Investing in Sustainability
The case of Ambienta SGR
November 2022
Ambienta highlights
Established platform
>€3.0bn
AUM3 in
European
environmental
sustainability
Sustainability Expert
15 years
4 Sustainability PE funds (24 platform investments and 33
add-ons)
>75 institutional LPs
Liquid long/short equity strategy – Ambienta X Alpha
Liquid multi-asset low vol strategy – ESG infra income
Liquid long only equity strategy – Sustainable Leaders
Liquid long only equity strategy – Environmental Mid-Cap
2 asset classes (+1 coming)
c.60 professionals in 4 offices
Winner of multiple industry
awards
Performing
Proprietary methodologies for sustainability measurement
and ESG in Action
European with global reach
30%
Ambienta I1
Realised Gross IRR
Ambienta II
2.9x
1.9x net TVPI
3.1x Realised Gross MOIC
43% Gross / 27% Net IRR2
1.6x DPI
Realised Gross MoIC
53 sustainability sector reviews
2.5x Realised Gross MOIC
Portfolio across
148 countries
Investment scope
Ambienta offices
Investments
Ambienta III
1.4x net TVPI2
39% Gross / 25% Net IRR2
0.4x DPI
1. Refers to Buyout and Growth Investments. Total Realised Gross MOIC for Fund marked at 2.0x
2. Preliminary net figures as of June 2022, net of fees, other expenses and carry
3. Including Ambienta IV, dry closed on 20th July 2022 for EUR 1.55bn.
2
Responsible, Sustainable, Impact... Investing
… and Ambienta positioning
Limit of «mission» driven investing
FINANCIAL
RETURN
Traditional
investing
Responsible
investing
Sustainable
investing
Market
return
Below
market
return
0%
Ambienta?
Thematic approach:
• sustainability shapes
investment scope
• financial returns driven
• impact measurement
• neither «impact» branded or
impact objectives
Negative
returns
Not relevant
Ambienta Sgr - Confidential
“Do not
harm”
selection
Sustainability
trends
Impact
investing:
finance first
Impact
investing:
impact first
Venture
philanthropy
Traditional
philanthropy
Impact objectives/targets
are key
IMPACT
3
Growing population is leading to global resource scarcity
and pollution concerns
Within the next 10 years
the world will need:
Rising population
+12%
8,6bn
+200%
7,7bn
40% more water
20% more energy
35% more food
Within the next 10 years
the world will produce:
2,5bn
30% more greenhouse gases
80% more plastic in the ocean
1950
2020
Global population
Ambienta Sgr - Confidential
2030
100% more urban waste
4
Sustainability is reshaping all industries
Resource efficiency
Sustainable
manufacturing
Sustainable
working & living
Smart Industrials
Green Chemicals
Filtration / Water
Testing, Inspection, Certification
Mobility
Sustainable Buildings
Software & Digitalisation
Waste Management
Agriculture / Food
Textiles
Supplements / Cosmetics
Packaging
Sustainable
consumption
Pollution control
Ambienta Sgr - Confidential
5
Sustainability is a European business
Resource scarcity and population density built an industry and society able to act sustainably
Electricity consumption
kWh/capita, 2019
New passenger car average
consumption
l/100km, 2019
11.936
8,4
-49%
-32%
6.140
US
EU
Clothing consumption
# of times a garment is worn, 2015
95
US
5,7
EU
Municipal waste production
Kg/capita/day, 2018-19
2,4
-42%
1,4
2.7x
35
US
EU
US
Note: Ambienta analysis on BNEF, IEA, Ellen McArthur Foundation and Eurostat
Ambienta Sgr - Confidential
EU
Source: European Commission; Number of SMEs (€10-250m annual turnover) in the industrial sector
6
Ambienta Private Equity Investment Strategy
Bringing Pan-European industrial expertise to local SME opportunities
Where we invest
▪
▪
▪
▪
Ambienta Sgr - Confidential
▪
▪
▪
▪
Sustainability-driven
European
Small and medium businesses
(€40-300 million)
Founders-owned, family
businesses
How we create value
▪
▪
▪
▪
▪
How we invest
Management & Systems
Internationalisation
M&A
Operational Excellence
Sustainability & ESG edge
LBO - Leverage buyouts
Growth capital
Control-oriented
Buy & build
How we improve sustainability
▪
▪
▪
Sustainability & Strategy team
EIA - Environmental Impact
Analysis
ESG in Action
7
Sustainability and ESG in Ambienta’s investment strategy
Sustainability drives investments selection, ESG drives value creation
Operations of portfolio companies
Product
or
Service
How a company operates to produce a product
or deliver a service
What a company produces
or delivers
ESG Integration within portfolio management
Thematic Strategy
EIA
Environmental
Impact Analysis
Ambienta Sgr - Confidential
8
EIA - Environmental Impact Analysis
We capture a large subset of investable goals and we provide a taxonomy to report to our investors
SDG
Resource Efficiency
Energy Saved
Water Saved
Materials Saved
Land(fill) Saved
▪
10 out of 151 possibly
investable goals out of the
17 in total
▪
85 out of 110 possibly
investable sub-goals out
of 169 in total
Food Saved
CO2 Emissions Reduced
Pollution Control
Environmental Impact Analysis
Environmental Metrics
Air Cleaned
Pollutants Avoided
Water Cleaned
Materials Recycled
Biodiversity Preserved
1. We do not include Goal 13, Climate Action, since it is mainly directed to policy makers and mitigation of effects of climate change rather than to products and services reducing CO2
emissions. SDG 16 “Peace, justice and strong institutions” and SDG 17 “Partnership for the goals” are considered uninvestable goals
Ambienta Sgr - Confidential
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EIA - Environmental Impact Analysis
How it fits within the investment process
First environmental
screening
Develop
environmental thesis
2
1
• Initially check whether
products and/or services
could really entail a resource
efficiency or a pollution
control claim
• Verify that environmental
drivers shape growth
opportunities for the
company
• Progressively (stage 2a and
2b) develop environmental
thesis that describe how
products and service deliver
their impact
Register into Dealflow
Manager
Ambienta Sgr - Confidential
Assess materiality
and measurability
Build full EIA
document
3
• Develop draft calculation
under our methodology to
understand whether the
impact is material and
measurable
• If doubts emerge, prepare
case to be discussed within
partnership
Present environmental
thesis at first
investment committee
4
• Develop full calculation of
annual impact against the
sapplicable metrics of the 11
metrics
• Finalize EIA only for
companies entering portfolio
Include draft calculation
in investment decision
documents
Finalized EIA, to be
recalculated annually
and reported to
investors
10
ESG in Action programme
Structured approach to ESG, a value creation and risk management tool
Closing
ESG initial
assessment and
due diligence
1
2
3 months
Goal setting
policies
Board
approved
6 months
Materiality
Analysis
completed
3
12 months
ESG Action
Plan approved
4
5
Monitoring
and
reporting
in place
Carbon Footprint Analysis and Strategy
Initial independent
ESG assessment
during DD
Implementation of three
goal setting policies:
•Environment, Health and
Safety
•Labour & Employment
Standards
•Business Integrity
Ambienta and
management team
together complete
“Materiality
Analysis” on risks
and opportunities.
Involve all
stakeholders
Ambienta and
management define
a “ESG Action plan”
with goals,
responsibilities, KPIs
and reporting duties
Reporting of ESG KPIs
in place
From the company to
its board monthly;
from Ambienta to LPs
and stakeholders
quarterly and yearly
• Mandatory ISO certifications: Quality ISO 9001 & Energy ISO 50001
• Optional ISO certifications: Environment ISO 14001; H&S ISO 45001 and
Supply chain ISO 28000
Ambienta Sgr - Confidential
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Case study: Collingwood Lighting
Developing a niche leader into a pan-European player of scale in the fragmented LED luminaires market
Description: Market leading premium brand in the design, sourcing and distribution of LED luminaires for residential, landscape, commercial and light industrial
applications in the UK and France (representing 100% of the company’s revenues)
Deal highlights
Large and robust
target market
Key business
capabilities
Strong management
team
Solid financial track
record
Deal summary
▪
Core addressable market is worth >£1.3bn across target geographies (UK & France),
underpinned by sustained growth drivers linked to energy efficiency
Sector
▪
Market has proved robust during the Covid-19 pandemic
Investment date
▪
CW is known for its brand strength, product quality & reliability, new product development
capability, high service levels and strong wholesale customer & supplier relationships
Location (HQ)
Ambienta is backing a management team with significant industry experience and, together
with the planned management additions and evolutions, strong ambitions to create a
leading pan-European platform
Vendor
▪
12% sales CAGR FY18-FY21A, c. 15% EBITDA margins & high cash conversion
Acquisition EV
€68.5 million
▪
Robust performance during Covid-19 with strong double-digit sales growth during 2021
Entry multiple
10.5x EV/EBITDA
▪
▪
European LED luminaires market is highly fragmented with >1,000 LED companies
presenting a significant market consolidation opportunity
▪
First add-on signed in Italy, strong pipeline of further 5 targets for >£20m EBITDA
M&A
Sourcing
Stake
Invested capital2
2Q 22 valuation
Financial profile (£m)1
1.
2.
Limited Auction
Baird PE
77.3%
€48.1 million
1.1x cost
LED lighting consumes less energy, has a longer lifespan
and therefore requires less replacement and emits less CO2
emissions in comparison to other alternate lighting
technologies such as halogen & fluorescent
▪
LED lighting penetration has a long way to go with only an
estimated c. 50% of lighting installations today in Europe
using LED technology
▪
2021 environmental impact estimate: 868 tons of Material
Saved, 13,527 Toe of Energy Saved, 43,624 tons of CO2
Emissions Reduced
30,2
4,2
5,0
5,7
03/2020A
14%
03/2021A
17%
03/2022A
15%
6,8
EBITDA
EBITDA
Margin
UK
▪
37,5
Sales
Feb 2021
Environmental thesis
49,6
29,8
LED Lighting
2022B
14%
Collingwood has Mar F/Y being updated to Dec Y/E from 2022 onwards. As of June 2022, excludes acquisition of Nobile completed in July 2022
Including co-investors, as of June 2022. Excludes acquisition of Nobile completed in July 2022.
Ambienta Sgr - Confidential
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Case study: Nactarome
Buy-and-build initiative in the food ingredient market leveraging the increasing shift to natural products
Deal highlights
Deal summary
▪
Growing naturals in
a resilient market
▪
Large €12.1bn addressable market, growing 2-3% per year overall
Natural products are an important growth driver in the industry, driven by increasing interest in
natural, organic and sustainable food
▪
Food & Beverage end markets proved resilient during downturns, particularly as flavours and colours
are mission critical raw materials
▪
1,200 active customers at entry, consisting of local and regional FMCG producers
Fragmented and
sticky customer base
▪
Build-up platform
with senior team in
place
Buy-and-build
project
Strong stickiness of customers to flavour & colour suppliers (high risk of change of taste or product
appearance when changing suppliers)
Sourcing
Auction
▪
Acquisitions taking active customers to over 4,500 active customers today across all applications (c. 4x
entry)
Vendor
▪
Independent leading player in mid-market European natural food flavours & colours
Stake
▪
Proven track record of successful M&A growth
▪
Senior and committed executive team reinvesting a significant portion of their proceeds;
▪
▪
Management
80%
Acquisition EV1
€58.5 million
Six add-ons completed in 3 years: IPAM (I), Nactis (F), Create Flavours (UK), Taste Connection(UK), FIAS
(I) Pharmograna (GER) to create a pan European player
Entry multiple2
11.8x
Revenues grew by 4.6x (exit vs entry year) and EBITDA by 5.3x
Investment to date3
▪
Ability to address clients’ needs on a
bespoke basis, leveraging superior crosssell capability
▪
The positive evolution of Nactarome’s
sales mix (beverage, sweet) coupled with
initiatives in procurement and process
optimization led to an increase in gross
margins
335.7
▪
1.
2.
3.
4.
Nov 2018 / Feb 2022
Italy
(12.9)
0.4x
Investment date / exit
Food ingredients
Location
Performance update
MoC
impact
Sector
1.7x
0.1x
(0.1)x
3.1x
Impressive multiple expansion linked to
the successful implementation of
Ambienta’s “One Company” vision and to
Nactarome’s unique positioning as a
sustainable scalable M&A platform
Realised MoC / IRR4
€109.3 million
3.1x / 61%
Environmental thesis
▪
The food ingredient sector is undergoing a shift from
synthetic/chemical-based to natural ingredients
▪
Substitution entails a switch from non-renewable fossil
and inorganic raw materials to raw materials which are
per se renewable sources
▪
Group commitment to further expand its natural products
portfolio constitutes the most significant growth driver
▪
2021 Environmental Impact: 212 tons of Pollutants
Avoided
Acquisition EV for Aromata €58.5m in Nov 2018. IPAM EV of €30.8m, Nactis EV of €69.2m, Create Flavours EV of €40.3m, TasteConnection EV of £7.8m, and FIAS EV of €15m
Entry multiple for Aromata transaction. Blended multiple including add-on acquisitions equal to 10.6x
Includes add-on acquisitions as of Q3 2021 and pro forma for FIAS acquisition in November. Amount invested is evenly split between Ambienta II & III (€54.7m each)
Including expected earn-out
Ambienta Sgr - Confidential
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Case study: Namirial
Leading provider of SaaS digital trust solutions
Description: Namirial is a leading provider of SaaS regulatory solutions that enable the trusted and legally binding execution of transactions and business
processes in a completely remote and digital manner. Namirial focuses on applications that are intrinsically regulatory-intense, being generally referred to as
“RegTech”.
Deal highlights
Deal summary
▪
Fast growing market
Strong positioning,
scalable platform
Large, fast-growing market. The European e-signature market alone is worth EUR 1.7Bn,
growing at a 30% CAGR
▪
▪
Solid financial position, 90% recurring revenues. DTM growing at a 30% CAGR
Nascent but material international footprint with ability to serve clients across Europe.
Upside from scaling internationally and achieve a substantial multiple upside at exit
Strong opportunity for M&A. Add-on of Netheos (France) completed in Nov-21, add- on
of Evicertia (Spain with significant South American presence) completed in Feb-22 and
add-on of Bit4Id (Italy, Spain, India and Latam) completed in Apr-22
Primary deal with upside from the introduction of professional management and proper
organizational structure
115,3
102,7
•
Professionalization of the organization complete
during the first year
•
Strong growth, with 16% organic revenue CAGR
since the investment driven by 28% CAGR in digital
trust solutions, where Namirial has strong products
in a market with strong momentum
•
EBITDA growth driven by 85% gross margin and
operating leverage
•
€29m free cash flow generated since the acquisition
•
Largely self funded M&A campaign
55,3
29,5
33,4
16,0
EBITDA
EBITDA
Margin
2019A
2020A
2021A
2022B
29%
29%
29%
29%
Ambienta Sgr - Confidential 1.
2.
3.
Proprietary
Stake1
Financial profile (€m)5
14,2
Sourcing
Vendor
▪
Sales
Italy
Large, fragmented customer base of 65,000 clients across industries
Professionalisation
upside
Including co-investors. Ambienta III stand-alone stake is 60%
Including Namirial (€150m), Netheos (€35m), Evicertia (€17m) and Bit4Id (€73m)
Blended entry multiple including the Netheos, Evicertia and Bit4id acquisitions equal to 10.5x
EBITDA
4.
5.
May 2020
Location
▪
▪
Digital trust solutions
Investment date
Market is driven by ubiquitous growth in compliance, and need for simplicity, like
digitalization, which delivers a better customer experience as well as economic and
environmental benefits. Demand for digitalization accelerated in response to COVID-19
▪ Complete suite of software solutions and unique SaaS offering
▪
Internationalisation
upside
48,5
Sector
Founders
64.0%
Acquisition EV2
€275 million
multiple3
9.4x EV/EBITDA
Entry
Invested
capital4
2Q 22 valuation
€64.1 million
2.9x cost
Environmental thesis
▪
Digitalization is a sustainability megatrend
▪
By providing software which enables businesses to
digitalize, Namirial contributes to pollution control and
resource efficiency; it reduces the use of paper and the
need for travelling to in-person meetings, helping
businesses make significant savings of materials, of CO2 and
other polluting emissions.
▪
2021 environmental impact: 13,680 tons of Materials
Saved, 880,536 m3 of Water Saved, 10,690 Toe of Energy
Saved, 33,708 tons of CO2 Emissions Reduced, and 5,458
m3 of Land(Fill) Saved
Including co-investors. Ambienta standalone amount invested is €60.1m
Including Namirial, Netheos, Evicertia and Bit4Id from 2021
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EIA - Environmental Impact Analysis
Case Study: Namirial
Internal Sources
Resource Efficiency Metrics
Unit of
measure
ment
Input data
2021
Metric
Unit of
measure
ment
2020
2021
A
Digital Certificates Issued
#
5,349,026
B
Remote Signatures
#
780,843,588
C
Number of equivalent graphic
paper sheets for certificates and
signatures
#
4
Energy Saved
Toe
7,388
10,690
D
Incremental digital devices used
#
602,282
E
Digital documents archived
#
490,573,100
Water Saved
m3
608,531
880,536
F
Number of equivalent sheets not
archived
#
5
tons
9,454
13,680
G
Electronic device working hours in
one year
Hours
2040
Land Saved
m2 or m3
2,082
5,458
Food Saved
tons
Materials Saved
EIA Model
Third party Sources
Input data
H
I
L
M
N
O
P
Q
R
H
G
Weight per sheet of paper
type A4
Percentage of recycled paper
raw material used for
graphic paper
Water withdrawal in paper
production
Energy saved per sheet
replaced
Electronic device energy
consumption
Conversion Toe to MJ
CO2 SAVED per sheet
replaced
CO2 emission for electronic
devices
Graphic paper recycling rate
in Europe
Specific volume of office
paper in landfill
Year for paper
decomposition in landfill
Ambienta Sgr - Confidential
Unit of
measurem
ent
2021
Source
ton / sheet
0.000005
ISO 536
%
13%
CEPI
m3 / ton
56
Stora Entso
Toe / sheet
3.53011E-06
SusTEACH
MJ / hour
0.014
SusTEACH
41,840
Internation
al Metric
System
MJ / Toe
Kg CO2 /
sheet
Kg CO2 /
hour
%
Ton /
m3
Years
0.0115
SusTEACH
0.002
SusTEACH
71%
CEPI
0.843
EPA
5
NSW Dept.
of Industry
Pollution Control Metrics
Metric
CO2 Emissions
Reduced
Air Cleaned
Pollutants Avoided
Water Cleaned
Materials Recycled
Biodiversity
Preserved
Unit of
measure
ment
tons CO2
equivale
nt
m3
2020
2021
23,295
33,708
tons
m3
tons
15
ESG in Action programme – Case Study: Namirial
Materiality Analysis
High
HIGH PRIORITY
Diversity program
Talent management and
retention
Likelihood of impact
Employee training &
development
Corporate governance training
Internal risk analysis
Talent Attraction
Customer Success
Corporate governance adoption
Data centre energy use
Low
Waste Management
KEY
Environment
Social
Governance
Environmental & Safety management
Low
Ambienta Sgr - Confidential
Degree of impact
High
16
ESG in Action programme – Case Study: Namirial
Action Plan
Area
A. Talent
management
and
retention
B. Employee
training &
development
C. Corporate
governance
training
D. Internal risk
analysis
E.
Talent
Attraction
Identified actions
Timeline
Development with Mercer of a reward strategy and adoption of banding
for a better definition of roles in the organization chart
Extension of the relationship with Welfarebit (e.g. for integration into the
MBO bonus) and courses and actions aimed at the employee's well-being
E-learning courses for 81/08, English language courses 1: 1 / class,
business English courses
Classroom courses
12/2021
AWS certification courses
12/2021
Courses for technical skills and developers
6/2022
Define a communication campaign on various topics
12/2021
Make sessions with the first reports to briefly explain what it is and
sessions for all employees in force
Provide an ad hoc training course for new entrants
12/2021
Insurance coverage in case of data breach
6/2022
Intellectual Properties policy and communication
6/2022
Cyber security, Data Protection and Privacy training
6/2022
Adoption of new certification to be aligned with competition (ISO 20000
Itil, ISO 22301)
EVP definition (Employer Value Proposition)
12/2022
Employer Branding Initiatives (Job fairs, University agreements, social
communication)
Established a solid candidate experience-based recruitment process
12/2021
Structured onboarding program
12/2021
Top employer/great place to work certifications
12/2022
Ambienta Sgr - Confidential
Area
F.
Customer
success
06/2022
12/2021
12/2021
G. Corporate
governance
adoption
12/2021
12/2021
H. Gender
equality and
diversity
program
Identified actions
Timeline
Mapping of the Existing Process and definition of a structure at group
level
Identify and install a Service desk support software to cover the complete
flow for the different customers target
Definition of KPI to be monitored
12/2021
Start a customer survey campaign with the goal to measure the customer
satisfaction and the NPS
Improving the brand reputation on the network
12/2021
Internal
Initiate internal audit processes to monitor the correct adoption of
governance procedures.
Evaluate extension of 231 abroad by finding an analogy or translating it
by removing the regulatory references (it becomes an internal code of
ethics)
External (customer communication)
Improve communication and sharing of corporate governance externally
by adding 231 and the Legality Rating on the site and using it as
marketing to increase Brand reputation.
Salary analysis between sex, between regions, between positions towards
the outside and towards the inside.
Set yourself goals in the selections - GENDER, nationality, culture, religion
12/2022
12/2021
12/2021
12/2021
12/2022
12/2021
12/2022
12/2021
17
ESG in Action programme – Case Study: Namirial
Monitoring
Unit of
Measurement
20211
Employees who completed data
protection and privacy training
%
Activities
scheduled for
2022
Number of GDRP complaints
#
0
%
8%
%
95%
Company specific KPIs (selection)
Employees benefiting from incentive
scheme
Employee satisfaction survey
Unit of
Measurement
2020
20211
kWh
837,913
1,521,226
kWh / eur (k)
15.2
20.9
m³
2,421
n.a.2
m³/ eur (k)
n.a.
n.a.
Eur
0
0
Training Expenditure per
Employee
€/empl.
71
248
Job Creation
# empl.
440
515
Cross Portfolio KPIs
Total Energy Consumption
Energy Consumption / Revenues
Total Water Consumption
Water Consumption / Revenues
Environmental CapEx
Ambienta Sgr - Confidential
18
Proven delivery of environmental impact and financial returns
Ambienta portfolio environmental impact (EIA1)
Realised investment performance (€m)2
Resource Efficiency
679
MATERIALS
SAVED
ENERGY
SAVED
WATER
SAVED
LAND(FILL)
SAVED
FOOD
SAVED
2,030,000 tons
~262,000Toe
~132,000 ml m3
~1,833,000 m3
~47,700 tons
equivalent to
944,000x
SUV’s weight
equivalent to
5,000,000x
refrigerators
annual
consumption
equivalent to
97x
New York City
annual
consumption
equivalent to
~13,000,000 people
annual
waste production
equivalent to
~91,000
Persons annual food
consumption
Pollution Control
230
CO2 EMISSIONS
REDUCED
AIR
CLEANED
POLLUTANTS
AVOIDED
MATERIALS
RECYCLED
WATER
CLEANED
BIODIVERSITY
PRESERVED
6,700,000 tons
4,600 km3
246,000 tons
344,000 tons
~ 34,600 ml m3
-
equivalent
to 82% of
Milan’s annual
recycled waste
equivalent
to 190 ml x
household annual
consumption
equivalent
to 3,200,000x
passenger car
annual emission
equivalent to
77km air column
above
Manhattan
3x MoC
30% IRR
equivalent
to 1,300,000x
EU-28 citizens
daily hazardous
waste
Capital Invested
Total Value
Fund II
1.
2.
Fund I
EIA: proprietary methodology to measure environmental impact. Cumulated environmental results for Ambienta’s private equity portfolio since inception. As at 31.12.2020
Ambienta buyout & growth investments only, as at 31.03.2021
Ambienta Sgr - Confidential
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