PE OPEN BOOK FINAL EXAMINATION

VI TRIMESTER
GROUP SUBMISSION

GROUP NUMBER: GP 3

NAME ROLL NUMBER SAP ID

AAKRITI MODI C001 80203180140
ASHISH DEOMORE A015 80203180051
MADHUMITHA GNANASEKAR C029 80203180070
NIKHIL AGARWAL B035 80203180008
Q2(1) Kindly refer to the excel file named ”PE_3_GP.xlsx” attached in the mail.
Q2(2): Term sheet
Issuer Aegis Inc.
Investors Series A
Investment Details Instrument: Equity Shares
Amount: 10,000,000 USD
Valuation Series A will have 54.6% stakes in Aegis
Inc.
Conditions Precedent to Closing Series A’s subscription to the shares of
Aegis Inc. shall be subject to satisfactory
completion of the legal, financial, business
and environmental due diligence on Aegis
Inc. During the due diligence process, Aegis
Inc. agrees to provide Series A and their
representatives complete access to its
facilities.
Representation and Warranties Aegis Inc will give indemnity and make
representations and warranties in respect of
itself as are usual and customary in a
transaction of this nature and reflect Series
A’s findings in any due diligence conducted
in relation to the transaction.
Board Representation and Corporate Series A is entitled to have 3 seats in Aegis
Governance Inc.’s Board of Directors and Aegis Inc.
should include separate audit and
compensation committee where Series A
would be a voting member of all
committees.
Assignment Rights Series A has the right to sell their shares or
assign their rights, and responsibilities,
either in whole or in part, to permitted
assignee, with prior consent of Aegis Inc.
Tag Along Rights If Aegis Inc. propose to sell or transfer their
equity stake to a third party, Series A shall
have the right to tag along in such a sale to
the extent of all its shares with priority
given to Series A.
Investor’s Right of First Refusal If Aegis wishes to transfer any or all of the
equity shares held by them to any third
party, Series A shall have a first right of
refusal to purchase the shares proposed to
be transferred.
Key Man Exclusivity Aegis Inc. shall not assume management or
lead responsibility in any other businesses
without obtaining prior written consent of
Series A.
Governing Law & Dispute Resolution This term sheet and the Definitive
Agreements shall be as per the laws of the
Republic of India.
Q3
Commitment period extensions: We must consider seeking commitment period extensions
to get ahead of opportunities and ensure flexibility to draw on unfunded commitments as the
pandemic has halted all sectors for investment initiations. For manufacturers, supply and
service delivery shocks due to COVID 19 will lead to shortages in many industries. Service
companies are facing issues around service delivery and resilience as a result of the impact of
the pandemic on the workforce. Travel and leisure focused assets facing demand shocks of
40-70% for domestic; up to 90% for international focus. GPs may have to reassess their risk
tolerance to arrive at a progressive decision of period extensions of the fund.

Follow-on investments: The expected need to provide additional capital to portfolio

companies may put pressure on the follow-on provisions in fund documents. GPs may want
to consider whether, and to what extent, a follow-on investment is subject to these limitations
if the follow-on investment is being funded without calling additional capital contributions or
through the use of leverage. If there is no follow-on investment capacity, or if follow-on
capacity may be constrained down the road, GPs may want to consider if other means of
credit support are available. Firms need to be mindful to check if any such infusion is
permitted according to the agreement.

Borrowing: Review borrowing availability under existing credit facilities and consider
borrowing well in advance of liquidity shortfalls, as further business deterioration could
negatively impact ability to satisfy borrowing conditions. Consider ability to raise
incremental liquidity on a pari passu basis. Certain borrowers are seeking additional EBITDA
add-back flexibility called the “corona clause” that expressly permits add-backs for lost
revenues for situations where businesses must be shuttered. Lenders are generally funding
financings committed prior to COVID-19 market upheaval. New commitments in the large-
and middle-markets have become scarce and we should consider alternative sources of capital
like direct lenders. Sponsors may look to existing subscription line facilities, margin loans or
other alternative financing arrangements. Consider asking LPs in funds that are in liquidation
or wind-down to “reallocate” unfunded commitments into new distressed or other non-
traditional strategies as a more efficient way of LPs’ underwriting “new” commitments. As
some LPs may be experiencing delays in their diligence and approval processes, consider
altering the number and sizing of closings.

Guarantees: Given the current pandemic, PCs would be in much extensive and more urgent
needs of capital which may require them to venture into other sources of capital. Consider
providing guarantees to facilitate portfolio company borrowings, but take into account
limitations imposed by LPA fund diversification provisions and borrowing restrictions.
Review follow-on limitations and consider if other means of credit support are available like
portfolio company guarantees.
Changes to investment objectives and restrictions: Transaction terms may need to be
reconsidered for COVID-19 viz financing provisions, conditionality, termination rights and
remedies, certain interim operating covenants and certain representations and warranties.
Targets may need additional flexibility under operating covenants to address COVID. Buyers
should anticipate COVID-19-related matters being excluded from R&W insurance coverage,
or at least subject to heightened scrutiny from underwriters. They can further invest in the
opportunities like distressed PCs and PIPE investment. Current expectations of change in
global trade, logistics and travel will be realized in tranches. Cheaper debt availability will
also change the ideal capital structure in portfolio companies.

Extension of the term: We must consider seeking term extensions to provide additional time
to weather a potential long-term financial downturn and build value. GPs may not consider
seeking a lower than expected returns on investments for their LPs so this would be a crucial
decision.

Sharing of information: GPs should be proactive as LP requests for information regarding

the manner in which funds and portfolio companies are dealing with issues arising out of
COVID-19’s impact on operations. Establish transparency and project short and long term
demand shifts as well as potential bottom line and balance sheet impact of the crisis in
different scenarios. Establish cashflow risk and devise actions to mitigate short term crunches
by leveraging on tools for integrated financial planning.

Reporting deadlines: Parties need to prepare for potential auditing difficulties, such as
restrictions from entering physical facilities. Consider impact on reporting obligations to
shareholders and creditors if financial statements cannot be prepared and delivered on time.
Consider whether there is a risk of receiving a “going concern” qualification in upcoming
audits and its impact on debt facilities and other contracts. GPs may want to review whether
the fund documents have flexibility to go beyond the customary 90 or 120 day delivery
timeframe or if the offering documents have disclosure relating to delayed reporting
contingency risk.

Additional Methods to investment and capital infusion: Non-traditional opportunities viz

distressed situations, direct lending etc may supersede private equity firms’ traditional
investment strategies. Review the funds’ investment mandates to confirm whether new
opportunities can be accommodated. Advantageous opportunities in this turbulent market
include: public market opportunities in exposed sectors where the shock is recoverable and
temporary, Sectors likely to benefit from a reconsideration of risk from pandemics viz
healthcare, insurance, labs, digitals etc, Secondary buyouts, Purchases from lenders and
Disposal of non-strategic assets by major businesses requiring an injection of capital.