is the hype over? - Syncap

Second quarter 2010
CLAIRFIELD REVIEW
A publication of Clairfield Partners: leaders in mid-market M&A and corporate finance in Europe, the Americas, and Australia
Renewable energy: is the hype over?
With subsidies on the wane, green businesses must stand on their own merits
Stefano Ermacora speaks
on renewable energy at
October 2009 conference.
Green has been a
buzzword since the
early 2000s when
easy money coupled
with the increasing
eco-consciousness of
consumers and corporates
sparked the
green gold rush. Like
the internet bubble
that preceded it by a
decade or so, everyone was eager to get in
on the act. We all know how the dot-com
bubble turned out – lax attention to solid
numbers meant that many companies
and investors went down leaving just the
lucky survivors that actually had some
product to sell. Will history repeat itself
with clean energy? And how has the economic
downturn affected this sector?
Stefano Ermacora, partner at Clairfield
France and head of Clairfield’s renewable
energy sector group, sees several im-
Clairfield experience in renewables
Clairfield Partners has ample experience
in renewable energy transactions
ranging from photovoltaic
plants to bioenergy from microalgae.
One of the most complex transactions
was Clairfield France’s sale of Sunlight
Power Maroc (SPM) to a private Swiss
investor group. SPM is Morocco’s third
largest player in the solar energy sector,
providing installation and maintenance
of solar home systems and integrated
technical solutions to public and private
clients. SPM’s founders were visionary foreign
investors who believed in the potential
of Morocco and the renewable energy
sector. Stefano Ermacora executed the
transaction in 2008 and remains on the
board of SPM today.
Solar Power Maroc
portant differences between renewable
energy in 2010 and internet businesses in
2000. “While the dot-com model was based
on visions of new markets and uncertain
future profits with many companies
showing losses year after year, renewable
energy is a solid, geopolitically and macroeconomically-driven
business. Thanks
to long-term feed-in tariff schemes, visibility
is much higher on all elements:
markets, players, technologies, and revenue
streams.”
The beginning of the 1990s saw the first
subsidy schemes for alternative energies
in Europe. By the middle of the 2000s,
green consciousness and sustainable development
had become political issues.
Today renewable energy is seen by many
as a quasi Keynesian driver for world economies
and a way out of the crisis. This
enthusiasm has also led to excessive developments.
The peak was reached at the
end of 2009 when European governments
Also in the solar sector, Clairfield Italy
led Kerself’s acquisition of Ecoware, a
company that installs large solar plants.
Kerself, listed on the Milan stock exchange
with a market capitalization of € 125
million, produces photovoltaic cells and
modules and installs photovoltaic plants.
Clairfield Netherlands led a large solar
transaction in advising S’Energy in the
sale of its stake in the solar cell company
Sunergy Investco. The buyer was Delta,
the utility company of the Dutch province
of Zeeland.
Most recently in the photovoltaic sector,
the investment arm of Clairfield France
acquired Energie 5 Méditerranée (E5
Med). E5 Med is both a distributor and
installer of high-end roof solar panels
realized that they could no longer afford
generous subsidies and began limiting
the high end of subsidies to installations
on the grid prior to the end of 2009. The
consequences were readily seen in France,
where the number of applications for solar
plants filed in December 2009 was greater
than the sum of the previous 12 months.
Fortunately, the market has started to
regulate itself and focus on projects and
companies with healthy fundamentals.
At the forefront of the clean energy movement,
Spain is at a critical moment. The
renewable energy sector has been highly
subsidized by the government, which
is now under tight budget constraints.
“Spain is seriously committed to maintaining
its position as a leader in renewable
energy. You can see this in the expansion
plans of the major Spanish companies
such as Gamesa and Iberdrola. At the
continued on page 2
designed for roof integration. The company
also offers engineering, installation,
and administrative services.
In other areas of clean energy, Clairfield
Sweden advised Swedish Biogas International
(SBI) on the raising of SEK 50
million from private investors. SBI designs,
builds, and operates biogas plants.
Clairfield Belgium signed a four-year
agreement to manage a consortium of industrial
and research partners dedicated
to the production of bio-energy from microalgae.
The consortium consists of two
universities and the companies N-Side,
Wetlands, and Lhoist. Clairfield also led
the research financing of € 5 million raised
from the industrial partners, the Walloon
government, and private investors.

SPOTLIGHT ON RENEWABLE ENERGY
Renewables: is the hype over? continued from page 1
same time, budget difficulties mean that subsidies to the sector
are being reconsidered. Production costs for solar and wind
installations have decreased so it is likely that these subsidies
will be the first to go,” says Brian O’Hare, partner at Clairfield
Spain.
As budget shortfalls and alternative schemes such as carbon
taxes allow subsidies across Europe to decrease, experts predict
the disappearance of smaller poorly-run companies. Concentration
is then to be expected among the remaining renewable
energy companies, both on the technology and on the operating
side. On the utilities and the electricity production side, large
utilities will eventually try to acquire wind and solar parks with
the most productive hours of operations and sell those below,
such as wind parks with less than 2000 hours per year.
Expectations are also high for greater efficiency and upscaling.
Wind farms will be expanded as larger turbines enter production
– 17 offshore wind farms are currently under construction
in Europe totalling more than 3500 MW, according to the European
Wind Energy Association. Solar parks will be made more
efficient, with new technologies and increasing size of single
projects such as gigantic desert solar parks. Clean fuels and
technologies for electricity storage, hydrogen storage, fuels
cells, air and gas cleaning technologies, and so on are also a
growing business. Strong venture capital and M&A activity
should therefore be expected as technology and know-how is
acquired via strategic growth.
Different countries use different mechanisms to promote renewable
energy: quotas and targets for use and production,
feed-in tariffs, and financial incentives for investment. The
Pew Foundation’s report Who’s Winning the Clean Energy Race?
makes clear that countries that incentivize the use of renewable
energy – China, Spain, Brazil, and Germany – are the global
leaders in the sector. Germany today clearly dominates manufacturing
and technology in terms of number of companies and
patented technologies. India and China are currently suppliers
but are increasingly innovative and competitive. China in particular
has given new prominence to clean energy policies recently
and in 2009 was the top country for renewable energy
finance and investment for the first time. This is a cause for
concern in the United States where finance and investment in
renewables is far behind its G20 counterparts. According to the
Pew report, “in relative terms, Spain invested five times more
than the United States last year, and China, Brazil, and the United
Kingdom invested three times more.” The United States is
catching up with increasing venture capital available for green
technologies.
Of course, the green sector took a hit with the downturn in the
global economy, but the decline in clean-energy investments is
estimated at only 6.6% according to the Pew report. At the same
time many countries have made clean energy the centerpiece
of their economic recovery packages. The green rush is more
intense than ever and the prize for the winners of this race is
market leadership in a growing sector for years to come.
Investment options in solar power in Italy
Andrea Scarsi is director
at Clairfield Italy.
For the last three years, incentivized rates
paid for wind and solar electricity, called
feed-in tariffs, have led to the significant
expansion of photovoltaic capacity in Italy.
With major cuts in tariffs in both Germany
and Spain and the slower than expected
start of the photovoltaic market in Greece,
Italy has the potential to become one of the
preferred geographies in Europe for attrac-
ting foreign investment in the photovoltaic sector.
The cost of solar equipment, such as inverters, cells, and modules,
has sharply declined. Profits for equipment manufacturers
have dropped significantly and higher returns have moved along
the value chain from the manufacturing of cells and modules to
the management of photovoltaic plants and the generation and
trading of green energy. As a result, over the last 12 months,
investors in Italy have focused on the acquisition of greenfield
or pre-authorized projects to develop and resell.
An alternative and very reliable investment option has emerged
that consists of investing in the share capital of special purpose
vehicles putting together a diversified portfolio of projects.
These projects often include highly profitable building-integrated
systems at different stages of planning and construction.
The building-integrated systems, and more generally, the roofmounted
systems in Italy obtain higher feed-in tariffs and possible
additional bonuses for the dismantling of asbestos. Fur-
thermore, the roof-mounted systems are generally built close
to existing medium-voltage lines, reducing the construction
costs of the entire photovoltaic plant. On the other hand, one
of the main problems connected to the roof-mounted systems
is the size of such systems, which are often too small to be of
interest to institutional investors. To resolve this issue, several
individual small projects can be grouped into special purpose
vehicles, thus achieving an interesting size, higher profitability,
and risk diversification.
In recent years Clairfield Partners’ Italian office, K Finance, has
advised financial and industrial players in the evaluation, investment,
and acquisition of high-return opportunities in the
sector and is currently assisting the fundraising of new special
purpose vehicles dedicated to the development of photovoltaic
plants in Italy. The Italian photovoltaic market is currently facing
a rush to build and connect the plants to the grid before
the end of 2010 when the tariffs in place since 2007 are due to
expire. Such a rush is especially motivated for ground-mounted
systems, for which the feed-in tariffs are in fact expected to significantly
decrease after December 2010.
In contrast, the government recently announced a minor decrease
in the tariffs for roof-mounted systems to be put in place
gradually in the first three quarters of 2011. The slow phase-out
will encourage the investment in photovoltaic roof-mounted
systems in Italy for at least the next 18 months.
2 Clairfield Review Q2 10

intuitucapital
InterFinancial
Sale
France
Clinique de Quissac
&
Domaine Du Cros
were sold to
Sale
Australia/Germany
Hydratec Industries NV
Boer & Croon
intuitucapital
was sold to
Acquisition
The Netherlands
acquired
MBI
France
was sold to
N1 Device Holding
Clairfield Review Q2 10
SELECTED RECENT TRANSACTIONS
Clinique de Quissac and Domaine du
Cros, clinics in the south of France,
were sold to VP Investissements in
two separate transactions.
Clinique de Quissac is one of the
largest French private mental health
clinics with 200 beds. Domaine du
Cros is a convalescent home with 60
beds, specializing in cardiology and
traumatology patients.
VP Investissements is a French midsized
family group founded in 1991
dedicated to health services.
Eden Technology Pty Ltd was
acquired by the Siemens IT
Solutions and Services business,
enhancing Siemen’s range in
product lifecycle management,
asset management, and civil &
national security solutions.
Eden Technology is a specialist
technology company with 30 years
of experience delivering software
solutions and services to the
defense, maritime, and evidence
management industries.
Hydratec Industries, formerly
known as Nyloplast NV, acquired
Euromouldings and Timmerije in
two separate transactions.
Hydratec Industries NV is an
industrial holding company with its
main activities in the design and
production of electronic panels,
and design and manufacturing of
plastic parts and blow-molded
packages. The company has
facilities in the Netherlands and
the U.K. Hydratec Industries is
listed on the NYSE Euronext.
Plastef Investissements, a holding
of the Plastef group, was sold to N1
Device Holding in a management
buy-in transaction.
Plastef is a French private plastic
injection company with expertise
in packaging under clean room
conditions for the medical sector.
The group produces liquid and solid
dosing and drug delivery systems
for major pharmaceutical groups.
The group also offers research and
development services.
McColl Partners
V2Finance
Sale
United States
was acquired by
acquired an equity
participation in
SynCap Management
intuitucapital
Acquisition
Germany/Poland
MBO
Brazil
was acquired by its
management
Acquisition
France
intuitucapital
acquired
Yosemite Waters was sold to
DS Waters of America, Inc., an
American producer and distributor
of home, office, and retail bottled
water products and a portfolio
company of private equity firm
Kelso & Company.
Yosemite Waters produces and
distributes home, office, and
retail bottled water products
in the southwest United States.
Yosemite offers three types of
drinking water, as well as water
dispensers and coffee products.
Piening is a leading German
provider of temporary employment
services, personnel
recruitment, and outsourcing
services. The company achieved
sales of approximately € 120
million in 2008.
Work Express is a Polish
recruitment and temporary
employment company. The
company is one of the largest
agencies in Poland with 4500
workers placed in 2009.
V2Finance acted as the
exclusive financial advisor to
the shareholders of Brasfrut in a
management buyout transaction.
The executive manager and
minority shareholder acquired the
totality of the equity of Brasfrut.
Brasfrut is a fruit pulp producer in
the northeast of Brazil. It produces
11,000 tons of pulp per year that
is distributed throughout Brazil
and also exported to Portugal,
Spain, the Netherlands, and the
United States.
The investment arm of
intuitucapital acquired 100% of
Energie 5 Méditerranée (E5 Med).
E5 Med specializes in high-end
photovoltaic equipment for
individual homes and businesses.
E5 Med is a distributor and installer
of solar panels designed for roof
integration. It distributes topquality
European equipment. The
company also provides technical
engineering, installation, and
administrative services.
3

New colleagues
Maree Klemm joined InterFinancial, Clairfield Partners in
Australia, as a director. Ms. Klemm has 35 years of experience
in the mining and financial services sectors in operations, advisory,
and consultancy roles. Her background in mining and
equity capital markets includes advising on metalliferous, industrial
minerals and energy resource projects; asset and share
price valuations; strategic advice for merger & acquisition targets;
investor relations strategies and corporate performance,
and research and analysis. Ms. Klemm was a senior geologist
for the Department of Mines & Energy. She is a fellow of the
Australasian Institute of Mining & Metallurgy; a fellow of the
Financial Services Institute of Australasia, a graduate member
of the Australian Institute of Company Directors, and a member
of the Australian Resources & Energy Law Association.
Cheri Taylor also joined InterFinancial as an associate director.
Ms. Taylor previously worked in Deloitte’s corporate finance
valuations practice. She has been involved in a number of independent
expert reports in the energy sector including ones for
Westside Corporation Limited and Bowen Energy Limited. Ms.
Taylor is a member of the Institute of Chartered Accountants
in Australia.
Johan Rost was appointed partner at R&R Partners in Sweden.
Mr. Rost worked in the IT industry for 25 years, starting at IBM
and later as IT manager and CEO for several IT companies. He
also worked as an investment manager in venture capital. Mr.
Rost served as business area manager for finance at the Addnode
Group, and also as CEO of SIX, the largest Nordic financial
information firm. Mr. Rost has extensive board experience at
private and listed organizations and holds a M.Sc. in mechanics
from the Royal Institute of Technology in Stockholm.
Coram Clairfield in Spain made several appointments. New partner
Iñigo Elustondo has more than 12 years of experience in
4
CLAIRFIELD PARTNERS
www.clairfield.com
Australia
InterFinancial Corporate
Finance Limited
345 Queen Street, Level 34
Brisbane Q4001
Tel: +61 7 3218 9100
www.interfinancial.com.au
Germany
SynCap Management
Mendelssohnstrasse 72
D-60325 Frankfurt am Main
Tel: +49 69 707 969 60
www.syncap.de
Russia
Taiga Capital
Trehprudny Pereulok 9, stroenie 2
123001 Moscow
Tel: +7 495 740 03 68
www.taigacap.com
United States
Clairfield Partners
18 East 41st Street
Suite 1901
New York NY 10017
Tel: +1 212 370 4343
www.clairfield.com
Belgium
SynCap Management
Avenue de Tervueren 212
1150 Brussels
Tel: +32 2 768 0569
www.syncap.be
Italy
K Finance
Via Durini 27
20122 Milano
Tel: +39 02 763 948 88
www.kfinance.com
Spain
Coram Clairfield
Diagonal 520, 6-5
08006 Barcelona
Tel: +34 93 487 0330
www.coram-clairfield.com
financial services. His areas of expertise are consumer goods,
tourism and leisure, industry, and the automotive sectors. Mr.
Elustondo previously worked at KPMG and BDO, as well as acting
as finance director of the Spanish subsidiary of the British
automotive group Kwik-Fit. Mr. Elustondo graduated summa
cum laude from Syracuse University in New York, and is fluent
in Spanish, French, and English.
Three senior advisors were also named by Coram Clairfield.
Daniel Alvarez is an expert in renewable energy who has
worked as a consultant to governments, corporations, think
tanks, and not-for-profit organizations. Mr. Alvarez advises on
the creation and development of projects in industry, energy,
and real estate, from the initial phase through structured financing
and entry of corporate shareholders. Victor Diez has
more than 20 years of experience working for multinationals in
the automotive, telecommunication, and electronics industries
where he has undertaken significant business development initiatives
for companies such as Nissan and Motorola where he
was executive vice president for EMEA. Fernando Santolaria
has more than 15 years of experience in financial services and is
owner and founder of Finagentes which advises clients on interest
rate risks and currency movements.
Andreas Piechotta became an associate partner at Clairfield
Partners in Germany and Belgium (SynCap Management). Mr.
Piechotta has been involved in international equity and crossborder
M&A transactions for almost 16 years with a special focus
on Eastern Europe. He began his career at Pfeifer & Langen
where he supported privatization processes in the Polish sugar
industry. He then moved to private equity at DEWB AG, a subsidiary
of JENOPTIK Group and then began to focus on midcap
M&A advisory. Mr. Piechotta studied law at the University Bayreuth
in Germany specializing in economic law.
Brazil
V2Finance
Av. Paulista 2073 conj. 421
01311-300 São Paulo
Tel: +55 11 3283-1146
www.v2finance.com.br
The Netherlands
Boer & Croon
Amstelveenseweg 760
1081 JK Amsterdam
Tel: +31 20 301 4350
www.boercroon.nl
Sweden
R&R Partners
Nybrokajen 7
111 48 Stockholm
Tel: +46 8 566 133 90
www.rrpartners.se
France
intuitucapital
Place Vendôme
356 rue Saint Honore
75001 Paris
Tel: +33 1 40 20 12 34
www.intuitu.com
Poland
Central Europe Trust Polska
Ul. Ks. J. Skorupki 5
00-546 Warsaw
Tel: +48 22 583 68 50
www.cet.com.pl
United States
McColl Partners
100 North Tryon Street
54th Floor
Charlotte NC 28202
Tel: +1 704 333 0525
www.mccollpartners.com
DISCLAIMER: No part of this report may be reproduced without the written permission of Clairfield Partners or one of its partner firms. The information
herein has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. While we endeavour
to update on a reasonable basis the information presented in this report, there may be regulatory, compliance or other reasons that prevent us from
doing so. Much of the information contained in this report is subject to variation due to changes in market conditions, legislation or regulatory matters
and Clairfield Partners does not undertake to notify any recipient of the report of changes to the information contained herein. This report is not
to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. Additional supporting information is available
upon request. Please contact: Research Desk, Clairfield Partners, Tel: +34 93 487 4623, email: research@clairfield.com.
Clairfield Clairfield Review Review Q3 Q2 0910