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Clean Technologies Investment World Asia 2010
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Post-conference Masterclass
Establishing and Structuring a CleanTech Fund
Post conference Masterclass / 9:00 am to 12:30pm - 3 September 2010, Hong Kong
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Establishing and Structuring a CleanTech Fund
9:00 (Part I) Introduction and overview of investment and legal strategy in cleantech funds
Facilitated by:– Christopher Tung, Partner, K&L Gates, Hong Kong – Christopher Bongars, Founder & CEO, SustainAsia, Hong Kong
10:00 (Part II) Setting up a parallel fund structure in Hong Kong and China
Facilitated by:– Michael Chan, Partner, K&L Gates, Hong Kong – James Chen, Partner, K&L Gates, Taiwan
11:00 (Part III) Opportunities and risks for funds in carbon trading and finance
Facilitated by:– Christopher Tung, Partner, K&L Gates, Hong Kong – Rutger de Witt Wijnen, Partner, De Brauw, Netherlands– GeertPotjewijd, Resident Partner, De Brauw, China
12:00 Question and Answer and Panel Discussion
12:30 Lunch
MasterclassProgram
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Establishing and Structuring a CleanTech FundAbout SustainAsia
Defining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
MasterclassPart I
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
About SustainAsia
Sustainability and clean & green technologies Focus on the Asia Pacific region Since 2005, we provide services, expertise and tools to high
performance companies and investors
CONSULTING
Independent expertise on cleantech&greentech as well as environmental and energy infrastructure investments
Assessment of risks and opportunities, as well as due diligence of private equity investments, project financing or M&A transactions.
Asia Pacific partner of Enablon, a global leader of governance, risks and compliance IT solutions
Joint Venture partner in Greenware, a provider of next generation end-to-end wireless intelligent monitoring solutions.
TECHNOLOGY
INVESTMENTSingapore
Shanghai
Auckland
Associates & Partner firms
Brisbane
Main Offices
Melbourne
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Investment Advisory
Innovate & accelerate
SustainAsia selects and assists high-potential technology and service companies in the clean & green technology and eco-efficiency sectors to accelerate their growth in the Asia Pacific region.
Research, evaluate, execute & exitSustainAsia advises financial services and investment groups on investment risks and opportunities in clean & green technology, energy and environmental infrastructure in the Asia Pacific region.
As a technology and industry expert, SustainAsia provides research and transaction services for the independent assessment and due diligence of targeted companies during private equity investment and merger & acquisition transactions.
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
MasterclassPart I
Establishing and Structuring a CleanTech FundDefining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Defining the rightstrategy & positioning
The designation “clean technologies” (“CleanTech” in short) are used interchangeably to designate solutions, products or services with innovative and high knowledge content, aimed at optimizing the use of natural resources (water, energy, raw materials, etc.) and reducing their ecological impact – for instance the quantity of greenhouse gas emissions, also known as ‘carbon footprint’ – while adding economical value:
AgricultureBio-materials and organic products (e.g. eco-textiles)Micro-irrigationNatural pesticides and bio-fertilizersBio-fuelsClimate change adaptation technologies
EnergySolar PhotoVoltaic (PV) Concentrated Solar and Solar ThermalWindBio-mass, bio-gas, waste-to-energyHydro (small & medium), geothermalSea wave and currentTransmission & Distribution ('smart grids')Fuel cellsUltracapacitors and batteries (storage)Energy efficiency and low carbon (solutions & services)
Industry and ConstructionMaterials (including recovery and recycling)Green ChemistryNew generation sensors & wireless solutionsHeat pumpsConstruction materials (isolation, BIPV)Green buildings (LEED certified)
TransportElectric vehiclesHybrid vehiclesFuel cellsSterling enginesIntegrated systems(e.g. "fleet tracking")Modal transportation solution
WaterWater resources managementWater recyclingBiological treatmentsPurification & UV disinfectionMicro-Filtration (MF) & Ultra-Filtration (UF)Desalination and Reverse Osmosis (membranes)Phytoremediation, micro-algaesSmart meters
Photo: hybrid vehicle (hydraulic technology) in China
Photo: BIPV concept (Building Integrated PhotoVoltaics)
Photo: Advanced UV disinfection
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Defining the rightstrategy & positioning
Cleantechisa youngindustry. Today the main bulk of investments in innovation and intellectualpropertyisstilloccuring in Europe and NorthAmerica. This trend willstartreversing in the years to come, with the rise ofcleantech‘champions’ in Asia Pacific exportingtheirown technologies
Cleantechsolutions: a global market.Asia (and China in particular) isalready a formidable platform for the manufacturing and exporting of highlycompetitiveCleantechproducts to international markets. In parallel, givenitsrapideconomicgrowth, the demand for Cleantechproducts& services inAsiaisstrong
Technologytransfersare accelerating.Cleantechcompanies are actively seeking an international presence through strategic M&A transactions.
The identification of strategic&technological gaps is a key aspect of the anyfundinvestmentstrategy
Avoidance of hot sectorsover-invested or over-subsidized
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Defining the rightstrategy & positioning
Type of fund
Early stage (seed money) = Angel Fund
Pre-profit stage = VC Fund
Growth stage = PE Fund
Late stage (pre-IPO) = LBO/MBO, Mezzanine
Geographic focus
Global mandate
Regional mandate: Asia, Australasia, South Asia, ASEAN
Country-focus: China (or greater China), India, Korea, etc.
Fund raisingFund Size and Currency Denomination (onshore/offshore)
Investors Profile (institutionals, family offices, individuals)
DealflowIntermediated vs. proprietarydealflow (local and global network)
Internalvs. outsourced PE research and analysiscapabilities
Balanced vs. sectorspecific (cleantech) focus
Clean energy(Clean Energy = RE/EE) % allocation
Supplyside = RenewableEnergy (RE) and demandside = EnergyEfficiency (EE) and otherclean energy (lowcarbon) projects and climate mitigation and adaptation technologies
Othercleantechsectorsin Agriculture, Industry& Construction, Transport, Water includingnon-energyrelatedClimatech % allocation
Focus of this presentation =
VC/PE
Focus of this presentation =
VC/PE
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Defining the rightstrategy & positioning
Type of targets
Early/growth stageunlistedcompanies of the industrialCleantechsector focus. High value addedProducts and/or Services in the value chainwith a leadership positionin theirdomesticmarket and with a clearinternational developmentstrategy
Profile of targets
Technology companies, equipment manufacturers, distributors and installers, engineering service companies, project developers, EESCOs, project specific special purpose companies, independent power producers, energy and water utilities or end users, etc.
AmountinvestedTransaction size and limits (% of the Fund size per transaction) Series A ou B (or later) Shares? Possibility of co-investments ?
% of participation
Minority or majoritystake? Governancecriteria: representation and veto powersat the board
Number of investments
Numberinvestmentsper yearover the investmentperiod (extension?)
Investmentperiod and Type of exit
Trade sale to strategicinvestoror financialinvestor (later stage rounds withothercleantech PE fund) or IPO (onshore/offshore)
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MasterclassPart I
Setting-up a clean technology fund in AsiaDefining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
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What are theKey Success Factors?
A clear investment strategy with a systematic approach to adding value through the entire investment process and delivering high returns to investors
A well targeted positioning to capture Cleantech emerging opportunities and to address high value strategic and technological gaps through a global network of professionals and partners
Strong combination of experience and skills: a unique and diversified team with deep industry expertise, local knowledge and all the skills needed for quality investments
Active and credible sponsor with solid track record: a long established presence with a proven infrastructure
A rigorous investment methodology: systematic, robust and responsible investment selection, execution, management and exit processes
Balanced investment opportunities: access to an on-going diverse and proprietary deal flow
Optimized investment structure: a transparent and safe investment vehicle with full management and advisory capabilities in the selected geography
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Setting-up a clean technology fund in AsiaDefining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
MasterclassPart I
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Adding value across the entireinvestment cycle
Investment Committee (Fund Management Co.)
Investment Committee (Fund Management Co.)
Advisory or Supervisory BoardSponsor + Strategic Advisors + Nominees of Investors (Limited Partners)
Advisory or Supervisory BoardSponsor + Strategic Advisors + Nominees of Investors (Limited Partners)
External Advisors & Experts
LegalAdvisor
Financial Advisor
Auditor
+ Industry Experts by
theme (depending on
targets)
External Advisors & Experts
LegalAdvisor
Financial Advisor
Auditor
+ Industry Experts by
theme (depending on
targets)
Investment & Management Team (full-time professionals)
Dedicated Partners for origination, transaction & exit, plus fund raising and investors relations) + dedicated team for Research, Analysis & Investment Management and Execution of investment & divestment
transactions
Investment & Management Team (full-time professionals)
Dedicated Partners for origination, transaction & exit, plus fund raising and investors relations) + dedicated team for Research, Analysis & Investment Management and Execution of investment & divestment
transactions
Typical VC/PE fund organization: team
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Adding value across the entireinvestment cycle
Excellence across the entire value chain
Proprietary Sourcing
Proprietary Sourcing
Sourcing & Screening
Permanent
Sourcing & Screening
Permanent
Investing
2-6 months
Investing
2-6 months
Building Value
2-3 years
Building Value
2-3 years
Divesting
6-12 months
Divesting
6-12 months
Intermediated Sourcing
Intermediated Sourcing
Structured Investment
Process
Structured Investment
Process
Proven due diligence network
Proven due diligence network
Managing transaction
parties
Managing transaction
parties
Strategic AdvisoryStrategic Advisory
Continuous MonitoringContinuous Monitoring
Value Roadmap and KPI
Value Roadmap and KPI
PositioningPositioning
Advisor SelectionAdvisor Selection
Coordination of parties
Coordination of parties
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Adding value across the entireinvestment cycle
Typical due diligence and audit team: industry and professional expertise
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Setting-up a clean technology fund in AsiaDefining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
MasterclassPart I
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Selecting quality investment opportunities
18
Step 1: Deal Selection
Deal SourcingDeal IntroductionFirst Screening (Internal)Meet Target (NDA)Evaluation & Project ReportSecond Screening*
Step 2: Term Sheet
Internal Due Diligence Revised Project ReportTerm Sheet (DRAFT) and Preliminary Investment Decision*Negotiation of Terms & Conditions with Target
Step 3: Closing
Internal & External Due Diligence (Legal, Financial, & Industry Review)Term Sheet (FINAL) and Final Investment Decision*Closing Transaction (Documentation)
Approval
Step 4: Management
Participation to the Board and Provision of Strategic GuidelinesSupervise Key Mngt StaffStrategic Decisions (by monitoring committee)*Quarterly Reporting
Step 5: Exit
Review exit optionsDivestment Decision*Implement exit options and distributions
* Each stage of the investment process requires prior approval of the Investment
CommitteeApprova
l
Approval
Approval
Investment criteria (stage, size, sector, company profile)
Commercial Factors
Financial Factors
Non-financial factors (including governance and Responsible Investment policies, if
applicable)
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SustainAsia is providing consultancy services to accelerate the market entry into Asia, of an innovative water disinfection technology company, through extensive market assessment, business planning and implementation, identification and selection of strategic partners, as well as identification of 'early adopters'.
Access to Asian market, initial promotion and representation steps, setting up distribution channels and demonstration project. Introduction to leading industry players.
“We approached SustainAsia to help initiate and build our base and distribution network throughout China and South East Asia. SustainAsia’s deep knowledge of the region, its water industry, the business culture and their wide network of relationships were key factors in our successful launch and our flourishing business in Asia”
OdedRose, Executive Vice
President, Atlantium Ltd
Market acceleration & technology transfer
Long term value delivered
Selecting quality investment opportunities
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SustainAsia provides independent and confidential technical and operational reviews, before, during and after construction of the project, to ensure that the design, construction, operation and management systems \are meeting applicable internationally recognized standards
SustainAsia provides the necessary due diligence and audits for assessing operational risks, execution risks, as well as the implementation of cutting edge eco-efficiency practice
Fact findings and independent assessment of the growth opportunities as well as technology, industrial and operational risks faced by the investors. Validation of key assumptions in the financial model
Due diligence & audit – Infrastructure
Long term value delivered
Selecting quality investment opportunities
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SustainAsia is mandated by several private equity investment and asset management firms to conduct independent assessments and due diligences of several clean technology companies in China, prior to a growth capital expansion transaction.
Our due diligences comprise site visits, interviews with management, technical auditing and market assessment, report on observations, analysis and recommendations, and contribution to the investment memorandum.
Independent and unbiased expert opinion, clarification on ‘key’ aspects of the transaction as well as possible technology & execution ‘deal breakers’ resulting in a more accurate valuation of the targeted company
“We engaged SustainAsia to help us evaluate an investment opportunity in the environmental services space and we found their services invaluable: they were able toget our team up to speed on the landscape in
China, and subsequently, help us evaluate the investment during site visits offering real expertise. Throughout our due diligence process, SustainAsia was a great resource and gave us comfort on many issues.”
Vinay Kumar, Vice President AEA Investors
Due diligence & audit – PE investment
Long term value delivered
Selecting quality investment opportunities
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Thank You
Any question or inquiry shall be directed to:
Christophe BONGARSFounder and CEO, SustainAsia Ltd3905 Two Exchange Square, Suite 7495, 8 Connaught Place, Central, Hong Kong
E-mail: [email protected]: (852) 3667 9118www.sustainasia.com