Supporting Innovation in Small and Medium Enterprises Project (Ливан - Тендер #52166116)

• Project ID

P127306

• Project Title

Supporting Innovation in Small and Medium Enterprises Project

• Country

Lebanon

• Notice No

OP00278123

• Notice Type

Request for Expression of Interest

• Notice Status

Published

• Borrower Bid Reference

LB-KAFALAT-411913-CS-LCS

• Procurement Method

Least Cost Selection

• Language of Notice

English

• Submission Deadline Date/Time

Mar 17, 2024 16:00

• Published Date

Mar 08, 2024

• CONTACT INFORMATION
• Organization/Department

Kafalat sal

• Name

Yolla Serieddine

• Address

Beirut, Lebanon

• City

• Province/State

Lebanon

• Postal Code

• Country

Lebanon

• Phone

01346255

• Email

yolla@kafalat.com.lb

• Website

LEBANON

Supporting Innovation in Small and Medium Enterprises in Lebanon (ISMEs Lebanon)

Project No.: P127306

Reference No.: LB-KAFALAT-411913-CS-LCS

KAFALAT SAL, with support from the Ministry of Finance and the World Bank, received financing facility to encourage the equity investment market to increase the supply of stage capital for Lebanese innovative firms through three financing tools and intends and intends to apply part of the proceeds hire a specialize Market Valuation Firm.

KAFALAT SAL serves as the main implementing agency for the iSME Project. The overall objective of the project is to encourage the equity investment market to increase the supply of early stage investment finance for financially viable, new, and existing innovative firms

The consulting services (“the Services”) include conducting an in-depth assessment of its 15 portfolio companies with the objectives of determining the fair market value of each portfolio company within the iSME Fund, specifically the market value of the ISME investment each.

The detailed Terms of Reference (TOR) for the assignment with deliverables is attached to this request for expressions of interest Annex1.

KAFALAT SAL now invites eligible consulting firms (“Consultants”) to indicate their interest in providing the Services. Interested Consultants should provide information demonstrating that they have the required qualifications and relevant experience to perform the Services.

The shortlisting criteria are:

• Consultant should be a legal entity and has offices in Lebanon
• Consultant’s general experience in valuing venture capital and private equity portfolio companies
• Technical and managerial capacities of the Consultant (managerial and key experts, ability to form a team to deliver services described in the TOR within short-time frame, valuation methodologies, etc.)
• Consultant’s regional experience (emerging and developing markets)
• Consultant’s understanding of valuation methodologies, complex financial information and early stage equity ecosystem.

Key Experts will not be evaluated at the shortlisting stage.

The attention of interested Consultants is drawn to Section III, paragraphs, 3.14, 3.16, and 3.17 of the World Bank Procurement in Investment Project Financing, Goods, Works, Non-Consulting and Consulting Services’ Fourth Edition dated November 2020 (“Procurement Regulations”), setting forth the World Bank’s policy on conflict of interest.

A Consultant will be selected in accordance with the Least Cost Selection (LCS) Consultant Qualification Selection method set out in the Procurement Regulations of the World Bank.

Further information can be obtained at the address below during office from 9.00 a.m. to 16:00 p.m. (Beirut time)

Expressions of interest must be delivered in a written form to the address below (in person, or by mail, or by fax, or by e-mail) by March 17th, 2024 till 16:00 p.m. (Beirut time).

Kafalat sal

Attn: Khater Abi Habib

Hamra Street, Piccadilly Center, 5th Floor

Beirut – Lebanon

P.O.Box: 11-641

Tel: +961-1-341 300/1/2 +961-1-346 255

Fax: +961-1-350 111

E-mail: Khater@kafalat.com.lb and e_akhrass@kafalat.com.lb

Annex I

Terms of Reference

Market Valuation Study for the Portfolio of the Innovative Small and Medium Enterprise (iSME) Project
LB-KAFALAT-411913-CS-LCS

March-2024

I. Overview and Context

Lebanon used to stand out for the number of public or quasi-public programs available to facilitate early stage innovation financing for young firms. A vibrant entrepreneurship ecosystem of accelerators, incubators, and training and support institutions has emerged in Lebanon over the past 20 years. The objective of this ecosystem is to build the capacity of entrepreneurs throughout Lebanon to expand business from idea-stage to commercialization, as well as improve the capacity of these firms to access early stage equity.

The Lebanon Innovative Small and Medium Enterprise (iSME) project is a $30 million investment project financing loan from the World Bank Group (WBG) to the Government of Lebanon (GoL). The project has the objective of developing the equity investment market to increase the supply of early stage investment finance for financially viable young and innovative firms. In doing so, the project supports the broader growth and job creation objectives of the GoL. The project became effective on February 3, 2015. It is implemented by Kafalat S.A.L., Lebanon’s national credit guarantee agency.

Project components and activities are as follows:

• Component 1a: US$3 million - Concept development Grants: Grants up to US$15,000 each provided to entrepreneurs to help them develop their innovative concepts, prepare a business plan, and launch a business;
• Component 1b: US$24.5 million – Direct equity co-investments made in eligible enterprises alongside other institutional investors and indirect investments made in Venture Capital funds in amounts up to US$2 million.
• Component 2: US$2.5 million – project management and administrative costs.

The iSME fund is an important source of early stage equity finance in Lebanon. Since project effectiveness 20 firms and 3 angel funds have received equity financing under the iSME program for a total investments value of $14M. The equity portfolio has been able to leverage $93M in co-financing from institutional investors, demonstrating its ability to crowd in private sector financing and expand the market for early stage equity finance in Lebanon. A total of 208 start-ups awarded $3M in grants. The 2023 grants assessment study showed that the beneficiaries of the grants have leveraged the program to raise a total of USD29M from various funding sources. This suggests that CDGs fill a critical financing gap for startups in various stages of idea or early-stage development, creating consistent deal flow for accelerators, equity funds (including iSME), and angel investors at the seed and growth stage. The iSME fund has received excellent feedback from industry participants for the rigor of its investment committee, the quality of young firms supported through both equity and concept development grant activities.

II. Scope of Consultancy Work

Kafalat is requesting an in-depth fair market value assessment of the iSME portfolio companies. The iSME Fund manages a diverse portfolio of investment in innovative companies across various sectors. To assess the impact generated by the project so far, the fund requires an assessment of the current fair market value of its investments/portfolio companies. The purpose of this Terms of Reference (ToR) is to outline the scope, methodology, and deliverables for conducting a comprehensive market valuation assessment. Thus, Kafalat is recruiting a financial/business consulting firm to assist in an in-depth assessment of its 15 portfolio companies with the objectives of determining the fair market value of each portfolio company within the iSME Fund, specifically the market value of the ISME investment each.

The valuation exercise shall encompass, but not be limited to, the following:

• Evaluation of financial statements, cash flows, and key performance indicators (KPIs) of each portfolio company.
• Analysis of market comparable, including transactions within similar sectors and regions.
• Assessment of the competitive landscape and potential disruptors in the industry.
• Examination of any recent developments, regulatory changes, or market influences impacting the valuation of the companies.

The assessment shall involve the following steps:

• Reviewing of financial documentation, including audited financial statements, management accounts, business plans, investor presentations, and any other relevant financial data provided by the Fund or the portfolio companies.
• Performing quantitative and comparative analysis using industry benchmarks and multiples. This may involve discounted cash flow (DCF) analysis, multiples-based valuation, scenario analysis, and sensitivity testing.
• Conducting qualitative analysis. This may involve assessing the company"s market position, competitive landscape, business model, technology, management team, and future growth prospects.
• Interviews with company management, if necessary, to gather additional insights into business strategies and operations.
• Preparing individual valuation reports for each portfolio company. Each report should include a clear explanation of the valuation methodology used, key assumptions, sensitivity analysis, and a justification for the final valuation conclusion.
• Consolidating individual valuations into a portfolio-level report: This report should provide an overview of the overall portfolio value, key risk factors, and any notable trends or observations.
• Physical access will be granted to the firm when necessary to evaluate any existing assets which might impact the valuation of the portfolio companies.

III. Necessary Skills and Experience

• In-depth understanding of the entrepreneurship and early stage equity ecosystem in Lebanon and the Middle East and North Africa (MENA). Field experience in countries of the region is a plus, as is relevant global experience.
• At least 5 years of extensive experience working in early stage finance/venture capital, access to finance for entrepreneurs, or in financial infrastructures.
• At least 5 years of experience in valuing venture capital and private equity portfolio companies, mostly in the tech sector.
• A strong understanding of valuation methodologies, including DCF analysis, multiples-based valuation, and scenario analysis for companies in the tech sector.
• Proven ability to analyze complex financial information and provide clear and concise valuation reports.
• Proven ability to analyze complex market reports and provide analytical assessment on market conditions and prospects.
• Proven track record in writing quality reports.
• Fluency speaking and writing English. Knowledge of Arabic is a plus.

IV. Team qualifications

The firm must demonstrate that the proposed team has expertise and criteria in the following areas:

• A team of experienced professionals with expertise in finance, valuation, and industry-specific knowledge.
• Strong analytical skills to assess financial statements, cash flows, and other financial metrics.
• Understanding of financial modeling and valuation methodologies.
• Awareness of industry-specific risks, trends, and benchmarks.
• Knowledge of transaction multiples and market comparable.
• Ability to prepare comprehensive valuation reports.
• Ability to analyze economic trends and their impact on the business.
• Expertise in macroeconomic factors that may affect the business value.

V. Timeline and Deliverables

Work is expected to launch in April 15th and ends June 15th, 2024. The following are the expected and payment schedule upon submission of deliverables.

VI. Task Manager/Reporting

The Task Manager for this project is Elie Akhrass, iSME Fund Manager.

VII. Ownership/Control of Work Product

All materials produced or acquired during the appointment - written, graphic, or otherwise - shall remain the property of Kafalat. In the event of early termination of the appointment or non-renewal upon its expiration, the Consultant shall, if requested by Kafalat, deliver copies of all materials and data developed with the iSME funds. Material developed by the Consultant under the TORs are exclusively owned by Kafalat SAL. This work is considered confidential and is not for circulation without explicit written approval from Kafalat SAL.

VIII. Confidentiality

The consultant shall treat all information obtained during the engagement as confidential and shall not disclose any sensitive information to third parties without prior written consent from Kafalat.

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