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True capital usa & aum clean energy india executive summary


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True capital usa & aum clean energy india executive summary

  1. 1. Executive Summary Confidential TRUECAPITAL LLC AUM Clean Energy Private Limited Inputs by: Srujan Bronthala, ConsultantMichael Herlache, ex-Asset Management and Investment Banking Associate
  2. 2. ABOUT USTrueCapital is a Consulting-cum-Investment initiative focused on Clean Energy sector in India.CONSULTING Initiative ("India-Texas Clean Energy Alliance"):1) TrueCapital ties with political/business authorities in West Texas (Clean Energy capital of Americas);2) TrueCapital has access to the team of best Developers, Project Managers, Transmission, Logistical,Markets and Policy experts from Texas and India. TrueCapital also has access to Texas Wind EnergyClearinghouse, The US Wind Alliance, Great Plains Energy Alliance, Southwest Energy Coalition, etc. andeducational institutions like Texas Wind Energy Institute, NIRE (including Texas Tech University), etc.which means first-hand knowledge of cleantech innovations via R&D initiatives at Texas universities;3) TrueCapital has also built a clean energy industry expert team to assist for implementation of publicand private Renewable projects in the state of Texas, via the operational expertise of TrueCapital’s Teamin India (AUM Clean Energy Private Limited), rewarding potential labor cost-cuts. Our India Team shallalso work in collaboration with the US Team to consult Indian Government Ministries like MNRE andMoP to implement green initiatives in India, based on proven models in Texas (built upon Teamsinternational experience with governments in Germany, Canada, and Kenya). The Team also intends tobuild Rural/Workforce Development, Manufacturing Supply Chain Inputs, and Clean Energy Educationmodels in India and USA. We also pursue Academic Initiatives with some US universities outside Texas.INVESTMENT Initiative ("TrueCapital Partners Clean Energy Fund I, L.P."):4) TrueCapital has prepared the Private Placement Memorandum for launch of approximately $120MMPrivate Equity Fund (size flexible based on market demand and Investors interest), focused onInvestment in strong ROI Clean Energy projects in India and Texas. TC has access to organizations likeCentral Electricity Authority under Ministry of Power for access to shortlist such investments from aplethora of Indian govt.-approved projects. We see this as buying an emerging market bond thatsatisfies private equity returns. A portion of the Fund shall be allocated to Texas to diversify theportfolio, and mitigate emerging-market risk with developed-economy investment, while maintainingsuperior returns;5) TrueCapitals Team has access to Investment and Operations experts in India and USA who selectthese projects after extensive due-diligence, targeting 20% Annual IRR with 5-7 years exit;6) TrueCapial has already touched base with leaders at Ministry of Power, Ministry of New andRenewable Energy, Power Finance Corporation, India Rural Electricity Development Association, etc. TCis pursuing environmentally-responsible investors in both India and Texas. In India, TC intends topropose to PFC to become the key Limited Partner for its Fund, as there are huge operational andinvestment synergies between both firms. PFC is Indian government’s nodal agency for investment inpower sector, and recently floated a SPE, ‘Equity Investment Group’, to specifically provide financing toprojects in the clean energy sector. TC provides a better alternative to the SPE strategy by PFC to boostclean energy sector investment in India. We prefer public-private investors, for a cohesive & lean Fund.
  3. 3. MARKET ANALYSIS: INDIA CLEAN ENERGY MARKET OPPORTUNITYEconomic and legislative developments in India indicate a growing nation in terms of size of populationand increasing spending power of the population. The Government of India recognizes the importanceof securing sustainable energy sources, which are currently recognized as insufficient, to support thecountrys economic development and increasing energy requirements. At present, India has a 15.2%peak demand power deficit and an additional 300,000MW capacity is required by 2017. TheGovernment of India has a target of 10% of power from renewable by 2012 and 20% by 2020. Currentrenewable capacity is at 13,879MW and the forecast is for 40,500MW renewable capacity by 2017.Currently, the clean energy sector in emerging economies, specifically India, presents an attractiveinvestment opportunity. Demographic trends and world-wide political pressure continue to createsignificant opportunities for projects that can consistently deliver clean energy to industrializingcountries starved for Power needed to grow their economies. Investment opportunities fueled by thesetrends exhibit sustainable growth and can be identified, analyzed, and invested in on proactive basis.In India’s 11th Five-Year Plan (2007–2012), the government aims to achieve a GDP growth rate of 10%and maintain an average growth of about 8% during the next 15 years. This growth will be highlydependent on the expansion of the country’s energy consumption. Due to rapidly expanding demandfor power, a capacity addition of over 100,000MW is planned through 2011 and 2012. Though this islargely based on growth of thermal generation, the contribution of electricity from renewable sources isexpected to increase, with wind energy continuing to lead the way. One of the major requirements fordeveloping this sector is the availability of cost-effective technologies and successful demonstrations.Projected addition of 15,000 MW from renewable energy could lead to $21 billion in investment overnext 10 years. A number of market drivers spur the development of clean energy markets in India:1. Existing and projected gaps in the electricity supply;2. Increased dependence on fuel imports to augment the electricity supply;3. Rising prices of fossil-fuel-based energy delivery (prices reached $140/barrel in 2008);4. Potential for locally available renewable energy resources and need for energy portfolio diversity;5. Favorable policy environment at all levels to promote clean technologies and investment climate;6. Expanded financial support for renewable energy and energy efficiency locally and internationally;7. Growing carbon credit markets, like Clean Development Mechanism (CDM), voluntary markets, etc;8. Local capacities and capabilities to harness clean energy at relatively inexpensive local labor supplies;9. Growing environmental, social, and health concerns over fossil fuel development.India is 4th-largest GHG emitter, 2nd to China as fastest-growing GHG emitter, and exceeds nationalambient air quality standards in 8 major cities. There is an acute need for development of clean energy.
  4. 4. TRUECAPITAL MARKET OPPORTUNITYWithin this emerging market, TrueCapital utilizes its proprietary Vertical Process to identify the sub-segments with sustainable growth, strong economics, and attractive investment and consultingcharacteristics. This is accomplished through a systematic application of demographic, consumer,political and economic screens which filter the entire sector down to a defined group of sub-segmentsand niches that are supported by strong long-term fundamentals. TrueCapital then focuses onidentifying the best projects in each of these targeted sub-segments for potential investment orconsulting. The clean energy sector as a whole represents an attractive arena for the following reasons:1. Ministry Approved Projects – TrueCapital has direct contacts at Ministry of Power, Ministry of Newand Renewable Energy, Central Electricity Authority, Power Finance Corporation, etc. Thus, TC plans towork at the highest level between India and US, utilizing its political clout like no one else’s;2. Large Target Market – While the Central Electricity Authority under Ministry of Power primarilyfocuses on Thermal and Hydro, it is very well complemented by Ministry of New and Renewable Energy,which mainly focuses on Solar and Wind. Thus, it provides TrueCapital a wider array of choices forprojects already approved by the Ministry;3. Stable Growth – The energy sector is one of the strongest categories of the economy in terms of riskadjusted revenue growth, and low volatility with respect to such growth. The energy sector hashistorically provided dependable, low-risk revenue growth;4. Strong Margins – The energy sector where TrueCapital focuses has exhibited substantial and stablemargins, which, on a risk adjusted basis, are highest amongst all major sectors of the India economy;5. Political Pressure – There are more than enough incentives for clean energy at both the central andstate levels in India, and TrueCapital provides a new and innovative approach of private investment andinternational consulting. In fact, there have been very positive changes made in the recent past toPower Finance Corporation under Ministry of Power, and Ministry of New and Renewable Energy itself,to drive clean energy investment in India;6. Demand Outstripping Supply – At this stage, the largest demand is in form of state governmentcontracts in India, and even though there are a lot of new corporations attracted to the clean energysector, the ones with a satisfactory supply chain to fully develop and deliver the end-result as per thecontracts, are few and far between;7. Emerging Sector and Attractive Valuations – Although they are some of the largest sectors of theeconomy, TrueCapital’s target Vertical has not historically been an area of consulting, or activeinvestment by the private equity industry.
  5. 5. HUMAN CAPITALTrueCapital was founded by experienced investment bankers, who set out to build a leadingindependent financial services firm serving clean energy with particular emphasis on US and India, basedon principles of Truth. Our extensive sector relationships and industry expertise allow us to source andinvest capital globally. Furthermore, our deep local roots in India, along with surrounding regions inSoutheast Asia, and US, uniquely positions us as the go to financial advisory firm for specific projects.Management TeamGaurav Joshi Founder and CEOAruna Vishwanathan Investment AdvisorVijay Kannan Director, Business DevelopmentGregory L. Wortham Technical Team Leader, USAVasudev Avadhani Technical Team Leader, IndiaN. Beth Emery Markets & Policy Analysis Team LeaderSam Fleet Director, Investor RelationsKaren Naumann Director, Public RelationsGirish Chandra Joshi Advisor, Director-Hydro, CEA under Ministry of PowerGurpreet Singh: Chartered AccountantKey Central & State Government Ministers within TrueCapital’s chain of relationshipsMember, Planning Commission (under India PM) Mr. B.K. Chaturvedi (head of energy sector)Minister of Power Mr. Sushil Kumar ShindeMinister of New and Renewable Energy Dr. Farooq AbdullahChairman & MD, Power Finance Corporation Dr. Satnam SinghINVESTMENT OPPORTUNITYWe need capital infusion through JV partner to build infrastructure in Houston and India to implement TCconsulting initiatives. Our initiatives include implementing Indian clean energy projects, communitydevelopment, and working with Indian industry, central & state government leaderships, educational &research institutions, as the US Technology/R&D partner. TC is also expected to incur legal & marketingexpenses towards the launch of its PE fund, backed by Indian political & business authorities, approachedthrough AUM Clean Energy (TC India affiliate). JV Partner gets preference as Fund’s LP/ GP (negotiable).