Complex Made Simple

Morgan Gatsby powers LeadCold to $218m strategic investment

* Morgan Gatsby, the Dubai-based financial services company, has burst onto the scene in the UAE

* Led by Ajay Arora, its CEO who has more than 26 years of experience in financial services such as investment banking, private banking and corporate advisory, the firm is now making serious inroads into the international investment banking market

* Morgan Gatsby is a full financial services business spanning investment banking, private wealth management and corporate advisory, servicing both domestic and international clients


In October 2016, Morgan Gatsby was appointed as exclusive financial advisor to LeadCold Reactors, the Swedish nuclear technology company. The bank was mandated to identify and secure equity financing to enable LeadCold to continue the development of its breakthrough Swedish Advanced Lead Reactor (SEALER) nuclear power production technology.

This innovative technology can generate low-carbon nuclear power production of 3MW to10MW of electricity over a ten- to 30-year period, with no refuelling needs. The reactor uses ground-breaking corrosion resistant technology and is a safe, reliable and cost-competitive base-load power generation source.

The SEALER units are intended for commercial off-grid use, making them ideal for remote communities or for mining and natural resources operations, where carbon-emitting and costly diesel generators are the predominant base-load generation source at present.


Seeking investors

From the outset, LeadCold’s preference was to secure funding from a single strategic investor, who could meet the both the initial equity funding requirement of $18.25 million to finance the commencement of the pre-licensing design review, followed by a larger equity raise to complete the pre-licensing review and progress with the R&D, licensing and construction of a full scale 3MWe demonstration reactor in Canada.

The Morgan Gatsby team, led by Arora, applied its usual rigorous methodology to the transaction, first gaining a detailed understanding of LeadCold’s investment proposition and familiarising itself with the SEALER technology.

This involved conducting site visits to the company’s R&D facilities in Sweden and arranging meetings with management and key personnel at LeadCold, including the CEO and founder, Janne Wallenius and CFO Harald Klomp.


Refining the plan

This enabled the bank to develop a detailed timeline for the transaction and work with management to refine the existing business plan and financial model. These then formed the basis for preparing the documentation for the fundraising, including the investment teaser, presentation/information memorandum and a data room.

Being a streamlined organisation was of great advantage to Morgan Gatsby, as it could respond quickly to the competing demands of the timeline to produce deliverables that were consistent with its high standards. Once the necessary documentation had been prepared, Morgan Gatsby developed a tiered list of potential investors who were ranked depending on a number of bespoke criteria, including the size of funds, the sectors of experience and the quality of the management team.

From this initial list, the Morgan Gatsby team used its extensive network of international contacts to identify and approach suitable investors for LeadCold, to showcase the company’s unique investment proposition and growth potential.

Following positive meetings with a number of interested parties, Morgan Gatsby recommended that LeadCold progress and finalise discussions with Essel Group Middle East (EGME). EGME, a subsidiary of Essel Group, was considered the ideal investor and partner for LeadCold, due to its desire to acquire attractive and innovative low-carbon intensive businesses and back strong management teams with the same core values as EGME.

The shareholder agreement between LeadCold and EGME was signed on October 23, 2016, with the company’s initial equity injection of $18.25m also completing that day. This investment enabled LeadCold to commence the pre-licensing design review of SEALER with the Canadian Nuclear Safety Commission (CNSC), and aided R&D efforts necessary to obtain a license to build commercial SEALER units in Canada.

Following the success of the initial equity raise, Morgan Gatsby raised a second round of funds for LeadCold in January 2017, with EGME providing a further $200m cash commitment. This additional investment will not only allow LeadCold to complete the pre-licensing review with the CNSC, but also to complete the detailed engineering design of SEALER, carry out the R&D necessary to obtain the license to build commercial SEALER units in Canada and license and construct a full scale 3 MWe demonstration reactor in Canada.


Seamless execution

The LeadCold transaction showcases the value that Morgan Gatsby brings to its clients through a combination of well-considered advice combined with seamless execution, leading LeadCold CEO Janne Wallenius to call the transaction “a major funding milestone” for the company.

The LeadCold transaction is just the latest in a string of advisory mandates for Morgan Gatsby. The company recently arranged the joint venture for a $1 billion food park joint venture in the UAE, which includes Azdan Investment (local partner) and France’s Rungis International Markets (Rungis). The purpose of the food park will be to establish a 3.3 million square feet marketplace, which will supply privately-owned fresh and processed food similar to the famed 232-acre Rungis in Paris.

The partners on the project are currently finalising plans for the preferred site location and expect this to be announced shortly. Morgan Gatsby also completed a successful $35m debt restructuring for a local private business involving numerous non-syndicated lenders. Driven by Arora and his passion for value-added deal making, the bank is set to continue going from strength to strength.