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1 EMERGING ENERGY & ENVIRONMENT, LLC TOWARDS A LOW CARBON ECONOMY: THE ROLE OF PRIVATE EQUITY FUNDS BY: JOHN PAUL MOSCARELLA Emerging Energy & Environment, LLC JUNE 2012
2 FUND CONCEPT EMERGING ENERGY LATIN AMERICA FUND II CONFIDENTIAL – FOR PROFESSIONAL INVESTORS ONLY Emerging Energy Latin America Fund II focuses on renewable infrastructure investments in Latin America. The Fund will mainly invest in companies within the energy related sectors of hydroelectricity, wind power generation, and solar energy. The Fund will also invest in regional mid-market companies that provide support and energy services to the renewable and energy efficient sectors using market proven technologies. The Fund will benefit from the collective experience of the team in the region in local origination, project development, project finance, investment management, and exits. First closing occurred in January 2012.
3 INVESTMENT HIGHLIGHTS EMERGING ENERGY LATIN AMERICA FUND II CONFIDENTIAL – FOR PROFESSIONAL INVESTORS ONLY Emerging Energy Latin America Fund II is a USD 150 million expansion capital fund focused on multi-sector investment in renewable energy. The Fund offers institutional investors an opportunity to invest in: One of the world’s fastest growing regions Renewable energy sector facing unprecedented demand from the industrial, transportation, and consumer segments Renewable infrastructure sector with its urgent need of expansion Seasoned fund management team with proven track record and three offices in the region
4 PIPELINE EMERGING ENERGY LATIN AMERICA FUND II CONFIDENTIAL – FOR PROFESSIONAL INVESTORS ONLY The team is actively working on the pipeline for Fund II: Focus on renewable energy infrastructure. The current Fund II pipeline, as of February 2012, consists of: Over 35 deals representing over US$2.8 billion of investment potential. Over US$2.4 billion of the pipeline represents wind, solar, and small hydro renewable energy infrastructure.
5 PIPELINE EMERGING ENERGY LATIN AMERICA FUND II CONFIDENTIAL – FOR PROFESSIONAL INVESTORS ONLY Country & Sector Matrix as of January 2012 (Capital costs in US million) BrazilChileMexicoPeru $1.7 Billion in Total Hydro 455 Solar 240 Wind 1070 710320324411 Scale: Up to US$50 million Between US$50 – 200 million Over US$200 million
6 CleanTech Fund (CTF): US$25 MM (2004) Early Stage PE/VC Fund: Portfolio by Technology & Country (US$ MM)
7 The Global Clean Tech Market (Euro Bn) Source: Clean Economy, Living Planet: The Race to the Top of Clean Energy Technology Manufacturing, Roland Berger, 2012
8 Cleantech Ranking Source: Clean Economy, Living Planet: The Race to the Top of Clean Energy Technology Manufacturing, Roland Berger, 2012
9 CleanTech Mapping of relative GDP and absolute size Source: Clean Economy, Living Planet: The Race to the Top of Clean Energy Technology Manufacturing, Roland Berger, 2012
10 China cleantech companies: Debt Financing and IPO’s Source: Clean Economy, Living Planet: The Race to the Top of Clean Energy Technology Manufacturing, Roland Berger, 2012
11 Private Equity Funds: Early stage/Growth Capital Venture Capital funds: Early stage, institutional capital Companies are often still “concept” “Pre” revenue or still incipient revenues Usually several VC firms collaborate Exit or sale to larger PE funds, strategic or IPOs Private equity funds Growth capital, usually expansion of current revenues by accelerating growth (“accelerated organic growth”) Capital to acquire similar companies, competitors (“buy and build”) Pre-IPO capital “Greenfield” projects, require debt Infrastructure Funds Project based special purpose companies Usually “brownfield” Significant debt requirements
12 Some conclusions: Transition to low carbon economy Key ingredients: Stable fundamental economies Strong regulatory support Stable and long term vs infrequent or volatile Long term carbon regime preferable Financing requirements Both debt and equity capital Equity is critical for: Early stage risk capital (VC) Growth capital (PE) Project based equity (PE) Capital Markets IPOs but also very important for private markets to function properly “Supply” of institutional capital via pension funds and other, i.e. institutional capital, needs to be increased in “cleantech” and “low carbon” generally
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