This project report assesses the potential for private equity investment in Wesfarmers, an Australian company operating in retail, chemicals, fertilizers, industrial products, and coal mining. The report begins with an introduction to private equity and its relevance, followed by an overview of Wesfarmers, including its financial performance, market position, and competitive advantages. The analysis delves into the reasoning behind the investment opportunity, highlighting Wesfarmers' strong market position, competitive advantages, multiple avenues for growth, low capital expenditure requirements, stable cash flows, favorable industry trends, a strong management team, and multiple areas to create value. It then calculates the financial gain and purchase consideration, estimating the total value of the firm and the per-share value of equity using the dividend growth model, PE multiple model, and present value of terminal cash flows. The report also outlines the capital structure, cost of debt, and cost of equity associated with the investment, providing a comprehensive financial analysis of the proposed private equity deal.
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