Suda (Private Equity Investment In China Study) Case Solution & Answer

Suda (Private Equity Investment In China Study) Case Solution 

Case Brief

In 2013, businessman Michael D Ding-man was thinking a personal investment at Suda Company Vehicle Company. Michael D was from the family office of the Shipston Group. Suda was the fastest developing electric bicycle producer in the PRC (People’s Republic of China). Shipston has been financing in the People’s Republic of China since the year 2005, and most of the investment was based on the continued evolution of the Chinese central sector (Chaplinsky & Hoang, 2017). The Chinese market has a remains of people, as people have moved from rural areas to urban areas in search of better job opportunities, as a result of which cities are overloaded and represent a long distance between employer and workers. Such urbanization and industrialized led to a huge transportation system and cities with high levels of pollution. The rise of e-bikes proved to be as effective as the bike was costly and energy efficient. Shipston has been observing investment in Sudan with due thoroughness and has come up with an investment of RMB 37.8 ($ 6m) in exchange for a 10% share of the company’s sales.

Investment Alternative

Shipston Group is connected in investing 37.8 RMBs ($ 6m) in exchange for a 10% share in the sales of the firm. Since no other firm has financing in the bicycle industry, all competitors are looking for developing markets to finance. Now Wang wanted to be sure of his investment-related option that the return on investment was more than the required 20% gain. What are the risks and benefits associated with financing and what leaving options are available for the firm.

Industry Outlook

Suda was owned bythe People’s Republic of China, an e-bike industry. China’s e-bike is one of the biggest manufacturing company, with an approximate 150 m bicycles on the road. Orders for E-bikes has increased due to many factors as well as high-level fuel value and people expansions in China. E-bikes also includes the difficulties of the country faces including higher oil orders from various customers, better conveyance and higher background impurity. E bikes are very popular due to their convenience and accuracy characteristic and very well-known methods of personal mobility strength. E-bikes are specially designed to decrease economic oil deficiency and e-bikes are estimated to reduce 1885 m barrels of oil orders every year. In addition, the government is dealt with the problem of environmental pollution and e-bikes are better organized in the heat, as they discharge a much smaller amount of carbon compared to other cars.

In addition, the demand for e-bikes was also created by higher urban moving rates, as people from the country’s rural areas moved to urban areas and made the city more heavilypopulated, thus, the need for e-bikes as people and better strength. As public transport was not that developed, it raised the value for e-bikes, which were expected to reach CNY99 b by 2015 from CNY 32 b in 2006 (See Appendix 1). The main reason for such an upwards growth in the sales of e-bikes was the increase in per capita income and was expected to grow by 9-10% annually. Finally, the demand for e-bikes went along with the growing number of people within the firm as offices were located in remote areas, which led to an increase in the demand for e-bikes.

Risks Associated to Industry &Investment

Apart from the increasing orders for e-bikes, there has been a chance in the PRC market, which could affect the financing of the Family Office. Risks are defined as below………….

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