gef presentation may 2017 - global environment …...gef presentation confidential 2 market and key...
TRANSCRIPT
MDBs
Sustainable investing is an increasingly mainstream area that will impact MDB’s positioning in the market
Fina
ncia
l Ret
urns
Development Impact / Sustainable Investing_
_
+
+
SRI Players
Private Sector Investors
Partnership Potential
There is significant partnership potential with institutions that have common goals and complementary capabilities
Current space
Trends
Reputation + Sustainability
Drivers
Note: For illustrative purposes. Several sources were consulted but exact position/proportion of shaded areas could vary
Call for all MDBs
3
Market: Growth potential/upside particularly for those who can address current bottlenecks
4
CurrentMkt Size
US 120 bn*
Investors interest inenvironmental finance
investmentsUS 620 bn*
Yearly investment needs in environmental finance
US 780 bn*
* Estimates based on New Energy Finance publications, EBGC calculations of demand from Pension funds, SWF, insurance companies, other institutional investors, HNWI and Family Offices, Stern Report and World Bank “Winds of Change” estimates
Exposure to regulators and policy makers and skills that go beyond the traditional banking/investment managers
Cross disciplinary team with ability to build synergies across environmental sectors: investors, knowledge, network, brand reputation
Strong network and access to niche opportunities
Tailored and customized risk approaches
Regulatory uncertainty
Information and knowledge gaps
Lack of scale and high transaction costs
Infant sector with underdeveloped risk tools
… that requireBottleneck factors …
(1) CAGR 2011-2016
Allocation & Growth Potential1InstrumentsSources
Public money Offset money Private moneyLegend: NE Not Estimated
Private funding sources
~55
Carbonmarkets
2
Carbontaxes
7
Generaltax revenues
NE
Offset markets and voluntary
3
Globalcapital
markets55+
Domesticpublic
budgetsNE
Bilateralagencies/
banks24
Multilateralagencies/
banks15
Public funding sources
~42
Policy incentivesNE
Carbon Offset flows
3
Grants4
Concession loans
13
Market rate loans
56
Equity18
2%
10%
Privatesector
finance55
Notes:
($, bn)
Source: Climate Policy Initiative (CPI) , ADB. Boxes and flows not drawn to scale
Climate change finance market
5
A vehicle that will mobilize capital at scale from global public and private sector investors …
Fund$500m
Direct Investments Co-investments
… to invest in environmental finance in Asia …
+
… designed to maximize impact and complement existing initiatives in this space.
PE ClimateFund
Clean energy initiatives
… through an unique investment management platform that combines private operators and MDBs with equity, debt and grant facilities …
Fund Manager
7
The Climate PPP Fund Concept
12
34
Traditional Private Equity FundsDifferentiator factors
Environmental, Socialand Governance
4
No in-house capabilities;Typically dependent on third parties
Reference institutions in ESG regulators standards1; Socially Responsible Investment Vehicle
Risk-mitigation
3Unmitigated exposure to sovereign and
regulatory risk
Unique set of potentially risk-mitigating facilities (guarantees, b-loans, grants), and access to policy
makers
Fee structure
5
Traditional 2/20 fee structureCompetitive 1.5/15 fee structure and significant
anchor committments
Comparison with other Asian Resource Efficiency PE Funds
8CONFIDENTIAL
1. Refer Appendix section ESG & Reporting
ACP
Size and opportunityAverage USD 200 mn; Limited either by scale
(fund size) or scope (geography/sector)Up to USD 500 mn; Diversification across sectors,
regions, and investment participations
1
Deal sourcing and track record
Mostly first time managers with presence limited to 1 or 2 markets
Combined team/platform augments traditional deal-sourcing across the whole region;
>15 years track record in this space
2
Vehicle‘s suitability to addressmarket constraints
2Deployment ratios below
expectations due to market conditions and disbursement criteria
Recognized by World Economic Forumas highly applicable to market conditions:one-stop shop for debt, equity and grants
Knowledge and technology transfer
3Limited reach/network within cleantech
communityPartnerships with industry players to promote
FDI and knowledge/technology transfer
Reach
4Policy/regulatory work separated from
investment arm; Limited reach beyond DFIs and government institutions
Financial facilities combined with policy dialogue; Diverse set of investors & players operating under a common
platform
Returns
5Primarily loans and grants, often not
reinvested into this spacePrivate equity, commercially-driven returns model with revolving effect
Leverage/Resource mobilization
1Marginal % of private
sector investorsTargets multiper effect of >200x
Impact
6Limited due to reach, scope, and lack
of private sector leverage effectUnique impact on job creation (>5,000 jobs/year),
CO2 reductions (2.5M TCO2/year),
ACP Differs from Existing Public Sector Facilities
9
ACPDifferentiator factors Pure Public Sector Facilities
Full Fledged Investment Platform in PE Environment Finance
10CONFIDENTIAL
+
Debt
Grant
Project finance
Guarantees
Dedicated TA
Other climate change related facilities managed by ADB
+Support Financial Facilities
PositiveDevelopmental and
Environmental Impact
Country dialogue
Regulatory framework
Political risk mitigation
ESG Assessment
Dedicated resources
Socially Responsible Investing (SRI) compliance
Climate Change Mitigation Advocacy
Historic project/country information
Network and reach
Support Knowledge Facilities
Fundraising: Institutional investors, HNWIs, family offices, public institutions, sovereigns
Deal Sourcing: > 30 offices in the region (combined Robeco, ORIX and ADB)
Execution: Team of > 10 based in Hong Kong, supported by Partners’ platforms
Portfolio Management: Unique capabilities (co-financing, ESG, regulatory risk)
InvestmentProgram
Return Objective >20% gross1
Note: In gray, ACP specific add-ons1. This target return is based on gross returns, and does not include fees or charges, which could significantly impact the return of such investment. This target return represents a net return equivalent of
approximately 15% per annum. Target returns are provided solely for illustrative purposes
ACP
ADB Can Play a Pivotal Part in the Capital Structure of ACP Deals
11CONFIDENTIAL
Having ADB in the capital structure may not only potentially help bridge an equity / debt gap, but also help attract other lenders
Sponsor
Investment
$$
ADB
Sponsor Equity
ACP Equity
Sub-debt / Mezz
Other Financiers
Capital Structure
$ACP
ADB Senior Debt
Market Positioning
12CONFIDENTIAL
Infrastructure
Project Finance /Loan instruments
Retu
rn
Risk_
_
+
+
ACP
Venture Capital
Win
d/So
lar
Hyd
ro/G
eoth
erm
al
Bio
mas
s/ B
iofu
els
Bui
ldin
g ef
ficie
ncy
& R
etro
fits/
Li
ghtn
ing
Agr
icul
ture
Rec
yclin
g/ W
aste
Man
agem
ent
Wat
er T
reat
men
t/
Dis
trib
utio
n
Dis
trib
utio
n/ S
mar
tG
rids
/ St
ora
ge
Clea
ner
Ener
gy/
CHP
Bat
tery
Tec
h&
V
ehic
les
Fore
stry
/Fi
sher
ies
China
India
Malaysia
Indonesia
Thailand
Philippines
Pakistan
Vietnam
Bangladesh
Kazakhstan
Mongolia
Cambodia
Other Asian Countries
Core Opportunistic
Core
Opp
ort
unis
tic
High Medium Low
Core and Opportunistic Markets
13CONFIDENTIAL
ACP Expected Development Impact
CP3Environment, Social &Governance (ESG)
compliance
Public sector track record
At entrance/investment relying in most cases on 3rd parties implementation
Private sector track record
At entrance/investment relying in most cases on 3rd parties implementation
ACP
ADB in the driver’s seat with direct impl. responsibilities on ESG issues
Greenhouse gas emission
reduction (tCO2-eq/year)
Public sector yearly average
18,560,131
Private sector yearly average
3,268,145
ACP expected yearly average
2,500,000
Job creation (#) / Taxes
generated ($, mn)
Public sector operations
NA
Yearly private sector operations impact
4,391 jobs / $472m paid taxes
Yearly ACP impact
> 2500 jobs / >$500m paid taxes
Public sector avg catalytic effect CP3 catalytic effect
Total multiplier effect of $100m
ADB Investment
Public sector average catalytic effect Private sector average catalytic effect ACP catalytic effect
Typical ADB Public Sector Investment CP3Typical ADB Private Sector Investment ACP
14
Geo exposure & promotion of
regional integration
Average project
Mostly country focus
Average project
Mostly country focus
ACP
Regional
ACP Expected Development Impact (Cont.)
15
ADB Public Sector Operations ADB Private Sector Operations ACP
Definition of space and exposure to new
markets
Average project
Climate change mitigation oradaptation
Average project
Mostly renewable energy projects
ACP
In addition to RE/EE, introduction of athird pillar-nature based assets (sust.
agri, water, forestry, fisheries)
Traditional Interventions
Knowledge dissemination, technicalassistance, policy dialogue and public
financing
Scope of interventions and resources
Traditional Interventions
Participation in commercial viableprojects originated by private sector operators. ADB intervention mostly
as financier
ACP platform
Combination of policy dialogue, grant,debt and equity facilities under the
same platform. Exclusively dedicated team active along full
invest. cycle
Private investors participation (%)
Average project Average project ACP
< 10% < 40% < 60%
Private Sector InvestorsDFIs & Public Investors
Average project CP3Foreign direct investment
promotion (%) < 20% < 30% < 70%
Average project Average project ACP
Non-Reg. Inv. / FinanciersLocal Investors
Important Disclosures
16CONFIDENTIAL
There can be no assurance that actual results will not differ materially from those described in such statements because of various factors. In considering any investment or other performance information contained in this presentation,prospective investors should bear in mind that past performance is not necessarily indicative of future results and there can be no assurance that the fund will achieve comparable results. The prior investment results and returns for variousentities set forth herein are provided for illustrative purposes only and may not be indicative of the fund’s investment results. The nature of, and risks associated with, the fund’s investments may differ substantially from those investmentsand strategies undertaken historically by such entities. There can be no assurance that the investments of the fund will perform as well as past investments managed or advised by RobecoSAM or its affiliates. All written and oral forward-looking statements attributable to the fund or persons acting on its behalf subsequent to the date of this presentation are qualified in their entirety by this provision.
In regards to the ‘track record’ section and all valuation projections and other estimates in this presentation, including estimates of value, returns or performance, these are forward-looking statements, are based upon certain assumptions,and are preliminary in nature. Actual results are difficult to predict and may depend on factors that are beyond the fund’s control. Actual events may differ from those assumed. Other events which were not taken into account may occurand may significantly affect the projections and estimates contained herein. Any assumptions should not be construed to be indicative of the actual composition of the portfolio, of the actual range, magnitude or timing of changes in themarket value of the fund’s investments or the actual amount and timing of the expenses and liabilities of the fund. Certain of the assumptions may, in certain cases, illustrate results that are inconsistent with the result that are likely tooccur. Some important factors which could cause actual results to differ materially from those in any projections and estimates contained herein include the following: changes in interest rates or financial, market, economic or legalconditions; differences in the actual allocation of investments from those assumed herein, among others.
There can be no assurance that estimated returns or projections will be realized or that actual returns or results will not be materially lower than those referred to herein. Such estimated returns and projections should be viewed ashypothetical and do not represent the actual returns that may be achieved by an investor. Investors should conduct their own analysis, using such assumptions as they deem appropriate, and should fully consider other availableinformation, including the information described under ‘investment considerations and risk factors’ in the memorandum in making an investment decision.
This presentation may contain estimated valuations of certain investments made by RobecoSAM directly or indirectly through investment partnerships it has established. These valuations were estimated by RobecoSAM and, due to thenature of the investments, these estimated valuations might have differed had they been made as of any date other than the relevant one set forth herein.
This presentation does not provide sufficient data to evaluate the merits and risks of an investment in the fund and is neither an offer to sell nor a solicitation of an offer to purchase an interest in the fund. Such offer or solicitation must beaccompanied by a confidential information memorandum (provided to qualified offerees only) that describes the risks, conflicts of interest and fees and expenses relating to an investment and you should read those documents carefullybefore you invest in the fund.
Past performance is not an indication of future results. There can be no assurance that the fund will achieve its objectives.
Returns reflect the IRR of similarly managed funds which are no longer being offered to investors. Net returns reflect the reinvestment of dividends (if applicable) and other earnings and are net of transaction costs and investmentmanagement fees.
The fund is not and will not be registered under, and an offering of interest in the fund will be made in reliance upon an exemption from, the registration requirements of the securities act of 1933, as amended and state securities laws foroffers and sales of securities which do not involve any public offering. The fund is not registered and does not intend to register as an investment company under the investment company act of 1940, as amended, and is not subject to thesame regulatory requirements as mutual funds.
An investment in the fund is speculative, involves significant risks and is suitable only for those persons who can (i) bear the risk of losing all or a substantial portion of their investment; and (ii) who have a limited need for liquidity in theirinvestment as there are restrictions on selling or transferring interests in the fund, including but not limited to set redemption dates, notification requirements, potential withdrawal fees and the absence of any secondary market for thefund. The fund may distribute to redeeming investors, securities that may not be readily marketable. The fund and investee funds (i) engages in leveraging and other speculative investment practices that may increase the risk ofinvestment loss; and (ii) may have volatile performance. The fund’s and investee funds’ high fees and expenses may offset the fund’s trading profits. The fund is not required to provide periodic pricing information to investors, and mayinvolve complex tax structures and delays in distributing tax information. Tax exempt investors may be subject to ubti. The performance fee may create an incentive to make riskier investments.
The success of the fund depends primarily on investment manager’s ability to choose the underlying fund managers as the multi-manager approach delegates control of the fund’s investments to persons other than the manager of the fundof funds. The success of a fund of funds depends on the ability of the manager of each underlying fund to select investment opportunities, to correctly interpret market data and otherwise implement the underlying fund’s strategy.
The fund and investee funds may utilize highly speculative investment techniques, hold highly concentrated portfolios, control positions and illiquid investments and participate in workouts. The availability of investment opportunitiesgenerally will be subject to market conditions. To the extent a portion of committed capital is not invested, the fund's potential for return will be diminished. The fund and investee funds may invest in portfolio companies that are newventures. These investments are subject to greater risk of loss than those in companies with more stable operations or financial condition. The fund and each investee fund may have limited or no operating history upon with an investormay evaluate likely performance. Numerous other private equity investors heave raised or are raising new capital for investments. This could increase competition for attractive investments and make it difficult for the fund to achieve itsobjectives. Investments made with non u.s. dollars will be subject to fluctuations in the exchange rate which may have an adverse effect on the value, price or income of an investment. Funds typically invest in securities that are not readilymarketable. Valuation procedures may be subjective in nature and may not reflect actual values at which investments are ultimately realized. The investment manager relies on the underlying managers’ representations that the valuationis fair and the disclosure is complete. The fund and investee funds may invest in securities of foreign companies which will expose the fund to additional risks including exchange, political, social, risk, foreign tax risk, lack of uniformaccounting standards, price volatility, potential illiquidity, higher transaction costs and less government supervision of exchanges. Investments in companies of Emerging Markets may increase these risks.
The Investment Manager to the fund is Robeco Institutional Asset Management, US, Inc. ("RIAM, US"). Securities offered in the US through Robeco Securities, LLC, ("RSec") member SIPC. RIAM US, SAM and RSec are affiliated firms.RobecoSAM may have business dealings, in addition to fund investments, with some of the managers mentioned in the presentation.