Talk by Andrew Musters

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Andrew Musters, Senior Investment Manager - Robeco Alternative Investments/private Equity - Netherlands

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  • In the next slides we will first deal with the impact of SRI on corporate earnings and on the expected stock performance. Next, we will find that constructing a SRI universe and ultimately a SRI portfolio is a challenging, labor-intensive but very interesting and rewarding task. I will outline Robeco’s SRI investment process and also show you a typical SRI portfolio as a result. A hot topic in the media nowadays is the responsibility to exercise the voting rights you have as a shareholder. We will discuss Robeco’s voting policy. Let first turn to the impact of SRI on corporate earnings.
  • In the next slides we will first deal with the impact of SRI on corporate earnings and on the expected stock performance. Next, we will find that constructing a SRI universe and ultimately a SRI portfolio is a challenging, labor-intensive but very interesting and rewarding task. I will outline Robeco’s SRI investment process and also show you a typical SRI portfolio as a result. A hot topic in the media nowadays is the responsibility to exercise the voting rights you have as a shareholder. We will discuss Robeco’s voting policy. Let first turn to the impact of SRI on corporate earnings.
  • In the next slides we will first deal with the impact of SRI on corporate earnings and on the expected stock performance. Next, we will find that constructing a SRI universe and ultimately a SRI portfolio is a challenging, labor-intensive but very interesting and rewarding task. I will outline Robeco’s SRI investment process and also show you a typical SRI portfolio as a result. A hot topic in the media nowadays is the responsibility to exercise the voting rights you have as a shareholder. We will discuss Robeco’s voting policy. Let first turn to the impact of SRI on corporate earnings.
  • Talk by Andrew Musters

    1. 1. Clean Tech Private Equity Investing: Market Dynamics, our Approach and our Experiences so far Andrew Musters, Partner, Robeco Private Equity TBLI Europe 2006 Paris, 9 November 2006 For discussion purposes only
    2. 2. Clean tech market dynamics
    3. 3. Clean tech market growth The combined markets for biofuels, wind power, solar power and fuel cells are expected to grow from USD 40 billion in 2005 to USD 167 billion in 2015. Clean Edge 2006 Clean tech has become the fifth largest venture investment category in North America with nearly 10% market share – ahead of semiconductors. Cleantech Venture Network 2006
    4. 4. Clean tech defined <ul><li>Clean tech embraces knowledge-based products and services that optimize the use of natural resources while reducing ecological impact and adding economic value </li></ul><ul><li>Main investment areas: </li></ul><ul><ul><li>Energy </li></ul></ul><ul><ul><li>Water </li></ul></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>Agriculture </li></ul></ul><ul><ul><li>Transportation </li></ul></ul>Source: Cleantech Venture Network Clean tech is becoming increasingly important in the private equity market: 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% 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 $ US m 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% U.S. and Canadian Cleantech Venture Deals by Quarter and as a percentage of total Venture Capital (by amount), 1999-2005
    5. 5. Clean tech private equity market prospects <ul><li>The market dynamics for clean tech investing are very favorable: </li></ul>Green technologies are on the verge of becoming one of the next waves in the knowledge economy revolution Tony Blair Prime Minister Great Britain Attractive Investment Opportunities Regulatory changes Consumer preferences Natural resource security/ reliability Natural resource prices Competitive new technologies Source: International Energy Agency
    6. 6. Clean tech performance characteristics <ul><li>Cleantech Venture Investing: Patterns and Performance (Cleantech Venture Network, 2005): </li></ul><ul><ul><li>Research study covers 67 IPOs and 730 M&A transactions over a 15 year period </li></ul></ul><ul><ul><li>Average return approximately 30% per annum </li></ul></ul><ul><ul><li>Average IPO delivers 5.3 times invested capital </li></ul></ul><ul><ul><li>Average trade sale (M&A transaction) delivers 4.3 times invested capital </li></ul></ul>The value of your investment may fluctuate. Results achieved in the past are no guarantee of future results
    7. 7. Our approach to clean tech investing <ul><ul><li>Our approach combines an explicit top-down view on the private equity and clean tech markets with a bottom-up investment selection process </li></ul></ul><ul><ul><li>Top-down Allocation: </li></ul></ul><ul><ul><ul><li>With respect to allocation rules in selecting clean tech private equity funds, up-front defined investment guidelines and allocation bandwidths will be used for the various geographical regions (North America, Western Europe and the Emerging Markets), as well as the stages of investment and sectors. These are dependent on the long term relative attractiveness of the categories and the available investment alternatives. </li></ul></ul></ul>Investment Tactics • Economic research • Analyst Reports, Trends and Outlooks • Discover attractive segments within • Regions • Finance stages • Risk - Return profile • Diversification analysis • Regions • Finance stages • Vintage years • Strategic planning of • Liquidity • Risk parameters • Investment Exposure • Tactical asset allocation and fund selection • Capital required • Risk management • Stress testing • Motoring current risks in comparison to predefined barriers • Sensitivity analysis • Projections of cash flows Investment Tactics Macroeconomic Analysis Modeling Portfolio Design • • • • • - • • • • • • • • • • • • • • • Investment Tactics Macroeconomic Analysis Modeling Portfolio Design
    8. 8. <ul><ul><li>Bottom-up investment selection: We evaluate a significant number clean tech investment opportunities annually. As a result of this large deal flow the core of the organization entails a systematic investment process which is necessary for identifying and making well-evaluated investment choices. This investment process can be illustrated as follows: </li></ul></ul>Our approach to clean tech investing Due diligence of clean tech funds requires specific knowledge in order to assess: - young teams - many unrealized investments - specific terms and conditions n XX IX. VIII. VII. VI. V. IV. III. II. I. Intermediaries Exit and Distribution Management Clean Tech Investment Opportunities u Research Monitoring & Reporting Investment Commitment Negotiation & Legal/Fiscal Review Investment Committee Due Diligence Deal Flow Screening Deal Flow R i s k M a n a g e m e n t X. Network Network
    9. 9. Investment portfolio: our experiences so far <ul><li>Deal flow: </li></ul><ul><ul><li>Building clean tech database since 2004 </li></ul></ul><ul><ul><li>Approximately 160 clean tech funds in our database </li></ul></ul><ul><ul><li>Overweighting U.S. versus Europe and Emerging Markets </li></ul></ul><ul><ul><li>Overweighting venture capital versus development/growth capital and buyouts </li></ul></ul><ul><ul><li>Overweighting energy versus other clean tech sectors </li></ul></ul><ul><li>Lessons learned so far: </li></ul><ul><ul><li>Quality clean tech funds becoming comparable to mainstream venture capital funds </li></ul></ul><ul><ul><li>Market potential is enormous </li></ul></ul><ul><ul><li>Valuations are still attractive although some areas are overheated (e.g. solar) </li></ul></ul>
    10. 10. Conclusion <ul><ul><li>Clean tech is an untapped investment field </li></ul></ul><ul><ul><li>Many trends are currently in favor of clean tech </li></ul></ul><ul><ul><li>Private equity is well positioned to take advantage of the opportunity </li></ul></ul>
    11. 11. Disclaimer <ul><li>THE INFORMATION CONTAINED IN THIS DOCUMENT IS SOLELY INTENDED FOR QUALIFIED INVESTORS WITHIN THE MEANING OF THE EXEMPTION REGULATION UNDER THE DUTCH ACT ON THE SUPERVISION OF SECURITIES TRADE 1995 (Wet toezicht effectenverkeer 1995) and the Dutch Act on the Supervision of Collective Investment Schemes (Wet toezicht beleggingsinstellingen). </li></ul><ul><li>No rights whatsoever are licensed or assigned or shall pass to persons accessing this information.  </li></ul><ul><li>This document has been carefully prepared and is presented by Robeco Alternative Investments. The content of this document is based upon sources of information believed to be reliable, but no warranty or declaration, either explicit or implicit, is given as to their accuracy or completeness. </li></ul><ul><li>This documentation has been prepared on a confidential one on one basis for private use by the recipient only, solely for discussion purposes with respect to Robeco Alternative Investments' specific capabilities . Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco Alternative Investments, is prohibited. By accepting this documentation, the recipient agrees to the foregoing. </li></ul><ul><li>This documentation is solely intended to supply the reader with information and reference on Robeco Alternative Investments' specific capabilities and does not constitute an offer, an invitation to subscribe for or investment advice in connection with any private equity funds or any other security or investment product . Investment decisions should be solely based on the complete set of documentation relating to the investment including the Private Placement Memoranda. </li></ul><ul><li>The information relating to performance is for historical information only. </li></ul><ul><li>The value of your investment may fluctuate. Results achieved in the past are no guarantee of future results </li></ul><ul><li>THIS PRESENTATION IS PREPARED BY ROBECO INSTITUTIONAL ASSET MANAGEMENT B.V. (&quot;ROBECO&quot;) TRADING AS ROBECO ALTERNATIVE INVESTMENTS. ROBECO IS REGISTERED WITH THE NETHERLANDS AUTHORITY FOR THE FINANCIAL MARKETS (AUTORITEIT FINANCIËLE MARKTEN) IN AMSTERDAM. </li></ul><ul><li>RABOBANK NEDERLAND IS A REGULATED ENTITY AS SET OUT UNDER THE ACT ON THE SUPERVISION OF CREDIT INSTITUTIONS 1992 (WET TOEZICHT KREDIETWEZEN 1992). </li></ul>

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