is the hype over? - Syncap

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SPOTLIGHT ON RENEWABLE ENERGY Renewables: is the hype over? continued from page 1 same time, budget difficulties mean that subsidies to the sector are being reconsidered. Production costs for solar and wind installations have decreased so it is likely that these subsidies will be the first to go,” says Brian O’Hare, partner at Clairfield Spain. As budget shortfalls and alternative schemes such as carbon taxes allow subsidies across Europe to decrease, experts predict the disappearance of smaller poorly-run companies. Concentration is then to be expected among the remaining renewable energy companies, both on the technology and on the operating side. On the utilities and the electricity production side, large utilities will eventually try to acquire wind and solar parks with the most productive hours of operations and sell those below, such as wind parks with less than 2000 hours per year. Expectations are also high for greater efficiency and upscaling. Wind farms will be expanded as larger turbines enter production – 17 offshore wind farms are currently under construction in Europe totalling more than 3500 MW, according to the European Wind Energy Association. Solar parks will be made more efficient, with new technologies and increasing size of single projects such as gigantic desert solar parks. Clean fuels and technologies for electricity storage, hydrogen storage, fuels cells, air and gas cleaning technologies, and so on are also a growing business. Strong venture capital and M&A activity should therefore be expected as technology and know-how is acquired via strategic growth. Different countries use different mechanisms to promote renewable energy: quotas and targets for use and production, feed-in tariffs, and financial incentives for investment. The Pew Foundation’s report Who’s Winning the Clean Energy Race? makes clear that countries that incentivize the use of renewable energy – China, Spain, Brazil, and Germany – are the global leaders in the sector. Germany today clearly dominates manufacturing and technology in terms of number of companies and patented technologies. India and China are currently suppliers but are increasingly innovative and competitive. China in particular has given new prominence to clean energy policies recently and in 2009 was the top country for renewable energy finance and investment for the first time. This is a cause for concern in the United States where finance and investment in renewables is far behind its G20 counterparts. According to the Pew report, “in relative terms, Spain invested five times more than the United States last year, and China, Brazil, and the United Kingdom invested three times more.” The United States is catching up with increasing venture capital available for green technologies. Of course, the green sector took a hit with the downturn in the global economy, but the decline in clean-energy investments is estimated at only 6.6% according to the Pew report. At the same time many countries have made clean energy the centerpiece of their economic recovery packages. The green rush is more intense than ever and the prize for the winners of this race is market leadership in a growing sector for years to come. Investment options in solar power in Italy Andrea Scarsi is director at Clairfield Italy. For the last three years, incentivized rates paid for wind and solar electricity, called feed-in tariffs, have led to the significant expansion of photovoltaic capacity in Italy. With major cuts in tariffs in both Germany and Spain and the slower than expected start of the photovoltaic market in Greece, Italy has the potential to become one of the preferred geographies in Europe for attrac- ting foreign investment in the photovoltaic sector. The cost of solar equipment, such as inverters, cells, and modules, has sharply declined. Profits for equipment manufacturers have dropped significantly and higher returns have moved along the value chain from the manufacturing of cells and modules to the management of photovoltaic plants and the generation and trading of green energy. As a result, over the last 12 months, investors in Italy have focused on the acquisition of greenfield or pre-authorized projects to develop and resell. An alternative and very reliable investment option has emerged that consists of investing in the share capital of special purpose vehicles putting together a diversified portfolio of projects. These projects often include highly profitable building-integrated systems at different stages of planning and construction. The building-integrated systems, and more generally, the roofmounted systems in Italy obtain higher feed-in tariffs and possible additional bonuses for the dismantling of asbestos. Fur- thermore, the roof-mounted systems are generally built close to existing medium-voltage lines, reducing the construction costs of the entire photovoltaic plant. On the other hand, one of the main problems connected to the roof-mounted systems is the size of such systems, which are often too small to be of interest to institutional investors. To resolve this issue, several individual small projects can be grouped into special purpose vehicles, thus achieving an interesting size, higher profitability, and risk diversification. In recent years Clairfield Partners’ Italian office, K Finance, has advised financial and industrial players in the evaluation, investment, and acquisition of high-return opportunities in the sector and is currently assisting the fundraising of new special purpose vehicles dedicated to the development of photovoltaic plants in Italy. The Italian photovoltaic market is currently facing a rush to build and connect the plants to the grid before the end of 2010 when the tariffs in place since 2007 are due to expire. Such a rush is especially motivated for ground-mounted systems, for which the feed-in tariffs are in fact expected to significantly decrease after December 2010. In contrast, the government recently announced a minor decrease in the tariffs for roof-mounted systems to be put in place gradually in the first three quarters of 2011. The slow phase-out will encourage the investment in photovoltaic roof-mounted systems in Italy for at least the next 18 months. 2 Clairfield Review Q2 10
intuitucapital InterFinancial Sale France Clinique de Quissac & Domaine Du Cros were sold to Sale Australia/Germany Hydratec Industries NV Boer & Croon intuitucapital was sold to Acquisition The Netherlands acquired MBI France was sold to N1 Device Holding Clairfield Review Q2 10 SELECTED RECENT TRANSACTIONS Clinique de Quissac and Domaine du Cros, clinics in the south of France, were sold to VP Investissements in two separate transactions. Clinique de Quissac is one of the largest French private mental health clinics with 200 beds. Domaine du Cros is a convalescent home with 60 beds, specializing in cardiology and traumatology patients. VP Investissements is a French midsized family group founded in 1991 dedicated to health services. Eden Technology Pty Ltd was acquired by the Siemens IT Solutions and Services business, enhancing Siemen’s range in product lifecycle management, asset management, and civil & national security solutions. Eden Technology is a specialist technology company with 30 years of experience delivering software solutions and services to the defense, maritime, and evidence management industries. Hydratec Industries, formerly known as Nyloplast NV, acquired Euromouldings and Timmerije in two separate transactions. Hydratec Industries NV is an industrial holding company with its main activities in the design and production of electronic panels, and design and manufacturing of plastic parts and blow-molded packages. The company has facilities in the Netherlands and the U.K. Hydratec Industries is listed on the NYSE Euronext. Plastef Investissements, a holding of the Plastef group, was sold to N1 Device Holding in a management buy-in transaction. Plastef is a French private plastic injection company with expertise in packaging under clean room conditions for the medical sector. The group produces liquid and solid dosing and drug delivery systems for major pharmaceutical groups. The group also offers research and development services. McColl Partners V2Finance Sale United States was acquired by acquired an equity participation in SynCap Management intuitucapital Acquisition Germany/Poland MBO Brazil was acquired by its management Acquisition France intuitucapital acquired Yosemite Waters was sold to DS Waters of America, Inc., an American producer and distributor of home, office, and retail bottled water products and a portfolio company of private equity firm Kelso & Company. Yosemite Waters produces and distributes home, office, and retail bottled water products in the southwest United States. Yosemite offers three types of drinking water, as well as water dispensers and coffee products. Piening is a leading German provider of temporary employment services, personnel recruitment, and outsourcing services. The company achieved sales of approximately € 120 million in 2008. Work Express is a Polish recruitment and temporary employment company. The company is one of the largest agencies in Poland with 4500 workers placed in 2009. V2Finance acted as the exclusive financial advisor to the shareholders of Brasfrut in a management buyout transaction. The executive manager and minority shareholder acquired the totality of the equity of Brasfrut. Brasfrut is a fruit pulp producer in the northeast of Brazil. It produces 11,000 tons of pulp per year that is distributed throughout Brazil and also exported to Portugal, Spain, the Netherlands, and the United States. The investment arm of intuitucapital acquired 100% of Energie 5 Méditerranée (E5 Med). E5 Med specializes in high-end photovoltaic equipment for individual homes and businesses. E5 Med is a distributor and installer of solar panels designed for roof integration. It distributes topquality European equipment. The company also provides technical engineering, installation, and administrative services. 3
Page 1: Second quarter 2010 CLAIRFIELD REVI

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