Schneider Electric is a leading provider of energy and automation digital solutions for efficiency and sustainability in homes and buildings worldwide, employing more than 135,000 employees. The company has an investment fund for electrification projects for countries such as Kenya.
A key concern in the electricity market of rural areas in developing markets is that potential customers do not have enough cash on-hand to purchase and own solar-home-systems equipment directly. This is where Schneider Electric’s investment fund comes in to invest in local companies and start-ups in the industry, while requiring a minimal return on investment.
why this case?
The case examines the concept of hybrid organization, which blurs traditional boundaries between nonprofit and for-profit organizations. The business model of pay-as-you-go solar home systems companies in Kenya is based on social entrepreneurs in the solar energy sector who wish to achieve social and communities’ objectives balanced with a minimal return on investment.
Two key challenges faced by such these companies are attracting external financing which is critical and balancing the expected returns from capital providers such as Schneider Electric.
The case describes three different investment opportunities that the Schneider fund is currently considering. Students are asked to make a decision, taking the role of the fund manager on the supervisory board. The students are challenged to analyze the businesses and forecast expected social impact and future financial performance of these companies.