Sustainable Australia Fund: A Financial Model for Capital Raising and National Expansion
Wiseworth Financial Modelling and Advisory built an auto-balancing three-way financial model for the Sustainable Melbourne Fund, now the Sustainable Australia Fund. The model forecast profit and loss, balance sheet and cashflow across ten years, with configurable scenarios and built-in error checks. It supported improved budgeting and capital planning, a successful capital raising, and a successful national expansion.
FAST FACTS
Client: Sustainable Australia Fund, formerly the Sustainable Melbourne Fund
Location: Melbourne, Victoria
Services: Forecasting and budgeting, scenario and sensitivity analysis, capital raising
Model type: Auto-balancing three-way financial model, ten-year horizon
Outcome: Successful capital raising and national expansion
Website: sustainableaustraliafund.com.au
Engagement year: [AWAITING MARK]
ABOUT THE CLIENT
The Sustainable Australia Fund is Australia's leading provider of finance for businesses to upgrade their buildings to achieve savings through energy efficiencies, as well as addressing climate change. This form of finance, known as Environmental Upgrade Finance, was created by the fund's earlier incarnation, the Sustainable Melbourne Fund.
THE CHALLENGE
The Sustainable Melbourne Fund had been seeking to expand its footprint. To prepare the groundwork for further wholesale funding it needed a clear set of forecasts, particularly of the cashflows from the buildings it financed.
The complication was the structure of the business itself. As Scott Bocskay, then Chief Executive, described it, the fund involved different types of loans and investments with a sophisticated financial structure, combined with service provision and a somewhat awkward governance structure. The business model was new, and consequently complex.
The fund needed a single tool that could do several jobs at once: set strategy, support business planning, test sensitivities and scenarios, and set an annual budget within the context of a longer term strategic outlook for the Board of Trustees. Wiseworth was engaged to build it, on a tight deadline.
WHAT WISEWORTH BUILT
Wiseworth built an auto-balancing financial model with clear inputs and linked profit and loss, balance sheet and cash flow statements. The forecast ran ten years, presented on a monthly, quarterly and annual basis.
The model included:
Sensitivity functionality with many configurable scenarios
Built-in error checks
An Executive Summary page designed to make presentations and reporting to the Board of Trustees straightforward
Clear input structure, so the fund's team could operate the model without external help
Mark Jeanes was quick to understand the business structure and its underlying cash flows, working through it with thorough questioning before building. During the build he checked in constantly to make sure the model would meet the fund's needs, and explained how it was being built as he went, which proved valuable in the client's later use of it.
THE RESULT
The results allowed for improved budgeting and capital planning, a successful capital raising, and ultimately a successful national expansion.
The model did not stop being useful once the raise was done. It is used annually to review the strategic outlook of the fund, reducing management time spent on both annual budgeting cycles and long term planning. It also improved management's ability to provide transparent and forward looking statements to investors in the fund.
IN THE CLIENT'S WORDS
"The result was an accurate, flexible, transparent and presentable financial model that has been extremely valuable for our forecasting, business planning and for discussions with board members. The biggest benefit has been that the model is used on an annual basis to review the strategic outlook of the business of the Fund and reduce management time in preparing and reviewing both annual budgeting cycles and long term planning.
Mark is clearly a talented financial modeller whose background in banking and finance provides a clear advantage. The model used Excel in a way I have not seen before, yet it is easy to use and clear. I would not hesitate to recommend Mark's financial models."
Scott Bocskay, Chief Executive Officer, Sustainable Melbourne Fund
FREQUENTLY ASKED QUESTIONS
What is an auto-balancing financial model?
An auto-balancing model links the profit and loss, balance sheet and cash flow statements so the balance sheet reconciles automatically as inputs change. Built-in error checks confirm the model is still balancing after each adjustment.
Can a financial model handle a complex ownership and governance structure?
Yes. The Sustainable Melbourne Fund model accommodated different types of loans and investments, a sophisticated financial structure, service provision, and a complex governance arrangement within a single tool.
How far ahead can a financial model forecast?
The Sustainable Melbourne Fund model forecast ten years ahead, presented on a monthly, quarterly and annual basis. The right horizon depends on the decision the model is supporting.
Can a financial model be used for board reporting?
Yes. This model included an Executive Summary page built specifically to make presentations and reporting to the Board of Trustees straightforward.
Who builds the model?
Mark Jeanes builds every Wiseworth model personally, from the first assumptions sheet to the last balance check. He spent 20 years at NAB, ANZ, Banque Paribas and Deutsche Bank before founding Wiseworth.
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