Thomas Jakobsen - RE Investment Strategies in Vietnam
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Transcript of Thomas Jakobsen - RE Investment Strategies in Vietnam
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RENEWABLE ENERGY INVESTMENT STRATEGIES
IN VIETNAM
June 2011
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INTRODUCTION TO ANPHA CAPITAL
Formed in 2006, raised two funds which listed on Frankfurt Stock Exchange in 2007, management spin-out in 2008.
First Vietnamese fund management company to sign the United Nation Principles of Responsible Investment (UNPRI).
Has since 2009 focused on Renewable Energy.
Managed by a team of international and local professionals with outstanding track records , significant assetsmanagement and operation experience.
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RENEWABLE ENERGY
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ENERGY EFFICIENCY
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WHY RENEWABLE ENERGY IN VIETNAM?
Growing awareness growing market Renewable Energy awareness is growing in Vietnam. This is in turn effectingthe Governments policies which are progressing very rapidly.
Proprietary Deal flow The investment opportunities are sourced through Anpha Capitals extensivenetwork in the Renewable Energy space in Vietnam.
Nascent Industry High Returns Most clean energy industries in Vietnam are in a nascent stage. This givesthe opportunity for high returns, but also increases the risk profile. Theinvestment manager will be more active in the operations of the investment
than in a traditional Private Equity investment.
Strong Case for Development of Vietnam Vietnam has for over 10 years had economic growth rates of 7-8% andchanged dramatically. The development in Renewable Energy, but alsoEnergy Efficiency and Waste and Water Treatment is however lagging.
Entrepreneurial Management Team The management team has experience with young companies and start ups.The management team will be active in the operations of the investee
companies.
Advisors The Funds has among its advisors environmentally very knowledgeable andvery respected individuals, with influence on environmental opinions inVietnam.
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WHY RENEWABLE ENERGY IN VIETNAM?
Positives Negatives
Bio fuels(Ethanol, Bio diesel)
Exportable Food Vs fuel
Wind Proven technology Regulatory
Biomass Proven technology TransportationEfficiency
Hydro Cheap Social issues
Solar Sustainable Cost
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1. Does it make sense with low electricity cost?
2. Different segments
- Residential/ Commercial
- Industrial- Municipal projects
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ENERGY EFFIECIENCY
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PIPELINE
The following pipelines are examples of our investee candidates
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PIPELINE - BIODIESEL
Transaction Details Investment Thesis
Sector Renewable Energy Highlights
Exposure to pioneer position opportunity created by potential and encouragedindustry.
Abundant feedstock supply at low cost
Flexible supply sources thanks to multi-feedstock capability technology
Small foot-print factory to startup, hence low investment cost
The plants location is very near target market. Good access to seaports and
highways to minimize logistics cost.
The demand of biodiesel increases significantly as one the best substitutions for
mineral diesel
Board and management team has almost 10 years of biodiesel manufacturing
experience
Ethanol E5 is already a proven sales success
Risks
Operating in a new industry in Vietnam
The customers are unfamiliar with biodiesel at the early stage
The selling price is possibly controlled by the government
Epidemic diseases and weather may affect feedstock supply
Background Opportunity to gain exposure in aleading firm in the biodiesel market
Capital raise US$12 Mn
Ownership 40% maximum
Instrument Convertible bond/Straight equity
Key terms No lockup
Expected cash-on-cash x 2.3x
Holding period 5 7 years
Exit Listing/Trade Sale
Sector Fundamentals
Clean energy is fully supported by the government in terms of tax deduction,
raising public awareness, developing distribution infrastructure.
The technology used in producing biodiesel from fish oil is available at low cost.
There is about 145,000-260,000 tons of fish oil, input material for biodiesel
production, available in Mekong Delta. Fish oil price is cheap because it is
extracted from waste of fish processing industry.
The demand of diesel is estimated at 8.74 million tons in 2010 and increased to
11.14 million tons in 2015.
The biggest market of diesel is Ho Chi Minh City area, near the Mekong Delta,
minimizing the transportation cost.
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PIPELINE - SOLAR POWER PANELS
Transaction Details Investment Thesis
Sector Renewable Energy Highlights
Exposure to long term development of Green Energy in Vietnam
Be the first pioneer company in the industry in Vietnam, take the largest market
share while promoting clean and sustainable energy, reduce toxic gas emission
Led by experienced founder with deep know-how knowledge
Geographical advantage for solar power projects
Tax incentives from Government
Potential IRR is over 20% for 7 years
Risks
Hard to negotiate a future Feed-in-tariff (FiT) with EVN
Operational risk in the initial stage as employees are inexperienced with the new
technology and equipment
Unknown target market since domestic demand does not justify cost while
regional markets (China, Laos, Cambodia, Thailand) are largely unknown and
European/American markets are dominated by bigger firms
Most equipments and production chains will be imported, expose the company
to exchange rate risk
Background Opportunity to invest into the first green energy
equipment manufacturer in Vietnam
Capital raise US$18 Mn
Ownership 49% maximum
Instrument Straight equity, convertible bond 10% coupon,
special rights
Key terms No lockup
Holding period 5 7 years
Expected cash-on-cash x 3.0x
Exit Listing/Trade Sale
Sector Fundamentals
There is a growing global concern about green-house effect and toxic gas
emission level.
Fast growing sectorGlobal accumulative solar photovoltaic (PV) electricity
market is expected to grow at 15% (Energy savings Weekly). Outside Europe,Asia is becoming a major demand centre as India and China announced plans to
increase their solar power capacities to 20 GW/each by 2020
Potential growth for renewable electricity in Vietnam Vietnam needs to
increase its supply capacity by at least 3 times of current capacity to meet
demands in 2020
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PIPELINE ENERGY EFFICIENCY
Transaction Details Investment Thesis
Sector Energy Efficiency Highlights
A huge potential market that has not been covered sufficiently
Two-three small size projects which require 0.5-1.5 million USD to retrofit
buildings with more efficient energy systems
The building owner gets new lighting and ventilation equipment for free. The
benefit from energy efficiency will be shared between the building owner and the
fund
The growth prospect comes from both geographic expansion of customer base
and the increasing return from energy saving bills
IRR=15% expected
Short pay-back period of 3-4 years
Governments commitment to rising energy prices
Risks
Current energy prices are relatively low which makes replacement of existing
energy system less attractive
There are not many big buildings with energy bills high enough
Tenants or apartments owners may refuse to change
Risk of energy prices not rising in expected horizon time of investment
Background Opportunity to invest in the brand new and
potential energy efficient field
Capital raise US$2-3 Mn
Ownership 51%-100%
Instrument 100% Debt
Key terms No lockup
Holding period 4 5 years
Expected cash-on-cash x 2x
Exit Trade Sale
Sector Fundamentals
The electricity production and consumption gap is getting bigger and puts
pressure on electricity price
The fast urbanization and the presence of big buildings in large cities create a
chance for energy efficiency business. Instead of flowing into capital-intensiveenergy plants, investments can be better used by financing many relatively small
energy efficiency projects
The rising electricity price makes energy efficient solutions be more economic
sound options for both office buildings and residential apartments
There is not yet a comprehensive consultancy and execution solution found in
Vietnam so the competition for projects is relatively low
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MANAGEMENT TEAM
Bui Cong Giang CEO
Current Founding Chairman of A.N.P.H.A Corporation Prior Deputy General Director of Him Lam Group Member of BOD of Keppel-Agtex JV Investment and R&D Manager of Agtex Corp. Executive Masters degree in Finance & Banking in Switzerland Postgraduate in International Marketing from the University of Padova in Italy
Thomas Jakobsen - Head of Sustainability Current Founding Chairman of Gate To Asia a Vietnam focused ESG consulting company Prior Vice Director of Tropicdane Group in Vietnam Managing Director of Bowers and Wilkins Loudspeaker manufacturer in Denmark M.Sc in Economics and Business Administration from University of Aarhus in Denmark MBA program at Katholieke Universiteit Leuven in Belgium
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CONTACT
Thank you
Thomas Jakobsen - Head of [email protected]+84 (0) 903 757 565
ANPHA CAPITAL FUND MANAGEMENT COMPANY
Address : 7 Vo Van Tan Street, District 3, Ho Chi Minh City, VietnamPhone : +84 (8) 3825 8107Fax : +84 (8) 3825 8108Website : www.anphacapital.com