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Terra verde

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TBLI CONFERENCE™ is the prime annual global networking and learning event on Environment, Social, Governance (ESG) and Impact Investing. …

TBLI CONFERENCE™ is the prime annual global networking and learning event on Environment, Social, Governance (ESG) and Impact Investing.

TBLI CONFERENCE USA New York 2013
Monday and Tuesday, June 17-18, 2013

Speakers:
Paul Rose
Vice President of the Royal Geographical Society
Richard L. Kauffman
Chairman for Energy Policy and Finance for the State of New York - Governor of New York's Office and Cabinet - United States of America
Martin Rapaport is chairman of the Rapaport Group and founder of the Rapaport Diamond Report

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  • 1. Confidential Page 1 TerraVerde Capital Management LLC 10 Rockefeller Plaza 35 W. 48th Street, Suite 1111 New York, NY 10020 Ph: 212-218-7590 Fx: 212-218-7599 www.terraverdecap.com info@terraverdecap.com @terraverdecap Confidential Page 1
  • 2. Confidential Page 2 Our Exponentially Growing, Changing Planet • Population • Consumption • Pollution • Information • Transportation • Credit • Energy Demand • Water Demand • Solar Power • Wind Power • Natural Gas
  • 3. Confidential Page 3 World Economy to Grow 6X by 2050! Source: Jeffrey Sachs, Common Wealth
  • 4. Confidential Page 4 NEEDED: Food, Water, Energy, & Infrastructure Global Energy Demand Global Water Demand Sources: EIA; WRSC.org (Quadrillion Btu)
  • 5. Confidential Page 5 Supply Shocks 1. Natural Resources Are Dwindling 2. Governments Are Discussing Emissions Pricing Meanwhile…
  • 6. Confidential Page 6 OVERUSE: Rio Grande Runs Dry in Texas
  • 7. Confidential Page 7 POLLUTION: Chemical Fertilizers, Industrial/Human Waste
  • 8. Confidential Page 8 Source: UK Met Office CLIMATE CHANGE: 2000’s = Hottest Decade on Record!
  • 9. April 2010 February 1985 Confidential Page 9 Global Focus on Depleting Resources October 2007 July 1988
  • 10. Confidential Page 10 Cost of Weather Related Disasters
  • 11. Confidential Page 11 Demand Growth: Building New Cities 90% of New Growth to Occur in Developing Countries: Car Sales: Mature vs. Developing Markets Electricity Consumption by Region
  • 12. Confidential Page 12 Fixing Old Cities: Broken, Dirty, and Inefficient Water and Environment Transportation Public Facilities Dams D Aviation D Public Parks and Recreation C- Drinking Water D Bridges C+ Schools D Hazardous Waste D Inland Waterways D- Levees D- Ports C Energy Solid Waste B- Rail C+ Energy D+ Wastewater D Roads D Transit D
  • 13. Confidential Page 13 Infrastructure Spending Mayor Bloomberg: $20B to Protect NYC from Climate Change
  • 14. Confidential Page 14 NEEDED: Infrastructure Updates • Drinking Water: 240,000 water main breaks per year in the U.S. • Wastewater: $298B investment needed over next 20 years • Garbage: 250 million tons of trash in 2010 • Hazardous Waste: 400,000 brownfield sites awaiting cleanup • Dams: 84,000 dams in U.S. – average age of 52 years • Levees: 100,000 miles of levees in U.S., much of which is suspect • Bridges: 200 million trips across defective bridges in U.S. per day • Aviation: cost of airport delay/congestion $22B per year and rising • Rail: over $75B capital investment since 2009 • Transit: $90B cost for deficient transit in U.S. in 2010 • Roads: $170B investment needed per year to improve congestion (FHWA) • Energy Grid: U.S. electrical grid is outdated, parts dating to 1880’s
  • 15. Confidential Page 15 Fossil-Fuel Alternatives Installed Solar Power Installed Wind Power TWh MW Source: BP; BP
  • 16. Confidential Page 16 Cleaner Fossil Fuels: Paradigm Shift
  • 17. Confidential Page 17 How Do You Invest In Infrastructure? • Public Equities (stocks, mutual funds, ETF’s) • Private Equity • U.S. Government & World Agency Bonds • Municipal Bonds • Corporate Bonds • Real Estate • Master Limited Partnerships • Hedge Funds
  • 18. Confidential Page 18 Why Hedge Funds (or Funds of Funds)? • Alignment of Interests • Ability to Short Stocks • Reduces Volatility • Provides Portfolio Diversification • Achieve Non-correlated Returns • Industry Specialists • Ability to Invest in Private Equity Portfolios
  • 19. June 17-18, 2013 Climate Change: Investment Opportunities and Risk Sources: bpr.berkeley.edu, nasa.org, ready.gov, nature.org www.terraverdecap.com
  • 20. Confidential Page 20 Disclaimer The information contained herein is solely for information and presentation purposes and does not represent nor is it intended to be an offering or solicitation of any kind. Offering can be made only by review of the Private Placement Memorandum and Limited Partnership Agreement. Supporting documentation will be furnished upon request for all comparisons, statistics, and other technical data. The information set forth here should not be construed as an investment recommendation nor is this a solicitation for any security, which can be made only by Private Placement Memorandum. The information contained herein has been obtained from sources we believe to be reliable. However, no representation is made that it is accurate or complete. This information may not be reproduced, distributed or published by any recipient for any purpose. Under no circumstances should it be used or considered as an advisory or offer to sell or a solicitation of any offer or advisory to buy any securities. While given in good faith, neither we nor any officer, employee, or agent of ours shall be liable for loss or damage, whether direct or indirect, which may be suffered by using or relying on the information, research, opinions, advice or recommendations contained herein or in any prior or subsequent written or verbal presentation.
  • 21. Confidential Page 21
  • 22. Confidential Page 22 How Does Climate Change Affect Supply?
  • 23. Confidential Page 23 Natural Catastrophes: 2012
  • 24. Confidential Page 24 Droughts U.S. Droughts: 2012
  • 25. Confidential Page 25 Fires Global Wildfires: 1996-2007 Source: ESA
  • 26. Confidential Page 26 Storms Moore, Oklahoma Source: NewYorker.com
  • 27. Confidential Page 27 Rising Sea Levels High Tide in Venice, Italy: 100 Days Per Year Source: Weather.com
  • 28. Confidential Page 28 NEEDED: Infrastructure Updates • Drinking Water: 240,000 water main breaks per year in the U.S. • Wastewater: $298B investment needed over next 20 years • Garbage: 250 million tons of trash in 2010 • Hazardous Waste: 400,000 brownfield sites awaiting cleanup • Dams: 84,000 dams in U.S. – average age of 52 years • Levees: 100,000 miles of levees in U.S., much of which is suspect • Bridges: 200 million trips across defective bridges in U.S. per day • Aviation: cost of airport delay/congestion $22B per year and rising • Rail: over $75B capital investment since 2009 • Transit: $90B cost for deficient transit in U.S. in 2010 • Roads: $170B investment needed per year to improve congestion (FHWA) • Energy Grid: U.S. electrical grid is outdated, parts dating to 1880’s
  • 29. Confidential Page 29 Fossil-Fuel Alternatives Installed Solar Power Installed Wind Power TWh MW Source: BP; BP
  • 30. Confidential Page 30 Cleaner Fossil Fuels: Paradigm Shift
  • 31. Confidential Page 31 How Do You Invest In Infrastructure? • Public Equities (stocks, mutual funds, ETF’s) • Private Equity • U.S. Government & World Agency Bonds • Municipal Bonds • Corporate Bonds • Real Estate • Master Limited Partnerships • Hedge Funds
  • 32. Confidential Page 32 Strategy: Going Long
  • 33. Confidential Page 33 Fossil-Fuel Alternatives Installed Solar Power Installed Wind Power TWh MW Source: BP; BP
  • 34. Confidential Page 34 Niche Sub-Sectors • Energy Storage • Smart Grid • Lighting • Desalination • Agriculture • Carbon Emissions Trading • Transportation • Transmission
  • 35. Confidential Page 35 Cleaner Fossil Fuels: Paradigm Shift
  • 36. Confidential Page 36 Strategy: Going Short
  • 37. Confidential Page 37 Once a “Blue Chip”...
  • 38. Confidential Page 38 ...always a “Blue Chip”?
  • 39. Confidential Page 39 Indices: Infrastructure vs. Clean Tech Brookfield Global Infrastructure (DJBGI) Wilderhill Clean Energy (ECO) Source: Bloomberg
  • 40. Confidential Page 40 Why Hedge Funds / Funds of Funds?
  • 41. Confidential Page 41 Why Hedge Funds (or Funds of Funds)? • Alignment of Interests • Ability to Short Stocks • Reduces Volatility • Provides Portfolio Diversification • Achieve Non-correlated Returns • Industry Specialists • Ability to Invest in Private Equity Portfolios
  • 42. Confidential Page 42 Water Infrastructure Energy Clean TechCommodities Impact Investing Global Investing How Does TerraVerde Fit In To My Portfolio?
  • 43. Confidential Page 43 TerraVerde Capital Management LLC 10 Rockefeller Plaza 35 W. 48th Street, Suite 1111 New York, NY 10020 Ph: 212-218-7590 Fx: 212-218-7599 www.terraverdecap.com info@terraverdecap.com @terraverdecap Confidential Page 43
  • 44. Confidential Page 44 TerraVerde Capital Partners LP launched on July 1, 2009. Today, TerraVerde allocates capital to 10 managers employing 10 major investment strategies. Cash Reserves Global Power Arbitrage Long/Short Int'l Equities Multi- Strategy Commodity Trading Renewable Energy Infrastructure Finance Long/Short Clean Technology Long/Short Alternative Energy Equities Long/Short Sustainable Equities Long/Short Infrastructure Long/Short Water Manager allocation as of Mar 1, 2013 *All return figures before 2012 are actual, audited, and net of all fees. All 2012 return figures are estimated, unaudited, and net of fees as of 2/28/13. Total return and value will fluctuate, and past performance is not necessarily indicative of future performance. Rate of return is computed on a compounded monthly basis and calculated by dividing net performance by beginning net asset value. The information set forth here should not be construed as an investment recommendation nor is this a solicitation for any security, which can be made only by Private Placement Memorandum. The information contained herein has been obtained from sources we believe to be reliable. However, no representation is made that is accurate or complete. $5B+ $1-5B$250- 500MM $100- 250MM <$100MM TerraVerde underlying manager firm size Confidential Page 44 TerraVerde: Strategy Allocations
  • 45. Confidential Page 45 * This analysis represents long-only positions and sector allocations of TerraVerde Capital Partners LP long short equity hedge fund managers as of July 1, 2011. The information contained herein has been obtained from sources we believe to be reliable. However, no representation is made that it is accurate or complete. This information may not be reproduced, distributed or published by any recipient for any purpose. Under no circumstances should it be used or considered as an advisory or offer to sell or a solicitation of any offer or advisory to buy any securities. While given in good faith, neither we nor any officer, employee, or agent of ours shall be liable for loss or damage, whetherdirect or indirect, which may be suffered by using or relying on the information, research, opinions, advice or recommendations contained herein or in any prior or subsequent written or verbal presentation. 0% 5% 10% 15% 20% 25% 30% Water Infrastructure Water Treatment Transportation, Auto Solar, Wind Electronics, Lighting Manufacturing, Construction Materials, Bldg Products, Chemicals, Recycling Environmental Control & Sustainability Natural Gas Products Agriculture Engineering Tech, Computers Food Services, Food, Retail Water Equipment & Meters Water Utilities Industry Holdings Greater Than $5B 29% $1B to $5B 42% Less Than $1B 29% Market Cap Confidential Page 45 TerraVerde: Industry Allocations
  • 46. Confidential Page 46 * This analysis represents long-only positions and sector allocations of TerraVerde Capital Partners LP long short equity hedge fund managers as of July 1, 2011. The information contained herein has been obtained from sources we believe to be reliable. However, no representation is made that it is accurate or complete. This information may not be reproduced, distributed or published by any recipient for any purpose. Under no circumstances should it be used or considered as an advisory or offer to sell or a solicitation of any offer or advisory to buy any securities. While given in good faith, neither we nor any officer, employee, or agent of ours shall be liable for loss or damage, whetherdirect or indirect, which may be suffered by using or relying on the information, research, opinions, advice or recommendations contained herein or in any prior or subsequent written or verbal presentation. 0 20 40 60 80 Japan Italy Austria Ireland Switzerland Germany UK Denmark Cayman Islands Korea Spain Belgium Hong Kong Bermuda Brazil Israel Canada Norway China US Country of Domicile # of Positions Aqua America Itron Tetra Tech Amer States Water A.O. Smith Flowserve Cadiz Xylem Ecolab AgrinosAmerican Water Green Mntn Coffee Sabesp Watts Water Golar LNG Heckmann Corporation SJW Corp Northwest Pipe Apple Calif Water Srvc Mead Johnson Nutrition Co. Mueller Inds Terra Nitrogen RuggedCom GLC-Poly Energy Holdings Top 25 Equity Positions As of 2/28/2013 Confidential Page 46 TerraVerde: Equity Allocations
  • 47. Confidential Page 47 Price Volatility: Just in Stocks? 30-Year U.S. Treasury Bond 30-Year California Municipal Bond
  • 48. Confidential Page 48 Clean Tech Sector Fund •Clean tech and renewable energy are in the early stages of a long term developing cycle to reduce dependence on fossil fuels and reduce greenhouse gas emission Commodities •Price performance of long/short equities and commodities is positively correlated to commodities prices Energy •Price performance of long/short equity allocations is correlated to fossil fuel prices Infrastructure •Stable asset class that provides a degree of inflation protection, has low correlations to other asset classes, and defensive with a significant portion of the return coming from current yield Emerging Fund Manager •While TerraVerde Capital Partners LP has a 4 year track record, the flagship Roebling Fund LP has an 12 year track record Global Investing •TerraVerde Capital portfolio has global positions in all sectors including natural gas, weather, ca rbon, and European power. Long/Short equity global positions range between 25%- 50% of all equity positions TerraVerde allocates to sector strategies across the entire supply chain of renewable energy. Confidential Page 48 How Does TerraVerde Fit In to My Portfolio?
  • 49. Confidential Page 49 2013 Report Card: Wastewater • $298B estimated capital investment needed over next 20 years • Address sanitary sewer overflows by fixing and expanding pipes • Capital needs for treatment plants are 15%-20% of total needs
  • 50. Confidential Page 50 2013 Report Card: Solid Waste • Americans generated 250 million tons of trash in 2010 • Recycled or composted 85 million tons, or a 34% recycle rate, more than doubled rate of 1980 Source: ASCE 2013 Report Card for America’s Infrastructure
  • 51. Confidential Page 51 2013 Report Card: Hazardous Waste • Annual funding for Superfund site cleanup estimated to be $500 million short of target • 1,280 sites remain on the National Priorities List • More than 400,000 brownfield sites await cleanup and redevelopment
  • 52. Confidential Page 52 Supply Shock #2: Government Action Kyoto Protocol Members (Green) Source: Wikipedia
  • 53. Confidential Page 53 Energy and Utilities •Power Generation •Electricity and Gas Transmission •Pipelines and Storage •Wireless Towers Water •Desalinization Treatment •Delivery •Testing •Infrastructure •Water Utilities •Water Rights •Utility privatization •Waste & Environmental Services Agricultural Productivity •Fertilizer/Seeds •Farming Equipment •Ethanol/ Biodiesel Producers •Food Manufacturers •Paper/Forest Products Alternative Energy •PolySilicon •Solar Equipment •Smart Metering •Efficiency •Wind Components •Wind Turbine •Wind/Solar Operators •Fuel Cells •Geothermal •Lighting •Batteries Transportation •Toll Roads •Airports •Seaports •Efficient transportation Arbitrage •Weather •Energy •Power •Hydro Power •Commodities •Carbon Arbitrage Confidential Page 53 Thematic Investment Sub-Sectors
  • 54. Confidential Page 54 2013 Report Card: Dams • Average age of 84,000 dams in U.S. – 52 years • Many built as low-hazard dams protecting undeveloped agricultural land • High hazard dams continued increase to 14,000 in 2012 Source: ASCE 2013 Report Card for America’s Infrastructure
  • 55. Confidential Page 55 Climate Change: Investment Opportunities and Risks “The challenges facing the planet today are unprecedented and extraordinary, climate change, weather, water scarcity, poverty, disease, growing inequality of income and wealth, demographic shifts, trans-border and internal migration, urbanization, and a global economy in a state of constant dramatic volatility and flux, to name but a few. While governments and civil society will need to be part of the solution to these massive challenges, ultimately it will be companies and investors that will mobilize the capital needed to overcome them.” Sustainable Capitalism, February 15, 2012, Generation Investment Management
  • 56. Confidential Page 56 Increase of Extreme Weather Events • Mid Atlantic and Northeast US States ▫ Extreme shift in weather pattern severity and frequency ▫ More frequent flooding due to sea level rise, storm surge, and wind damage Source: www.wunderground.com/hurricane 0 5 10 15 20 25 30 1850 1870 1890 1910 1930 1950 1970 1990 2010 Frequency Year Number of Storms and Hurricanes Per Year in the North Atlantic Storms Hurricanes 5 per. Mov. Avg. (Storms) 5 per. Mov. Avg. (Hurricanes)
  • 57. Confidential Page 57 Climate Change and Weather Patterns
  • 58. 127 139 152 158 177 201 243 310 1,173 1,330 101 118 304 205 268 207 338 404 1,620 1,470 - 500 1,000 1,500 2,000 Japan Russia Nigeria Bangladesh Pakistan Brazil Indonesia United States India China Forecast for Year 2050 Current Population (in Millions) Global Focus on World Population Growth Source: U.S. Census Bureau. Source: http://maps.grida.no/go/graphic/world_population_development. Phillippe Repacewicz, UNEP/Grid-Arendal. Population (Billions) 1 2 3 4 5 6 7 8 9 Year 1804 1927 1960 1974 1987 1999 2011 2025 2045-50 Years Elapsed 123 33 14 13 12 12 14 20-25 Confidential Page 58
  • 59. 0 100 200 300 400 500 600 Mozam… Uganda Rwanda Haiti Ethiopia Cambo… Angola Niger Burkin… Nigeria Ghana Kenya Bangla… China India UK Philippi… Peru Brazil Germany Denmark Austria France Norway Spain Mexico Japan Italy Australia U.S. Average Water Use Per Person Per Day (Liters) Global Focus on Water Usage and Availability Source: United Nations Development Program, Human Development Report 2006. Source: USGS. http://ga.water.usgs.gov/edu/earthwherewater.html Where is Earth’s water located? Picture of Earth showing if all water (liquid, ice, freshwater, saline) was put into a sphere it would be less than 870 miles in diameter. Confidential Page 59
  • 60. Confidential Page 60 Farm Expenses
  • 61. Confidential Page 61 2013 Report Card: Levees • U.S. estimated 100,000 miles of levees can be found in all 50 states • Reliability of levees unknown in many cases
  • 62. Confidential Page 62 2013 Report Card: Bridges • Over 200 million trips across deficient bridges in U.S. per day • FHWA estimates cost of eliminating bridge backlog by 2028 at $20.5B per year • Only $12.8B per year currently being spent Source: ASCE 2013 Report Card for America’s Infrastructure
  • 63. Confidential Page 63 2013 Report Card: Aviation • 33 million more commercial flights in 2011 vs. 2000 • FAA estimates cost of airport delay and congestion at $22B in 2012 • FAA estimates this cost to rise to $34B in 2020 and $63B by 2040 Source: ASCE 2013 Report Card for America’s Infrastructure
  • 64. Confidential Page 64 2013 Report Card: Rail • In 2012 Amtrak recorded highest year of ridership with 31.2 million passengers • Current ridership is double that of 2000 • In 2010, freight railroads renewed rails on more than 3,100 miles of track • Since 2009, more than $75B capital investment from freight and passenger railroads
  • 65. Confidential Page 65 2013 Report Card: Transit • Unlike other U.S. infrastructure systems, transit system is not comprehensive • 45% of American households lack any access to transit • $90B cost for deficient transit systems in the U.S. in 2010 Source: ASCE 2013 Report Card for America’s Infrastructure
  • 66. Confidential Page 66 2013 Report Card: Roads • 42% of U.S. urban highways remain congested • Congestion costs estimated at $101B per year in wasted time and fuel • FHWA estimates $170B capital investment needed per year to improve Source: ASCE 2013 Report Card for America’s Infrastructure
  • 67. Confidential Page 67 2013 Report Card: Energy • U.S. relies on an aging electrical grid and pipeline distribution systems, some from 1880s • Natural gas and oil will become a greater challenge after 2020 as population increases
  • 68. Confidential Page 68 Five Investment Themes of TerraVerde Capital Confidential Page 68 • Growing global populations are expected to increase by two billion people before 2050. • Depleting natural resources are under stress with increased population growth • Water and wastewater are becoming critical global issues • Unpredictable and severe weather patterns causing resource constraints in agriculture and shifting demands on an aging infrastructure • Increasing corporate and consumer awareness of sustainability in the U.S
  • 69. Confidential Page 69 Opportunities in the Infrastructure Sector • Growing Energy Imbalance and Demand for Fossil Fuels: Leverage opportunity by investing in undervalued and mispriced U.S. and global infrastructure stocks benefitting from secular shift towards energy, transportation, transmission, water, and water resources • Niche Investment Opportunities: Global strategies that provide low correlation to other asset classes • Intense Sector Competition: Intense pricing competition within many industries resulting in big winners and losers • Industry Contacts and Fundamental Insight: Leverage industry contacts with fundamental insight and information networks in infrastructure, renewable energy, and water related markets • Identify Growing Sector Problems and Companies that Can Provide Solutions • Shorting Opportunities: Companies with weak balance sheets, poor management, and poor product introduction
  • 70. Confidential Page 70 Paradigm Shift: New Sources of Energy – 2 • Fundamental changes in the U.S. energy industry are creating significant opportunities to invest in North American energy infrastructure as new shale plays are typically in regions with little or no take-away or processing infrastructure • Shifting North American supply basins present growth opportunities for energy infrastructure players • Shale “haves and have nots” – market has bifurcated energy and power companies’ performance that have significant exposure to shale • M&A heating up • Washington political backdrop encouraging more development of domestic energy to support job growth and national security
  • 71. Confidential Page 71 Aging of U.S. Infrastructure – Part I: Power Plants Capacity (GW) Coal Nat Gas Nuclear Hydro Other Renew Total 50 years and older 234 120 44 85 47 2 532 40 to 50 years old 62 18 51 10 3 7 151 Less than 40 years old 10 77 2 3 6 5 103 Total Capacity Reserves 306 215 97 98 56 14 786 Age Distribution of Current U.S. Generating Capacity in 2030 Number of Generating Units Coal Nat Gas Nuclear Hydro Other Renew Total 50 years and older 1,197 2,015 55 2,928 1,951 167 8,313 40 to 50 years old 211 700 46 717 364 543 2,581 Less than 40 years old 72 1,165 2 184 601 596 2,620 Total Capacity Reserves 1,480 3,880 103 3,829 2,916 1,306 13,514 Source: Energy Information Administration (EIA), Electricity Generation Capacity – Form EIA-860 Database
  • 72. Confidential Page 72 Demand Growth #2: Fixing Old Cities But the Developed World Needs Infrastructure Updates! Water and Environment Transportation Public Facilities Dams D Aviation D Public Parks and Recreation C- Drinking Water D Bridges C + Schools D Hazardous Waste D Inland Waterways D- Levees D- Ports C Energy Solid Waste B- Rail C + Energy D+ Wastewater D Roads D Transit D Broken, Dirty, and Inefficient!
  • 73. Confidential Page 73 • Carbon Trading • Desalination • Energy Storage Investment Opportunities: Niche Markets
  • 74. Confidential Page 74 Indices: Infrastructure & Clean Energy Brookfield Global Infrastructure (BJBGI) Wilderhill Clean Energy (ECO)
  • 75. Confidential Page 75 • Monday, May 27, 2013 Source: cnn.com

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