Food Check (Pvt) Ltd – Invoice Discounting

September 2019
Executive Summary

• Acquire 100% equity of Food Check (Pvt) Ltd; an invoice purchase / discounting business

• Established track record of discounting invoices of credit worthy customers

− Historical annualized returns of over 25%

• Initially start with discounting invoices of Zemindar Flour Mill (ZFML)

− Existing vendor with validated history of supplying to credible brands

− Eventually expand to other vendors in the food business

• Current principals at Food Check will continue to manage operations

− Managed through 14th Gate – an affiliated investment management company

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Transaction Structure

• 14th Gate Management is investing working capital in Zemindar Flour Mills (“ZFML”)

• A portion of the output may be sold to well reputed brands at premium pricing

• ZFML does not have the liquidity to withstand credit cycles mandated by these brands

• Investors can provide “invoice discounting” through an established entity – Food Check

• No goodwill value for Food Check – capitalize company for operating needs

• Initial operating capital need of PKR 20 million

• Mandate 14th Gate to manage the invoice discounting cycle

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Transaction Process
1. Diligence performed by 14th Gate on credit worthy parties to on-board for discounting

2. Transaction governed through a multi-partite agreement among all participants

3. ZFML invoices uploaded to a web-based platform for counterparty verification

4. Discounted amount advanced to vendor bank account through 14th Gate controlled bank account

5. Payments from counterparties made to a Food Check controlled bank account

Credit Worthy Customers -

1
14th Gate Diligence & On-boarding
Management Multi-partite
2
Agreement
Working Capital
Investment

4 Financing
(Discount)
Transferred ZFML
Through
Affiliated - Investor Controlled A/C
3
Business

Purchase of
Invoice

Investor
5
Food Controlled
Check
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Illustrative Return Profile
Wheat Processed / Cycle 621,329 kg
Water Gain / Refraction Adj. 2%
Net Weight of Wheat Processed / Cycle 633,258 kg
Wheat Converted into Maida Flour 26%
Net Weight Maida Produced (kg) 164,647 kg
Maida Flour Sold for Credit 46%

Maida Flour Sale / Cycle - 84kg Bag Equivalent 900 Bags

Cycles / Month 4
Maida Flour Sale / Month 3,600 Bags
Selling Price / 84kg Bag PKR 4,000
Monthly Gross Sales (PKR '000) PKR 14,400
Invoice Discount Rate 5.00%
Discounted Invoice Value (PKR '000) PKR 13,680 Sensitivity Analysis
Discount Spread / Month (PKR '000) PKR 720 Invoice Discount Rate
4.00% 4.50% 5.00% 5.50% 6.00%
Average Days in Capital Need 30 27% 29% 31% 33% 36%

Average Days
Receivable
Receivable (PKR in '000) 45 24% 26% 29% 31% 33%
30 PKR 13,680 60 22% 24% 26% 28% 31%
45 PKR 20,520 90 17% 19% 21% 23% 26%
60 PKR 27,360
90 PKR 41,040

Average Days in Monthly Annual Unused Annual Float Annual

Receivable Gross Return Gross Return Liquidity on Liquidity Total Return
30 5.26% 63% PKR 27,360 15% 31%
45 3.51% 42% PKR 20,520 15% 29%
60 2.63% 32% PKR 13,680 15% 26%
90 1.75% 21% PKR 0 15% 21%
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 Food Check: Historical Returns
14th Gate has invested PKR 11 million with Food Check as a pilot investment program.

Average Investment
Investment Invoice Period Discount per
Company Industry Counterparties (PKR MM) # of Invoices Amount (Months) Invoice Return (1)

Zemindar
Flour 2.0 30 67,000 6 6.5% 33%
Flour Mills

Lahori’s Pvt.
Poultry 9.7 76 128,000 5 5.9% 25%
Ltd

Total 11.7 106 27%

(1) Calculated as annualized accrued return on average receivable outstanding.

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14th Gate Management

About Us:

• An investment firm pursuing principal investments in Pakistan with a focus on private debt
and control equity transactions

• Led by executives with significant experience, both as capital allocators and investment
advisors at top tier bulge bracket investment banks and investment managers globally

Why Us:

• 14th Gate acting as investment manager for the working capital investment in ZFML

− Establishes complete control on ZFML’s cash cycle for Investor(s)

• We are the only platform that combines deep local market connectivity with sophisticated
investment expertise

− This is a key differentiator in executing risk-controlled transactions

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Managing Partner – Saif Tariq

Mr. Tariq is a Managing Partner at 14th Gate Management.

Before founding 14th Gate Management, Saif led the Global Emerging Market Equities
strategy at Pine River Capital Management, a US$15BN global multi-strategy hedge
fund. He also helped manage Pine River’s equity and debt investments in financial
services and energy assets.

Earlier, Mr. Tariq worked at Citadel Investment Group, a US$27BN global multi-strategy
hedge fund, focusing on financial services investments.

Prior to Citadel, Saif worked in the Mergers & Acquisitions Department of Citigroup,
where he executed transactions in the financial services sector and advised distressed
companies following the 2007 crisis on restructuring alternatives.

Saif graduated from The Wharton School at the University of Pennsylvania with a
degree in finance.

Mr. Tariq is based in Lahore, Pakistan.

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Managing Partner – Jamil Swati

Mr. Swati serves as a Senior Advisor to the Investment Committee at 14th Gate
Management.

Earlier he was a Founding Partner of Tenbrook Management, which oversaw >US$1BN

of illiquid emerging markets credit and equity investments after the 2007 crisis. Mr.
Swati also led special situations investing at Graticule Asset Management Asia, a
US$4BN affiliate of Fortress Investment Group, a US$70BN multi-strategy alternative
investment firm. Earlier, he was co-head of Fortress Investment Group’s Emerging
Markets Illiquid Corporate Investments business. Prior to Fortress, Mr. Swati was a
Portfolio Manager at Aeneas Capital Management, a US$300M hedge fund, where he
focused on emerging markets special situations.

Earlier, Mr. Swati worked in the Mergers & Acquisitions Department of Goldman, Sachs
& Co. where he executed over US$7BN in corporate transactions.

Jamil graduated from Northwestern University with a BS in Electrical Engineering and

received an MBA from the University of Chicago.

Mr. Swati is based in New York and Islamabad, Pakistan.

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Senior Advisor – Talha Saeed

Mr. Ahmed serves as a Senior Advisor to the Investment Committee at 14th Gate
Management.

He is currently an executive director and group head for wholesale & SME banking at
Silkbank and responsible for their corporate, treasury, financial institution, investment
and SME banking streams. He has previously led Silkbank’s retail operations as well.

Prior to his role at Silkbank, Talha served as country head for SME banking at Standard
Chartered bank in Pakistan, where he served on the senior management committee.

Mr. Ahmed spent six years at Union Bank, last serving as country head for SME
banking, a segment that he helped developed from scratch at the bank.

Talha started his career in banking with ANZ Grindlays in Pakistan, prior to which he
held an analyst position in National Development and Finance Corporation (NDFC).

Mr. Ahmed holds a Master’s degree in Economics from Quaid-e-Azam University in

Islamabad and has served on various boards including Silkbank, Lahore Stock Exchange
and Agritech Limited.

Mr. Ahmed based in Lahore and Islamabad, Pakistan.

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