ener tech capital wally hunter, managing partner june 5 2006 · wally hunter – 2005, 17 years rbc...

© EnerTech Capital, 2006 - Confidential

ENERTECH CAPITAL

Wally Hunter, Managing Partner

June 5th 2006


1 ENERTECH CAPITAL

Track Record – 10 years of success doing the same th ing

� Founded in 1996� $290 Million dollar US Venture Fund focused on investments

emerging energy technology companies� Offices in Philadelphia and Toronto

The FundThe Fund

ManagementManagement

ECP II LimitedsECP II Limiteds� HarbourVest� Thomas

Weisel� Permal

� Scott Ungerer – 1996, Founder, 16 years electric utility management

� Wally Hunter – 2005, 17 years RBC venture and energy tech investing

� Bill Kingsley – 2000, 20 years advanced networking and communications

� Tucker Twitmyer – 2002, energy tech PE since 1999

� HydroQuebec� Pepco� AES/IPALCO

� EDF� Batelle� Stephens

— Background —


2 ENERTECH CAPITAL

EnerTech selected as Cantor Fitzgerald’s venture pa rtner

— Cantor’s Strategy for New Energy —

Alternative & New Energy Technology

(Venture Fund Partner)



Alternative Energy Assets (Asset Fund

Partner)


Partner)






Partner)

Alternative Energy Assets

Emissions TradingEmissions Trading

New Energy Platform

Asset Finance, Advisory, and Merchant Banking Strategy

Sector growth driven by the confluence of environmental, energy commodity, economic, and regulatory dynamics

trading through CO2e and Environmental Brokerage Services

Venture/PE/Capital Markets Strategy

New technologies drive incremental valuation and tap new opportunities

Trading and Brokerage Strategy

Cantor is a global leader in carbon and emission credit

New technologies drive incremental valuation and tap new opportunities


3 ENERTECH CAPITAL

Strategic Focus – Lower cost energy

EnerTech’s Sweet

Spot:

Technologies that

Deliver Lower Cost

Energy

Direct Costs

Indirect Costs

— Creating Alternatives Inside the Efficient Frontie r of Energy Costs —


4 ENERTECH CAPITAL

Becoming More Cost Effective

Improvements in technology and mass production will drive costs down further


5 ENERTECH CAPITAL

Primary objective - Putting financial returns first

Financial ReturnsFinancial ReturnsTop QuartileTop Quartile

30% IRR30% IRR+5%+5%--8% over S&P8% over S&P

DiversificationDiversificationfor established venture investorsfor established venture investors

HedgeHedgeagainst increasing energy costsagainst increasing energy costs

— Value Drivers —

Strategic ValueStrategic Valueprogram specific to the LPprogram specific to the LP


6 ENERTECH CAPITAL

Incumbent AssetsIncumbent Assets

Alternative AssetsAlternative Assets

Fossil FuelsFossil Fuels Electricity / PowerElectricity / Power

Investment Landscape – Diversified playing field

— Value Migration Map and Select Portfolio Companies —


7 ENERTECH CAPITAL

“Cleantech Investment: Patterns, Performance and Prospects”

June 5, 2006

Nicholas Parker, ChairmanCleantech Capital Group LLC


8 ENERTECH CAPITAL

Cleantech Venture Network� The Cleantech Venture Network™ LLC is a membership organization bringing insight,

opportunities and relationships to investors, entre preneurs and service providers interested in clean technology.

� Introduced the "cleantech" concept in 2002 and have since popularized it as a viable investment category.

� Principal office in Ann Arbor, Michigan with a pres ence on US West Coast, Australia, Canada, China and Europe.

� Provide information products, related services, and the Cleantech Venture Forum™ series of events, in which a cumulative total of ne arly 1800 investors have participated and over $400M has been raised by presenting compan ies

� Serve over 900 affiliate investor members worldwide . We have tracked more than $8 billion invested in cleantech ventures, over $94 bi llion in M&A transactions and over 100 IPOs. We have sourced more than 500 deals.

� Cleantech Venture Network ™ is part of the Cleantec h Capital Group LLC


9 ENERTECH CAPITAL

Cleantech investment by Quarter 1999-2005

Cleantech is growing as an investment category: Now receiving 9+% of all VC in North America

U.S. and Canadian Cleantech Venture Deals by Quarte r and as a percentage of total VC (by amount), 1999-2 005

5%

6%5%

3%

1%1%2%

3%

2%1% 1%

1%

2% 2%2%

6%6%

5%5%

4%

5%

4%4%

5%

6%

4%

7%

9%

0

100

200

300

400

500

600

700

800

900

1999

Q1

1999

Q2

1999

Q3

1999

Q4

2000

Q1

2000

Q2

2000

Q3

2000

Q4

2001

Q1

2001

Q2

2001

Q3

2001

Q4

2002

Q1

2002

Q2

2002

Q3

2002

Q4

2003

Q1

2003

Q2

2003

Q3

2003

Q4

2004

Q1

2004

Q2

2004

Q3

2004

Q4

2005

Q1

2005

Q2

2005

Q3

2005

Q4

$ US m

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%


10 ENERTECH CAPITAL

Cleantech Investments1999-2005

Cleantech Periods, $ invested & number of deals

$4,944$3,233

618

363

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Q1 1999 - Q4 2001 Q1 2002 - Q4 2005

Bubble and Burst Learning and Diversification

$US

m

0

100

200

300

400

500

600

700

Num

ber

of d

eals

$ invested US m

Number of deals

Europe is about 40% and Asia 10% of North America


11 ENERTECH CAPITAL

2006 Onward – Growth & ROI

Three periods of cleantech, $ amounts and numbers o f deals invested Q 1999-Q2 2005 and projected for Q3 2005-Q 4 2009

$3,233 $4,944 $8,487

618

1,489

363

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Q1 1999 - Q4 2001 Q1 2002 - Q4 2005 Q1 2006 - Q4 2008

Bubble and Burst Learning and Diversification Growth and Returns

$US

m

0

200

400

600

800

1,000

1,200

1,400

1,600

Num

ber

of d

eals


12 ENERTECH CAPITAL

Can Cleantech Make Money?

� Report released in late March 2005

� 67 initial public offerings: 730 M&A transactions i n 30+ countries

� Estimates Cleantech IPOs yielded returns to pre-IPO investors of 5.5x, European venture-backed IPO generated returns of over 8x.

� Estimates overall returns on cleantech M&A transactions were 4.3x on invested equity, based on more than $94 billion in transactions tracked over the past 2 decades

� A hypothetical portfolio of cleantech venture inves tments delivered an estimated IRR of approximately 30%. (Assumed 40% of the portfolio’s investments were written off and an ave rage holding period of five years.)

Cleantech Venture Investment – Patterns & Performanc e


13 ENERTECH CAPITAL

Incumbent AssetsIncumbent Assets

Alternative AssetsAlternative Assets

Fossil Fuels: Fossil Fuels:

Higher PricesHigher PricesElectricity / Power:Electricity / Power:

More DemandMore Demand

•• Alternative FuelsAlternative Fuels•• Converted FuelsConverted Fuels•• Fuel HandlingFuel Handling

•• Renewables Renewables •• StorageStorage•• Advanced NetworksAdvanced Networks

Technologies used in:Technologies used in:•• ExplorationExploration•• Extraction Extraction •• Remediation Remediation

•• Intelligent GridIntelligent Grid•• EmissionsEmissions•• Power Management Power Management

Target Investments – Specific plays we are running f or ECP III

— Examples of EnerTech III Target Areas —


14 ENERTECH CAPITAL

The Next Industrial Revolution

� Cleantech is emerging as the enabling technology of modern industrial society: the next and necessary wave of venture innovation in a natural resource constrained world.

� Alongside the information revolution is an industrial revolution reshaping the design and manufacture of almost ever ythingthat we see around us. The disruptive products being developed today have significant improvements over the old because they:

�Are lighter, smarter and stronger .

�Are cheaper to manufacture and operate.

�Are less carbon-intensive and more energy efficient

�Offer greater service utility per unit of material input

�Enable virtually zero waste and/or emissions


15 ENERTECH CAPITAL

Conclusions

� Investments in Energy Technology are now one of the key strategic focus areas for a significant number of large multinational companies. Examples: General Electric and BP

� Venture markets in energy technology and Cleantech provide real returns to investors and is established as a key asset class.

� Significant new opportunities for investments in emerging technologies that provide a double bottom line.

ener tech capital wally hunter, managing partner june 5 2006 · wally hunter – 2005, 17 years rbc...

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