating what had already been built, and held on to customer relationships, which she
viewed as the most valuable piece of the supply chain over the long term. Whalan appreciated
Cochran’s experience investing in the space and her direct attitude about the challenges the industry
faced. The two agreed to stay in touch as PEG’s next round took shape.

In June 2016, PEG raised a $4.3 million A-2 round at an $8.5 million pre-money valuation,
representing 3.7x 2016 revenue and a 3.1x price-to-book ratio, comparable to M-KOPA and African
banking firms’ recent valuations. BHI invested $1 million for a 7.8% equity stake. (See Exhibit 4 for pro
forma fully diluted capitalization as of A-2 round.) At the time of the Series A-2, BHI projected a 28%
internal rate of return (IRR) on its $1 million investment after five years.

BHI and other investors viewed M-KOPA as a likely eventual acquirer and exit option. However,
one key risk for BHI was its exposure to M-KOPA, in which around 10% of BHI’s $50 million direct-
investment allocation was invested. If M-KOPA did not acquire PEG, though, BHI hoped to be able to
find a buyer among either later-stage PE investors seeking cash flow investments, a strategic buyer like
energy conglomerate TOTAL, or mobile telecom operators, some of which had already approached
PAYG targets in East Africa. Investor interest in the PAYG market was growing among energy-focused
investors, including an expected $100 million growth-stage fund in the process of being raised by
Acumen, an emerging markets venture philanthropy fund. U.S.-based technology companies had also
shown interest in PAYG due to the potential to acquire household-level data. D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

9

PEG in 2017

In 2016, PEG booked $2.3 million in revenue on sales of approximately 9,000 SHS to more than
20,000 total customers in Ghana and CDI—each customer saving an estimated $1,000 on fuel and power
over five years (see Exhibit 5 for financial statements). CDI sales were exceeding targets. The company
planned to expand to Burkina Faso by 2018 and then to Benin by 2019. In January 2017, PEG began
selling health insurance in conjunction with BIMA, a mobile-payments health products provider
underwritten by Prudential. Health incidents that required hospitalization were a leading cause of PEG
customers’ falling behind their PAYG schedules. “We give them free hospitalization insurance,” noted
Whalan. “It’s a low cost per customer, and it has added to our margin because customers like it so
much our repayment rates have gone up. It’s a sign that there are tons of opportunities, not just energy
or even just physical assets. Once you know the customer and are in their house and they trust you,
the sky is the limit to what you can provide to them.”

Later that year, PEG opted to switch suppliers from M-KOPA to d.Light, a global solar provider
that operated in Africa, China, South Asia, and the U.S. d.Light’s systems did not require a SIM card,
so customers would not have to carry the batteries to coverage areas to pay and unlock; the system
came with a 10-digit keypad, where customers manually inserted a code they received via SMS to
activate the system (see Exhibit 6 for d.Light product specifications).

Switching suppliers offered the prospect of lowering COGS and contributing to increases in gross
profit from 30% in 2016 to as high as 50% following the switch. This would be driven by several factors,
including: improved repayment rates due to switching to a technology better suited for the West
African market; efficiency improvements in direct sales and marketing over time; and better product
margins on the d.Light systems. If margins improved and customer defaults also decreased, a
successful switch to a new supplier could potentially reduce the capital needed to grow the business
and reach profitability. However, the switch required PEG to retrain all its sales staff—not an
insignificant effort and cost—and presented challenges in transitioning customer data to a new
platform.

Recharge? BHI and PEG’s Series B

After the A-2 round, PEG raised an additional $1.4 million in grants and $1.8 million in commercial
debt to support operations and expansion. At the time, PEG anticipated raising a $10 million Series B
in 2017, which it hoped would be led by TOTAL. Whalan explained:

TOTAL is a good proxy for a lot of big companies starting to notice this space. They
have money and resources but don’t know what they want to do. Taking an investment
from one of those companies is great for our reputation and general brand—it gives you
big presence. The risk is that another potential acquirer might get scared off, or TOTAL
might block them, so it narrows your partnership and acquirer options. Or, TOTAL
invests and subsequently decides they don’t want to dive into the industry. Then, you
have an investor that is limiting your options and isn’t showing you an end game. You
have to write the investment documents in a way that you can buy them out if they are
limiting you too much and in a way that does not allow TOTAL or another big investor
the right to say no to certain other acquirers.

However, due to internal delays in closing its in-house fund, TOTAL could not commit to a firm
time frame to make the investment. Therefore, in April 2017, PEG decided to raise a $5 million Series
B round from existing investors, seeking a $20 million pre-money valuation. It hoped to follow that D
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318-003 Blue Haven Initiative: The PEGAfrica Investment

10

within 16–18 months with a larger Series C that would include TOTAL. The Series B funds would be
devoted to expanding PEG’s presence in Ghana and CDI, increasing refinancing activities, and
developing a pilot in a third market. BHI was considering committing $1 million to the Series B,
bringing its total to $2 million invested and resulting in an approximately 10% ownership stake. If BHI
proceeded with the investment, it would secure a seat on PEG’s board. (See Exhibit 7 for Series B pro
forma diluted capitalization.)

In addition, Whalan and Heller informed BHI that, following the delays with TOTAL’s investment,
PEG anticipated running out of cash to fund operations by July. BHI’s single-family office structure
and streamlined IC decision-making process made it the only current or potential investor positioned
to quickly provide an infusion of capital so that operations could continue until the Series B closed.
BHI’s IC was deciding if they should release all or part of the $500,000 required in the form of a short-
term note that would convert to equity in the Series B.

Decision Time
In May 2017, Pritzker Simmons and Cochran were once again examining BHI’s detailed model and

the term sheet they had received from PEG (see Exhibit 8 for key terms) before coming to a decision
with the full IC. The pre-money valuation of $20 million implied a revenue multiple of 8.7x 2016
revenues. This was a premium relative to available public-company comparables. Market comparables
showed a range of current revenue multiples of 1x to 9x, with a median of 5x (see Exhibit 9 for
comparables) for publicly traded banks and fintech. However, PEG had significantly different growth
characteristics, growing at 80%+ year over year with a less capital-intensive business model than brick-
and-mortar incumbent banks. Horwitz noted, “Selecting appropriate comps in PEG’s market is
challenging because often there is no publicly available data on a relevant universe of peers; therefore
we have to use data on publicly traded companies, which is far from perfect.”

Pritzker Simmons noted that BHI’s base case projected almost $88 million in PEG 2021 revenue and
$27 million in EBITDA. An EBITDA exit multiple of 4.5x showed a 35% IRR (see Exhibit 10 for 2020
IRR sensitivity analysis). This assumed that BHI invested $4.5 million total by 2021, including an
additional $2.5 million in subsequent rounds. Analysis under a potential exit multiple of 2x projected
2021 revenue showed an even higher IRR of 47%. However, discounted cash flow analysis at BHI’s
normal hurdle rate of 30% and an exit EBITDA multiple of 4.5x gave a total equity value of around $21
million.

Both Pritzker Simmons and Cochran were aware of the significant risks and uncertainty embedded
in the financial projections, and the challenges of valuing an early-stage company like PEG. For one,
exit EBITDA multiples had been as low as 2x in some comparable companies, and Cochran was
concerned that West Africa might not command the same level of multiple as in East Africa, where the
market was better developed. Cochran pointed to several other risky assumptions underlying the base
case:

Revenues As usual, the management team had provided aggressive sales forecasts, which BHI
discounted by approximately 50%. Still, the discounted projections assumed 160% revenue growth in
2018, slowing to about 60% by 2021. Cochran knew from BHI’s M-KOPA investment that selling into
this customer base was labor-intensive work and often lagged expectations due to the need to educate
the consumer. Moreover, despite high mobile penetration, use of mobile money (a key part of the
business model) lagged in Ghana, which adversely impacted revenues and repayment rates. The
projections also assumed that PEG could increase revenue per unit up to about $425 over time as a
result of add-on loans for additional products, including TVs, cell phones, and larger systems. D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

11

Product Switching suppliers was time- and labor-intensive. Failure to manage the transition well
could reduce revenues and/or profit projections, especially if sales slowed and the human capital per-
unit costs increased above current levels. BHI had modeled an improvement in gross margin over time
to 50%, but an unsuccessful transition could mean that gross margins would remain closer to current
levels, significantly reducing BHI’s potential IRR depending on the valuation method employed.
Moreover, PEG assumed that switching to the new supplier would contribute to a reduction in
customer defaults over time and had modeled write-off expenses of just 10% of revenues going
forward, compared to 25% in past years.

Exit Even with strong performance, PEG would need a sizable Series C round in order to reach
profitability. However, experience also made BHI cautious about the potential need for Series D or E
rounds. If this were the case, Pritzker Simmons and Cochran worried that the additional capital would
not be there. While BHI was aware of more investors coming into the space, the capital markets
ecosystem remained shallow—particularly in West Africa. TOTAL postponing its investment was a
signal that the mainstream investors—strategic corporates and/or larger institutional funds—might
also hesitate to enter the space as aggressively as BHI might hope.

Currency and access to debt PEG raised debt in U.S. dollars to purchase inventory but sold
products in Ghanaian cedi, and its local operating expenses were in cedi as well. Both currencies had
been under pressure recently. Further decline in the value of the currency could threaten revenues and
PEG’s ability to raise external debt or repay current debt. Moreover, as a U.S.-dollar investor, local
currency depreciation added potential volatility to BHI’s prospective returns. Cochran said:

I see three ways of assessing the opportunity. First, if our base case assumptions are
correct, then the financial opportunity looks great. We’re confident in PEG’s management
and we have a line of sight on follow-on investment from a large player like TOTAL or a
potential acquisition from an East African player interested in entering a new region.

If revenues or profit come under pressure from any of the risks we just discussed, the
economics aren’t as strong. With little imagination, we are below our 30% hurdle.
However, since we are already invested and we believe this product can be an important
pioneer product in West Africa, maybe we should double-down. [With] our market
expertise, a board seat, our network of capital partners—we just might be able to manage
our downside more effectively as an investor.

TOTAL’s delay does leave me concerned that it will be difficult to find the growth
capital partners we need for this company to be successful. We can’t be the only ones
funding this company until exit or growth, and there are not a lot of investors who can
write $10 million checks in West Africa. We can put another $1 million in, but we need to
think about the end game. If PEG will still need to raise another $10 million or $20 million
to get to profitability, and we don’t see a pipeline of investors to work with us, it may be
more prudent just not to invest. Particularly if we don’t think the returns are there.

Pritzker Simmons nodded in agreement with Cochran’s description of the decision they were
facing. “I’m torn,” Pritzker Simmons acknowledged. “This company shouldn’t die. It’s well run, and
we believe there is a path to profitability and a huge market need. From an impact perspective, it could
still be successful and we might be the catalyst for other investors we don’t see. On the other hand, we
have been clear in our mission of achieving market rate returns and impact.”

They turned back to the model: Should Cochran and Pritzker Simmons recommend a follow-on
investment in the Series B to the IC? Was the proposed valuation reasonable? How confident should D
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318-003 Blue Haven Initiative: The PEGAfrica Investment

12

BHI’s IC be that PEG would perform well enough to make their 30% hurdle, and, if it did not, did that
necessarily mean BHI should not invest? What were reasonable assumptions about PEG’s growth
given increasingly competitive markets? Would multiples get squeezed, reducing BHI’s potential
return? If BHI proceeded with the Series B, PEG would require the bridge financing to maintain cash
flow for operations until the round was completed. What form should the bridge financing take?
Should BHI provide the full $500,000 or request that PEG enlist additional investors for the bridge?

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Blue Haven Initiative: The PEGAfrica Investment 318-003

13

Exhibit 1 Blue Haven Initiative Selected Biographies

Liesel Pritzker Simmons Cofounder and principal. Oversees a portfolio
focused on holdings that generate competitive financial returns and address social
and environmental challenges. In addition to working closely with entrepreneurs,
nonprofits, and co-investors on companies and initiatives that create social,
environmental, and financial value, Pritzker Simmons develops strategic
partnerships with organizations that support and advance more informed investing.
Pritzker Simmons cofounded Blue Haven with her husband, Ian Simmons. Pritzker
Simmons is also Cofounder of IDP Foundation, a private Chicago-based foundation

focused on achieving universal primary education. There, she helped create the IDP Rising Schools
Program, which leverages microfinance networks to empower nearly 450 low-cost private schools—
established and managed by local entrepreneurs—in some of the least-developed regions of the world.
Pritzker Simmons, an engaging and sought-after speaker on impact investing and Next-Gen investors,
serves on for-profit and nonprofit boards and investment committees of organizations including
ImpactAssets, Synergos, Toniic, Eco-Post, and The ImPact, a network of families committed to the
conscientious stewardship of wealth. Pritzker Simmons attended Columbia University in New York
City, where she studied African History. She lives in the Boston area with Simmons and their daughter.

Lauren Cochran Managing director. Leads strategy and execution for the BHI
family office’s portfolio of direct investments. Cochran builds and oversees a
portfolio of debt and equity investments with the dual expectation of best-in-class
financial returns and maximum positive social and environmental impact. As part
of this work she spends more time in sub-Saharan Africa than anywhere else. She
sits on the boards of several of Blue Haven’s portfolio companies, working with
entrepreneurs, building the ecosystem, and finding new investment opportunities.
Lauren is also a member of the Blue Haven Initiative Investment Committee. Prior

to joining Blue Haven, Cochran worked for five years at Imprint Capital before the impact investment
firm was acquired by Goldman Sachs Asset Management. There, she made investments across the
developing world in for-profit businesses seeking to improve standards of living, create economic
opportunity, and better the environment while also generating a commercial financial return. Her
interest in emerging- and frontier-market startups focused on improving the lives of populations
underserved by existing infrastructure dates back to her 2006–2007 tenure with the William J. Clinton
Foundation’s Health Access Initiative—analyzing healthcare infrastructure on the ground in sub-
Saharan Africa and working to fill gaps in the diagnosis, care, and treatment of children living with
HIV/AIDS. Encountering grassroots entrepreneurship in Africa inspired Lauren to pursue a career
linking social impact and PE. Earlier in her career she worked in commercial PE as an analyst with
Deutsche Bank’s financial sponsors group in New York and then as an associate at Diamond Castle
Holdings, a PE firm investing in energy, business and financial services, and healthcare. Cochran holds
a BS from Georgetown University, completed the General Course program at the London School of
Economics, and earned her MBA from the Wharton School at the University of Pennsylvania.

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318-003 Blue Haven Initiative: The PEGAfrica Investment

14

Exhibit 1 (continued) PEGAfrica Selected biographies

Hugh Whalan PEG cofounder and CEO. Started several businesses focused on
energy and financing in West Africa since 2009. He started the first crowdfunding
site for energy lending, and a fast-growing solar distribution company in Ghana, the
predecessor to PEG. He has previously been recognized as a top 30 under 30
Australian entrepreneur, a 2015 Young Global Leader by the World Economic
Forum, and in 2017 was selected as an Aspen Institute Global Fellow.

Nate Heller PEG cofounder and COO. Heller has 15 years of experience in
international social enterprise and development, including seven years building
innovative distribution channels for poor consumers in West Africa. Heller also
completed two years in the Agroforestry industry in Senegal on a two-year Peace
Corps mission as well as doing time as a Congressional Hunger Fellow in the
Information and Communication for Development division of the United Nations.

He speaks six languages, including French, and has a Masters from Johns Hopkins SAIS and an MBA
from Yale.

Siddique Habib PEG Ghana director of sales. Habib has over nine years of
experience in the Telecommunications and Emerging Technologies sector with a
deep understanding of critical business drivers in multiple markets and industries.
Prior to joining PEGAfrica, Habib was the Head of Commercial at Lebara Mobile and
was the longest-serving Head of Sales and Distribution at Airtel Ghana. He
graduated from the University of Ghana with a BA in Psychology and is currently

pursuing an MBA from the Australian Institute of Business.

Abdi Adawe Sigad PEG director of finance. Sigad holds a Bachelor in Economics
and a Master in Finance and Accounting. Sigad has over 20 years of experience in
finance and internal auditor roles, 13 of them in five sub-Saharan African countries
for Total Energy. Sigad most recently spent two years as the CFO of one of the largest
ports in East Africa. He speaks seven languages, including French, and has a Bachelor
in Finance and Accounting from University of Franche-Comte.

Source: Adapted by casewriter from Blue Haven Initiative and PEGAfrica company documents.

Exhibit 2 BHI Direct and Indirect Investment Portfolio, 2017

Type Portfolio

Public Equities Geos Essex; Ownership Capital; Generation Investment Management
Fixed Income Community Investment Management
Direct Investments CleanChoice Energy; Crossboundary; Karibu Homes; M-KOPA Solar; Mosaic; PEG;

Shortlist; Spire; Twiga Foods; Umati Capital
Alternative Investments Community Investment Management; Elevar Equity; Microvest Purposeful

Investing; Quona Capital
Real Assets Althelia Ecosphere; The Lyme Timber Company; Vision Ridge Partners
Philanthropic Capital &
Grants

B Lab; Harvard University; Issue One; Prime; Wharton University of Pennsylvania

Source: Adapted by casewriter from Blue Haven Initiative company documents. D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

15

Exhibit 3 M-KOPA MK IV Solar Home System

Source: Blue Haven Initiative company documents.

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318-003 Blue Haven Initiative: The PEGAfrica Investment

16

Exhibit 4 PEGAfrica Series A Pro Forma Capitalization, USD thousands, March 20, 2016

USD thousands

Pre-Money 8,500
Investment 4,310
Post-Money 12,810

Investor USD thousands Total Shares % Ownership

Management 9,477 25.9%

Persistent Energy Partners 4,959 13.5%
Impact Assets 5,358 14.6%
Series A Angels 154 0.4%
Investisseurs & Partenaires (I&P) 655 4,068 11.1%
Engie 655 4,068 11.1%
Energy Access Ventures 2,000 5,710 15.6%

Blue Haven Initiative 1,000 2,855 7.8%
Totals 4,310 36,649 100%

Source: Adapted by casewriter from Blue Haven Initiative company documents.

Note: Persistent investment included the share held by Impact Assets, which Persistent managed on behalf of Impact Assets.
Numbers modified to remove the proposed Employee Stock Option Plan (ESOP).

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31
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318-003 Blue Haven Initiative: The PEGAfrica Investment

18

Exhibit 5 (continued) PEGAfrica Balance Sheet, USD thousands, 2016a-2017e

2016a 2017e

ASSETS
Non-current assets
Property, plant, and equipment 300 353
Goodwill 3,300 3,300

Current Assets
Receivables 1,500 4,200
% of Sales 65% 70%
Inventory 800 900
% of Sales 35% 15%
Cash 2,900 6,200
Total current assets 5,200 11,300

TOTAL ASSETS 8,800 14,953

Equity
Stated capital 9,500 14,500
Retained earnings (1,600) (4,190)
Total shareholder’s fund 7,900 10,310

Liability
Debt 750 3,625
Total non-current liabilities 750 3,625

Payables 150 600
Other liabilities 418
Total liabilities 900 4,643

TOTAL EQUITY AND LIABILITIES 8,800 14,953

Source: Adapted by casewriter from Blue Haven Initiative company documents; some numbers have been disguised for
purposes of the case.

Note: 2017 figures projected based on completion of the Series B capital raise of $5 million. PEG had about $2.9 million in
the bank at the end of 2016. This was depleted to around $1 million by July 2017, at which point PEG planned to raise
more funds. The company truly would have run out of cash at the end of 2017 but left some cushion in case fundraising
took longer than expected.

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Blue Haven Initiative: The PEGAfrica Investment 318-003

19

Exhibit 6 d.Light Product Specifications

Product D30 X740 X850

Panel 10W 30W 40W
Battery 3.0Ah 6Ah 6Ah
Controls Base unit with 10-digit

keypad
Base unit with 10-digit
keypad + lamp controls

Base unit with 10-digit
keypad + lamp controls

Integrated points of light 3 LED bulbs 3 LED bulbs + 1 tube
(daisy chain)

4 LED bulbs + 1 tube
(daisy chain)

Max lumens 360 1060 1280
Brightness settings 2 Dimmable Dimmable
Television (no antenna) N/A 19-inch digital 19-inch digital
Accessory 1 1 mobile charger 2 mobile chargers 2 mobile chargers
Accessory 2 Rechargeable torch N/A Rechargeable torch
Accessory 3 Rechargeable radio with

MP3 player
N/A Rechargeable radio with

MP3 player

Source: Adapted by casewriter from Blue Haven Initiative company documents.

Note: All specifications conformed to Lighting Global Quality Assurance standards and were +/- 15% STC.

Exhibit 7 PEGAfrica Series B Pro-Forma Diluted Capitalization, USD thousands, May 2017

USD Thousands

Pre-Money 20,000

Investment 5,000

Post-Money 25,000

Investor USD thousands Total Shares % Ownership*

Management 9,479 20.52%

Persistent Energy Partners 4,958 10.73%

Impact Assets 5,357 11.60%

I&P 400 4,832 10.46%

Engie 1,000 5,977 12.94%

Series A Angels 154 0.33%

Energy Access Ventures 1,100 7,810 16.91%

Blue Haven Initiative 1,000 4,764 10.31%

Acumen 1,000 1,909 4.13%

PCG 500 954 2.07%

Total 5,000 46,194 100%

Source: Adapted by casewriters from Blue Haven Initiative company documents.

* Before any incremental shares were issued to the ESOP. D
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318-003 Blue Haven Initiative: The PEGAfrica Investment

20

Exhibit 8 Sample PEGAfrica Term Sheet, Series B, May 2017

Term Summary
Investment Amount $5,000,000, of which $1,000,000 will be provided by Blue Haven Initiative

(Investor)

Pre-Money Valuation $20,000,000

Employee Share
Scheme (ESOP),
granted and
committed

22% pro forma for Series B issuance representing a 10% increase to the
ESOP. The shareholders agree that the increase will be a direct dilution to
holders of Series A shares. Options will vest over three years for new
hires.

Form Series B shares; preferred equity

Use of Proceeds Proceeds will fund working capital, hiring, and other company activities

Closing Date Target closing date of July 1, 2017

Conditions of
Investment

Negotiation of definitive legal documents, satisfactory completion of due
diligence, and other conditions precedent, including completion of a
business plan

Exclusivity The Founders and the Company agree that they will not solicit or accept
other offers until the target closing date

Governance Board of Directors will have seven directors. Investor will have the right to
appoint one director. The Board will include one representative from the
founders, two representatives of Series A shareholders, two
representatives of Series B shareholders, and two independent directors

Rights attached to
Series B Shares

• Fixed cumulative cash preferential dividend of 6% per annum
• Upon liquidation of the company, the holders of Series B will receive

pari passu along with Series A shares (and in preference to ordinary
shares) the original purchase price plus all accrued but unpaid
dividends

• Series B shares will have anti-dilution protection in the case of new
shares issued at a price below the issue price

• Right to participate pro rata in issuance of any new shares
• Right of first refusal to acquire any Series A, B, or Ordinary Shares that

are proposed to be transferred or sold
• Co-sale or tag-along rights, such that if any Founder, Series A or

Series B shareholders have an opportunity to sell, the Investors must
be given an opportunity to sell a pro rata proportion on the same
terms at the same price to the purchaser

• If holders of at least 50% of Series A and B shares agree to sell their
shares and the Board approves the plan, there will be drag-along
rights so that all remaining shareholders will be required to sell

Source: Adapted by casewriters from Blue Haven Initiative company documents. D
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[email protected] or 617.783.7860

31
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318-003 Blue Haven Initiative: The PEGAfrica Investment

22

Exhibit 10 Series B IRR Sensitivity Analysis for Year 2020e, Conducted May 2017

EBITDA Multiple

(Assuming Base

Case Projections) IRR

Revenue Multiple

(Assuming Base

Case Projections) IRR

2.0x 9% 0.5x 4%
3.0x 21% 1.0x 25%
4.0x 31% 1.5x 38%
5.0x 38% 2.0x 47%
6.0x 44% 2.5x 55%
7.0x 49% 3.0x 61%

Source: Adapted by casewriters from Blue Haven Initiative company documents.

Appendix A: Africa Development and Impact Investing Background

In 2015, the International Monetary Fund (IMF) forecast that GDP growth would continue to rise at
4.5% per year and that 7 out of 10 of the world’s fastest-growing GDPs over the past five years were in
Africa.6 Two-thirds of Africans—more than 700 million people—lived without access to electricity. 7
Most households depended on firewood, charcoal, and dried dung for cooking and heating; these
biomass fuels produced negative health-related and environmental side effects, such as child
pneumonia and chronic respiratory disease. Kerosene lamps, used for light, were expensive and
introduced increased risk of fire and poisoning. Fewer than 25% of Africans had bank accounts.8 There
was limited penetration of mobile money in West Africa compared to East Africa, where mobile
payments for solar power and a host of other goods and services were more common.

Best estimates put impact investment AUM in Africa at $9 billion in 2015, up from an estimated $4.8
billion in 2013.9 Agricultural investments received the most funds, followed by financial services,
particularly in East Africa, where financial innovations were more concentrated.10 In 2015, over $185
million was invested in technology in Africa, 11 of which the solar sector was the leading recipient; M-
KOPA Solar and Off Grid Electric, which operated in East Africa, received the most investment capital
in the sector.12 Solar investments offered the prospect of strong returns coupled with significant
developmental impact. Since 2008, off-grid energy technology attracted more than $500 million in
global investment. 13

A shortage of capital willing to commit to early-stage, high-risk ventures in uncertain regulatory
environments meant investments were risky and relatively illiquid. Financial markets were not robust,
and there were few secondary buyout funds, which limited exit opportunities via both private sale and
public offerings. Africa lacked robust networks to connect founders with capital and other
social/environmental impact enterprises.

Ghana Background

In 1957, Ghana became the first formerly colonized country in Africa to become an independent
nation. 14 In 1992, following years of political turmoil, constitutional, multiparty democracy was
restored.15 From 2006 to 2013, GDP growth averaged 7.4% per year, but real GDP growth declined
from 14% to 4% between 2011 and 2014.16 Stagnant growth was attributable to currency depreciation D
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Blue Haven Initiative: The PEGAfrica Investment 318-003

23

(since 2012, the Ghanaian cedi had lost over half its value against the dollar), growing debt, inflation,
gas-supply volatility that caused electricity shortages, and slow growth in key sectors. 17

From 2012 to 2015, Ghana suffered from a power crisis due to a shortage of natural gas and low
water levels at the country’s main hydroelectric plant at the Akosombo Dam. In 2015, Ghana’s electrical
grid generated just 43% of its 2,800-megawatt capacity. Rolling blackouts drove even urban residents
connected to the grid to use kerosene and car batteries to power heat, light, and appliances.

According to the World Bank, Ghana was the easiest country in the region in which to conduct
business. 18 In 2015, the largest sectors in Ghana included services such as transportation, public
administration, defense, and financial services, which collectively contributed 50% of the nation’s
GDP. 19 Agriculture made up about 21% of GDP, but more than 50% of the labor force was engaged in
agriculture. 20 In 2017, Ghana’s was the second-biggest economy in the region, following Nigeria’s. 21

Within West Africa, Ghana attracted approximately 20% of total foreign direct investment inflows. 22
From 2007 to 2015, overall FDI into the region dropped by 9% from $14 billion to $12.8 billion; during
the same period, FDI flowing into Ghana increased from $855 million to $3.2 billion. 23 According to a
2015 United Nations GIIN report, Ghana received funds from eight DFI and 24 non-DFI impact
investors, which put $1.7 billion into 142 deals since 2005.24

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318-003 Blue Haven Initiative: The PEGAfrica Investment

24

Endnotes

1 TOTAL S.A. Public Company Profile, Capital IQ, Inc., a division of Standard and Poor’s, accessed January 2018.

2 Blue Haven Initiative, “Strategy,” http://www.bluehaveninitiative.com/strategy/, accessed June 2017.

3 David Bank, “Who’s the Next Impact Target After Goldman Sachs Snaps Up Imprint Capital?” Impact Alpha, July 21, 2015,
https://goo.gl/CmmQDe, accessed November 2017.

4 “PEG Africa wins ‘Scaling Off Grid Energy Grand Challenge’ grant from USAID to pilot innovative ways to help customers
pay through mobile money in Ghana,” PEGAfrica press release, November 2, 2016, https://www.pegafrica.com/news/,
accessed August 2017.

5 Pauline Bax and Moses Mozart Dzawu, “Worst Blackouts in Decade Spur Ghana Opposition Protests,” Bloomberg, February
18, 2015, https://www.bloomberg.com/news/articles/2015-02-18/worst-blackouts-in-decade-spur-ghana-opposition-party-
protests, accessed November 2017.

6 UNDP Regional Service Centre for Africa’s (RSCA) Inclusive Growth and Sustainable Development Cluster (IGSDC),
through its Private Sector (AFIM) Unit, “Impact Investment in Africa—Trends, Constraints & Opportunities,” United Nations
Development Programme, November 2015, p. 9, https://goo.gl/yyKEcU, accessed August 2017.

7 UNDP, “Impact Investment in Africa,” p. 16.

8 UNDP, “Impact Investment in Africa,” p. 17.

9 UNDP, “Impact Investment in Africa,” pp. 19-20.

10 UNDP, “Impact Investment in Africa,” p. 20.

11 Disrupt Africa, “Disrupt Africa African Tech Startups Funding Report 2015,” https://gumroad.com/l/egbOX, accessed
August 2017.

12 Tom Jackson, “Why African solar is a hotbed for investment,” Disrupt Africa website, September 1, 2016, http://disrupt-
africa.com/2016/09/why-african-solar-is-a-hotbed-for-investment/, accessed August 2017.

13 Jackson, “Why African solar is a hotbed for investment.”

14 “The Landscape for Impact Investing in West Africa,” Global Impact Investing Network (GIIN), December 2015, p. 70,
https://thegiin.org/assets/160620_GIIN_WestAfrica_full.pdf, accessed August 2017.

15 “The Landscape for Impact Investing in West Africa,” GIIN, p. 70.

16 “The Landscape for Impact Investing in West Africa,” GIIN, pp. 70-71.

17 “The Landscape for Impact Investing in West Africa,” GIIN, p. 71.

18 “Doing Business: Measuring Business Regulations,” World Bank, 2015, in “The Landscape for Impact Investing in West
Africa,” GIIN, p. 73.

19 “The Landscape for Impact Investing in West Africa,” GIIN, p. 70.

20 “The Landscape for Impact Investing in West Africa,” GIIN, p. 70.

21 “The Landscape for Impact Investing in West Africa,” GIIN, p. 73.

22 “The Landscape for Impact Investing in West Africa,” GIIN, p. 72.

23 “Ghana targets 20% FDI Increase in 2014,” Oxford Business Group, 2014, in “The Landscape for Impact Investing in West
Africa,” p. 72.

24 “The Landscape for Impact Investing in West Africa,” GIIN, p. 73.

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  • Structure Bookmarks
    • Blue Haven Initiative: The PEGAfrica Investment
    • Becoming an Impact Investor: Liesel Pritzker Simmons
    • BHI: A Family Office
    • Indirect Investments
    • Direct Investments
    • Direct Investment Process
    • PEG: Getting Started in Financing Home Solar
    • Rising Sun: Founding PEGAfrica
    • Licensing the Technology
    • Selling Home Solar
    • Powering the Enterprise: Financing PEG
    • PEG in 2017
    • Recharge? BHI and PEG’s Series B
    • Decision Time
    • Exhibit 1Blue Haven Initiative Selected Biographies
    • Liesel Pritzker SimmonsCofounder and principal. Oversees a portfolio focused on holdings that generate competitive financial returns and address social and environmental challenges. In addition to working closely with entrepreneurs, nonprofits, and co-investors on companies and initiatives that create social, environmental, and financial value, Pritzker Simmons develops strategic partnerships with organizations that support and advance more informed investing. Pritzker Simmons cofounded Blue Haven with her
    • focused on achieving universal primary education. There, she helped create the IDP Rising Schools Program, which leverages microfinance networks to empower nearly 450 low-cost private schools—established and managed by local entrepreneurs—in some of the least-developed regions of the world. Pritzker Simmons, an engaging and sought-after speaker on impact investing and Next-Gen investors, serves on for-profit and nonprofit boards and investment committees of organizations including ImpactAssets, Synergos, To
    • Exhibit 2BHI Direct and Indirect Investment Portfolio, 2017
    • Exhibit 3M-KOPA MK IV Solar Home System
    • Exhibit 4PEGAfrica Series A Pro Forma Capitalization, USD thousands, March 20, 2016
    • Exhibit 5PEGAfrica Income Statement, USD thousands, 2015a-2021e
    • Exhibit 5 (continued)PEGAfrica Balance Sheet, USD thousands, 2016a-2017e
    • Exhibit 6d.Light Product Specifications
    • Exhibit 7PEGAfrica Series B Pro-Forma Diluted Capitalization, USD thousands, May 2017
    • Exhibit 8Sample PEGAfrica Term Sheet, Series B, May 2017
    • Exhibit 9PEGAfrica Comparable Company Information, USD millions, June 2016
    • Exhibit 10Series B IRR Sensitivity Analysis for Year 2020e, Conducted May 2017
    • Appendix A:Africa Development and Impact Investing Background
    • Ghana Background
    • Endnotes
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