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Challenging business school students to use financial
innovation and investment strategies to create returns and
scalable impact
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4th year of I3C (now MS –SIC) 2011: NYC @ JPM
2012: SF @ SF Federal Reserve Bank
2013: Washington DC @ World Bank
2014: NYC @ Morgan Stanley
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39 schools, globally
72 teams
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112 prelim round judges
17 final day judges, representing $10’s billions in investment capital
24 investor mentors
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Inspiring & motivating: Janine Guillot, ex CALPERS Operating CIO, on why institutions are driving sustainable investing
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MS-SIC winner: Fresh Coast Capital (Kellogg)
UC Berkeley, Haas School
Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University
Johns Hopkins School of Advanced International Studies
Yale School of Mgmt, Yale School of Forestry & LBS
Said at Oxford
Darden at University Virginia
Sustainability Mgmt at Columbia
INSEAD
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Source: EPA.
Brownfields
“Abandoned, idled or underused properties whose redevelopment is encumbered by real or perceived
contamination.”
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Sources: GAO, HUD.
A $650 billion problem
…450,000+ brownfields nationwide
5,000,000+ acres of abandoned industrial sites…
…which would cover 60 of our largest cities
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Brown-to-green impact
Sources: De Sousa, C. & Wu, C. , GWU, Greatecology.com.
Property Values
Tax Revenue
Smart Growth
Environmental Justice
5-15% increase for properties up to ¾ mile from the site
$11B annual local tax revenues across 500 cities
1 acre brownfield redevelopment = 4.5 acres of countryside saved
Brownfields are disproportionately located in low-income communities
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Sources: Ron Zalesny, U.S. Forest Service.
The hybrid poplar solution
Fast growing trees that offer…• Profitable timber products within 4 years• A natural form of land detoxification• Land value appreciation
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Fresh Coast Forest Fund
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Why brownfields don’t move
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Poplar trees provide an elegant solution
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Our model brings together existing strategies
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Source of Fresh Coast returns
Source: Greenwood Resources.
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Source of returns: pulp, paper and timber
Location of Wood-Using Mills
State of the Industry
Proximity to Market
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Source of returns: biomass power
Source: U.S. Department of Energy.
Current Biomass Power Facilities• Every 4 years, poplars are harvestable for wood products that supply fuel for biomass power plants and modular power facilities
• 38M tons of wood currently used for biomass power to supply U.S. electric consumption, producing 5x the wattage of solar PV
• $1.2B in U.S. spending on biomass electric power in 2013
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Source of returns: land value appreciation
Source of Returns
State Agencies’ Approved Remediation Vendors Lists
Municipalities seeking…• Productive use• Remediation• Redevelopment potential
Corporate polluters and private land owners seeking…• To satisfy EPA• Improve land value• Redevelopment potential
Customers
$0 current land value
Vacant land now productive
Trees green the community
Remediated contaminants
• Equity Promote giving Fresh Coast 15-20% of appreciation value at sale or reassessment
• Remediation fees
Monetizing AppreciationFuture value: Tens of thousands of $$
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Investment criteria
At least 500,000 acres for Fresh Coast Capital
Operating industrial
land needing
remediation
450,000+ brownfield
sites
5,000,000+ acres vacant
land
1. Sites should not have significant structures
2. If sites are contaminated, should be approved for remediation through planting trees
3. Sites should be about 40 near-contiguous acres
4. Sites should be near a profitable market for forest products
5. Sites should ecologically support growth of poplar trees
6. Site owners should be willing to wait 8-16 years for development
Available Acreage
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Scaling the fund
Series I Series II
Size $50 Million $250 Million
Acreage 25,000 125,000
Investment Manager Fresh Coast Capital
Fund Name Fresh Coast Forest Fund
Fund Structure Evergreen Fund with 10-year renewal periods
Fee Structure 1% management fee, 20% performance fee
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Powerful returns compete with typical timber…
Sources: Treasury.gov, Greenwood Resources.
Forestry returns70% pulp, paper, timber
20-year real returns (net)
Forestry Ops. 8.1%
Total return 10.8%
Real Returns 10yr. 20 Yr.
Treasury Real Return (TIPS) 0.6% 1.0%
Typical timber returns 5%– 8%
Fresh Coast Forest Fund 6.5% 10.8%
Asset Characteristics• Low liquidity • Current income• Low correlation with other
asset classes• Inflation hedge• Tax advantages
Land appreciation &
remediation
Forestry returns30% biomass
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A $5M investment: current income + long-term returns
$(5)
$(4)
$(3)
$(2)
$(1)
$-
$1
$2
$3
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19Land Payouts
Timber Payouts
Biomass Payout
20-year investmentIRR: 10.8%
Cash multiple: 3.4X
10-year investmentIRR: 6.5%
Cash multiple: 1.7X
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Return enhancement opportunities
Environmental Impact
Carbon credits
Stormwater Management
Government Grants
Other Poplar Products
Biochar
Cellulosic ethanol
Diversifying Crops
Willows
Switchgrass
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A profitable and impactful opportunity
Environmental impact
Community impact
Competitive Returns for
Investors
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Special thanks to our advisors
US Environmental Protection Agency
• Adam Klinger, Repowering America’s Land
• Ann Carroll, Office of Brownfields and Land Revitalization
• Gail Cooper, Office of Brownfields and Land Revitalization
• Donna Perla, Office of Research and Development
• Linda Fiedler, Technology Assessment Branch
• Dan Powell, Technology Integration Branch
Timber Management & Brownfield Redevelopment
Biomass EnergyInvestment Management & Northwest Indiana Development
• Jeff Nuss, Greenwood Resources• Paul Young, Conservation Forestry• Ron Zalesny, Poplar
phytoremediation expert, US Forest Service
• Marv Marshall, Restore the Earth• Donna Duscharme, Delta Institute• Todd Parker, Delta Institute• Eve Pytel, Delta Institute• Todd Davis, Hemisphere
Development• Scott Sherman, Hemisphere
Development• Blase Levin, Technical Assistance to
Brownfields
• Bill Holmberg, Biomass Coordinating Council, American Council on Renewable Energy
• Amanda Martinez, Bull Moose Energy
• Bryce Stokes, Department of Energy, Forest Operations Research
• Ed Gee, U.S. Forest Service, Woody Biomass Utilization
• Phil Hetzner, Keystone Industries
• George McClellan, Keyston Industries
• Dave Chen, Equilibrium Capital Group
• Saurabh Narain, National Community Investment Fund
• Jason Scott, EKO Asset Management
• Michele Oertel, Indiana Finance Authority Brownfield Program
• Jack Eskin, NW Indiana Regional Planning Commission
• Joe Van Dyk, City of Gary Redevelopment Director
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Contact us
http://www.freshcoastcapital.com
Twitter: @freshcoastcap