1. Overview of Iona Capital and the Funding of Development Presentation to the Northern Powerhouse Energy Conference 6 December 2017
Delivering enhanced risk/return in smart energy and resource efficiency

2. Agenda
Introduction to Iona Capital
Market trends and opportunities
A quick historical analogy
Funding in the energy sector

3. Introduction to Iona Capital
A specialist UK Institutional Fund Manager based in London with c. £300m assets under management
Investing money for UK Local Government Pension schemes since 2012
Sector Focus: Renewable and Waste Infrastructure, Energy and Resource Efficiency
Strong and differentiated team combining private equity, sectoral and operational expertise

4. Investment History 2011 2017 2017 LP1: Fully invested in 13 projects
LP NW: Regional fund 50% invested in 4 projects
LP 3: First Close of £90m ex £250m target
SERE Fund: In fundraising
2011
2017
2017

5. Iona Bioenergy Portfolio
Over £160m invested
in 21 Projects
Total installed renewable energy capacity: 65 MWe
6 Project Developers
7 Technology Providers

6. Yesterday – centralised power Future – clean, local power
Market trends and opportunities 1
Shift to renewable energy is accelerating … with increasing levels of distributed energy allied with smart technologies. Indeed, what actually is Infrastructure investment in a Distributed Energy World?
Yesterday – centralised power
Future – clean, local power

7. Market trends and opportunities 2
Growth of electric and autonomous vehicles – and the shared economy

8. Market trends and opportunities 3
Disruption and adoption trends driven by new technologies & reducing cost curves
Cost reduction of new energy technologies
Source: US Department of Energy – Revolution Now – September 2016 Update. Normalised US$ costs Notes: Land based wind costs derived from levelized cost of energy from representative wind sites. Distributed PV is average residential installed. Utility-Scale PV is median installed cost. Modeled battery costs are at high-volume production of battery systems, derived from DOE/UIS Advanced Battery Consortium PHEV Battery development projects. LED bulbs are for A-type bulbs from reference.

9. A quick historical analogy – ‘Railway Mania’
The rapid investment into railways in the 1840s-1850s demonstrates the importance of driving novel infrastructure to drive regional growth … but shows it is not without risk ….
Index of UK Railway share prices*
1840
1852
* Source: Collective hallucinations and inefficient markets: The British Railway Mania of the 1840s by Andrew Odlyzko

10. Funding research & development … and infrastructure
Investments in the energy space can command varying returns depending on the revenue and asset risk profile and their evolution over time
5% IRR
Indicative
Revenue Quality
10% IRR
Traditional Infrastructure
25% IRR
15% IRR ? ?
Operational Projects
35% IRR
Pre-construction projects
Technology/asset application
Counterparty quality
Contractual quality ? ?
Growth capital
VC/ ANgel
Asset Quality
Quality/portability of asset
Diversification/Ability to insure/wrap
Suitability for refinance

11. Funding in the energy sector
Significant opportunities exist for energy investors in new technologies and ‘quasi- infrastructure’ projects
However markets, technologies and service models are evolving fast and, hence, create risk
Investors need to be innovative in targetting attractive opportunities and structuring funding
Iona is well positioned to build on its specialist and innovative foundations in this rapidly developing market