Keenjhar Lake Resort Project - Sindh Board Of Investment ...

14.4 Investment Analysis
Based on the financial assumptions described above, the Project yields a Project IRR of 17.7% and
Equity IRR of 22.8%. Simple payback is estimated to be achieved by 9 th year, i.e. 5 th year of operational
period which is very healthy when compared with regional benchmarks on tourism projects followed by
reduced upfront investment.
14.4.1 Upside Potential
The following factors are expected to contribute towards enhancing project returns over the base lines
estimates presented above:
1. Reduced upfront payment against Quoted Bid Amount (QBA): The transaction structure
being envisaged proposes a low cost deferred payment facility option whereby initial payment
by selected bidder to be limited to only 20% of QBA.
2. Exit Options: Exit options are available from start of the project, subject to certain conditions
relating to maximum dilution levels.
3. Modification of development outlays: Development outlays can be further reduced in the
initial phase of development since the initial phase would focus on Infrastructure Development,
which is expected to have significant lower cost/ outlays than those required in the finishing
stages of the project.
4. Recreation zone: Flexibility is available on the design and development of 200 acre Recreation
Zone component with an added option for the developer to enter into sub-concession or subcontract
arrangement(s) with the third parties.
5. Option to modify non-essential facilities: Developer shall have the option to modify the nonessential
components such as Walk-up apartments and farmhouse villas into hospitality
components and may be able award sub-concessions for those components, as long as such
modifications do not contradict the overall theme of the Conceptual Master Plan.
6. Walkup- Apartment: Cash flows from walk-up apartments have not been factored into the
baseline project returns.
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Keenjhar Lake Resort Project - Project Information Memorandum