Post-conference Masterclass
Clean Technologies Investment World Asia 2010
Establishing and Structuring a CleanTech Fund
Post conference Masterclass / 9:00 am to 12:30pm - 3 September 2010, Hong Kong
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
MasterclassProgram
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
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
MasterclassPart I
Establishing and Structuring a CleanTech Fund
About SustainAsia
Defining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
www.sustainasia.com
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
About SustainAsia
CONSULTING
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
Shanghai
INVESTMENT
Independent expertise on cleantech&greentech as well as environmental
and energy infrastructure investments
Singapore
Assessment of risks and opportunities, as well as due diligence of private
equity investments, project financing or M&A transactions.
TECHNOLOGY
Melbourne
Brisbane
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 endto-end wireless intelligent monitoring solutions.
www.sustainasia.com
Main Offices
Auckland
Associates & Partner firms
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Investment Advisory
Innovate &
accelerate
Research, evaluate,
execute & exit
SustainAsia selects and assists
high-potential technology and
service companies in the clean &
green technology and ecoefficiency sectors to accelerate
their growth in the Asia Pacific
region.
SustainAsia advises financial services
and investment groups on investment
risks and opportunities in clean &
green technology, energy and
environmental infrastructure in the
Asia Pacific region.
www.sustainasia.com
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.
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
MasterclassPart I
Establishing and Structuring a CleanTech Fund
Defining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
Selecting quality investment opportunities
www.sustainasia.com
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Defining the right
strategy & 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:
Industry and Construction
Materials (including recovery and recycling)
Green Chemistry
New generation sensors & wireless solutions
Heat pumps
Photo: BIPV concept (Building
Construction materials (isolation, BIPV) Integrated PhotoVoltaics)
Green buildings (LEED certified)
Agriculture
Transport
Bio-materials and organic products (e.g. eco-textiles)
Micro-irrigation
Natural pesticides and bio-fertilizers
Bio-fuels
Climate change adaptation technologies
Electric vehicles
Hybrid vehicles
Fuel cells
Sterling engines
Integrated systems
(e.g. "fleet tracking")
Modal transportation solution
Energy
Solar PhotoVoltaic (PV)
Concentrated Solar and Solar Thermal
Wind
Bio-mass, bio-gas, waste-to-energy
Hydro (small & medium), geothermal
Sea wave and current
Transmission & Distribution ('smart grids')
Fuel cells
Ultracapacitors and batteries (storage)
Energy efficiency and low carbon (solutions & services)
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Water
Photo: hybrid vehicle
(hydraulic technology) in
China
Photo: Advanced
UV disinfection
Water resources management
Water recycling
Biological treatments
Purification & UV disinfection
Micro-Filtration (MF) & Ultra-Filtration (UF)
Desalination and Reverse Osmosis (membranes)
Phytoremediation, micro-algaes
Smart meters
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Defining the right
strategy & 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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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Defining the right
strategy & positioning
Early stage (seed money) = Angel Fund
Type of fund
Focus of this
presentation = VC/PE
Pre-profit stage = VC Fund
Growth stage = PE Fund
Late stage (pre-IPO) = LBO/MBO, Mezzanine
Global mandate
Geographic focus
Regional mandate: Asia, Australasia, South Asia, ASEAN
Country-focus: China (or greater China), India, Korea, etc.
Fund raising
Dealflow
Fund Size and Currency Denomination (onshore/offshore)
Investors Profile (institutionals, family offices, individuals)
Intermediated vs. proprietarydealflow (local and global network)
Internalvs. outsourced PE research and analysiscapabilities
Clean energy(Clean Energy = RE/EE) % allocation
Balanced vs.
sectorspecific
(cleantech) focus
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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
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Defining the right
strategy & 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.
Amountinvested
Transaction 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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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
MasterclassPart I
Setting-up a clean technology fund in
Asia
Defining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
www.sustainasia.com
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
What are the
Key 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
MasterclassPart I
Setting-up a clean technology fund in
Asia
Defining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
www.sustainasia.com
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Adding value across the entire
investment cycle
Typical VC/PE fund organization: team
Investment Committee (Fund Management Co.)
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
Advisory or Supervisory Board
Sponsor + Strategic Advisors + Nominees of Investors (Limited Partners)
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External
Advisors &
Experts
LegalAdvisor
Financial Advisor
Auditor
+ Industry
Experts by
theme
(depending on
targets)
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Adding value across the entire
investment cycle
Excellence across the entire value chain
Sourcing &
Screening
Permanent
Investing
2-6
months
Building
Value
2-3 years
Divesting
6-12
months
Proprietary
Sourcing
Structured
Investment Process
Strategic Advisory
Positioning
Intermediated
Sourcing
Proven due
diligence network
Continuous
Monitoring
Advisor Selection
Managing
transaction parties
Value Roadmap and
KPI
Coordination of
parties
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Adding value across the entire
investment cycle
Typical due diligence and audit team:
industry and professional expertise
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
MasterclassPart I
Setting-up a clean technology fund in
Asia
Defining the right strategy & positioning
What are the Key Success Factors?
Adding value across the entire investment cycle
www.sustainasia.com
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Selecting quality
investment opportunities
Step 1: Deal Selection
Investment criteria (stage, size, sector, company profile)
Deal Sourcing
Deal Introduction
First Screening (Internal)
Meet Target (NDA)
Evaluation & Project Report
Second Screening*
Commercial Factors
Approval
Financial Factors
Non-financial factors (including governance and Responsible Investment policies, if applicable)
Approval
Approval
Step 2: Term Sheet
Step 3: Closing
Step 4: Management
Internal Due Diligence
Revised Project Report
Term Sheet (DRAFT) and
Preliminary Investment
Decision*
Negotiation of Terms &
Conditions with Target
Internal & External Due
Diligence (Legal, Financial,
& Industry Review)
Term Sheet (FINAL) and
Final Investment
Decision*
Closing Transaction
(Documentation)
Participation to the Board
and Provision of Strategic
Guidelines
Supervise Key Mngt Staff
Strategic Decisions (by
monitoring committee)*
Quarterly Reporting
* Each stage of the investment process requires prior
approval of the Investment Committee
Step 5: Exit
Approval
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Review exit options
Divestment Decision*
Implement exit options and
distributions
© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Selecting quality
investment opportunities
Market acceleration &
technology transfer
Long term value
delivered
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.
www.sustainasia.com
“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
© Copyright 2010 SustainAsia
Ltd. All Rights Reserved
our flourishing
Selecting quality
investment opportunities
Due diligence & audit –
Infrastructure
Long term value
delivered
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
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
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
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Selecting quality
investment opportunities
Due diligence & audit –
PE investment
Long term value
delivered
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.
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
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.
“We engaged SustainAsia to
help us evaluate an
investment opportunity in the
environmental services space
and we found their services
invaluable: they were able to
get 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
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
Thank You
Any question or inquiry shall be directed to:
Christophe BONGARS
Founder and CEO, SustainAsia Ltd
3905 Two Exchange Square, Suite 7495,
8 Connaught Place, Central, Hong Kong
E-mail: cbongars@sustainasia.com
Tel: (852) 3667 9118
www.sustainasia.com
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© Copyright 2010 SustainAsia Ltd. All Rights Reserved
