Case Study - Ares Energy and Infra (Senior Associate)
Hi all, have an upcoming case study with Ares Infrastructure.and Power
I have been told the case will be 5 hours, but no other detail. Was wondering if anyone had any insight on what one could potentially expect or how best to prepare?
They are a flexible capital investor so suspect it will involve evaluating which part of the capital structure would be most attractive from a risk return perspective. My experience across the capital stack is limited since we make equity investments exclusively at my current shop.
Experience that folks on here that have interviewed at other US energy / renewable funds would certainly be valuable as well
Any pointers would be greatly appreciated
Thanks very much!
Bump
Although I am not an expert, based on my experience and other friends, there are several strategies that may boost your chances to pass:
- They are not expecting the perfect/right answer, however they want to see how you model under pressure and how you think.
- Since you have limited time and probably not enough for a comprehensive analysis, I would master the basic LBO modelling.
- Once it is master, use some sources such as Inframation, Infrastructure Journal and Investor, to collect data from +50 deals. The key is to get info re the most common capital structures (and the banks syndicating). That would give you a flavour of the different types and structures.
Let me know if that it is useful, PM if you need more guidance.
Thanks truelondoner. I think that makes sense by means of approach and the suggestion to go on Inframation etc to collect a sample of typical capital structures is an excellent one I honestly didn't think of that.
Let me know if you need more ideas once you had a look at the capital structures at Inframation.
I've found that model case studies can vary for these types of roles. On one hand you could get a model prompt that is akin to your 'typical' LBO as there are businesses that are classified as infrastructure that are volume linked and not tied to contracts. The way in which you would build up an operating model and finance these types of businesses can be practiced through the types of prompts you'd get at a traditional PE firm.
On the other hand, if there is a specific focus on energy, you may receive a model prompt that is more along the lines of a project finance model. The two main differences here is that in an energy model, let's say it's a contracted solar farm, (i) you will likely have operating assumptions tied to contracts (contracted PPA pricing, full wrap O&M, etc.) and (ii) a methodology of financing that is tied to DSCR. Typically if you were to model out any consumer business, you'd project out 5-10 years and then assume a terminal value using some perpetual growth or EBITDA exit multiple. Additionally, your financing assumptions on quantum would be tied to trailing EBITDA as well. With a contracted infrastructure asset, particularly ones with finite lives, you would model out the cash flows over the contracted period and then layer on any merchant or post-contracted cash flows. Additionally, contracted infrastructure assets have debt sized to their cash flows and have a repayment profile that is also sculpted to cash flows. If this is a US renewable asset they may throw tax equity at you (I would be really surprised if they did but you never know).
If I were a betting man, I would say that given the duration of the test, that this would likely be an evaluation of an investment through an equity investor's perspective. Hopefully this helps and good luck!
Thanks that's very helpful and I think your assessment is spot on. Given the duration I suspect they will throw in a little complexity and they do indeed look at a lot of renewables at the moment (almost exclusively from the looks of things) so I wouldn't be entirely surprised if they throw in a tax equity component
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