UNIDO / GEF Global Clean Tech Innovation Programme
Special Event at VEF An Introduction to
Private Financing Advisory Network
Peter Storey
Vienna 9th May 2017
Overview Clean Energy Investment Accelerator: PFAN advises low-carbon, climate resilient businesses in developing countries, and matches projects to appropriate private financing.
PFAN mobilizes private financing to reduce GHG emissions and build climate resilience – contributing to Paris Agreement and Sustainable Development Goals:
o Paris Agreement Impact: Mobilize USD 100 billion per year by 2020 of private and public financing
o SDG Impact: SDGs 7 (Energy), 9 (Industry), 13 (Climate Action), and 17 (Partnership).
PFAN operates on a low-risk, low overhead networking model based on fixed-fee project development and transaction advisory services
Where We Are Now (2)
PFAN is one of few actors in the climate finance space addressing key barriers for Small and Medium-sized Enterprises (SMEs) in developing countries and emerging economies:
DEMAND
Oversupply of poorly structured projects
Lack of financial & commercial
skills
SUPPLY
Large Financing Supplies
Underdeveloped investment cultures and risk assessment
Low familiarity with
technologies & business models
Limited supply of Investor Ready Projects / Limited Investment Readiness
PFAN – Rationale A multi-pronged approach
PFAN Development Profile
Project
Idea /
Concept
Pre-
Feasibility
Development
Technical
Feasibility
Commercial
Feasibility Implementation
High Risk Decreasing Risk
Own Money
Sweat Equity
Friends & Family
Angel Investors
Dvpt Finance
DFIs
Philanthropic Institutions
Strategic Investors
Private Equity
Impact Investors
Development Banks
Venture Capital
Financial Investors
Banks
Linkages with DFI Activities / Programmes
Tipping Point TA Facility PFAN
PFAN Services
• Professional advice
• Proven methodology
• Network members
• Local and global understanding
• Investor forums
• Investor Roadshows
• 1-1 introductions
• Investor Network
• Identifies strengths and weaknesses for focus of coaching
• Feedback from investors and experts
• Deal facilitation
• Technical studies
• Due diligence and legal costs
• Co-funding Tipping Point
Technical Assistance
Project ID Investment Readiness
Assessment
Strategic Advisory & Coaching
Financing Facilitation
Project Criteria
PFAN PROJECTS
Commercially Viable
Growth Potential
Experienced
Management Team
Development Impact
(SDGs)
Climate Impact
Technically Viable
• USD 1–50 million total investment in low carbon, climate resilient projects
• Micro projects (< USD 1 million)
• Wind/ Solar / W2E Biogas / Hydro / Energy Efficiency / Biomass / Biofuels / Geothermal / Rural Electrification / Clean Transport / Mitigation / Adaptation
• Technology Neutral
Global Snap Shot of PFAN
PFAN Track Record
USD 1,2 billion raised
87 projects
701 MW installed capacity
Projects closed
Leverage ratio:
1 / 80
2,6 million tonnes CO2e pa
141 GWh pa
energy savings
USD 8,7 billion Pipeline 358
projects
4.900 MW
capacity
17,6 million tonnes CO2e pa
Pipeline Analysis
15% 0%
7%
28%
2%
17%
13%
8%
3%
7%
Region
S Asia Asia Pacific
China SE Asia
CISCA East Africa
Southern Africa West Africa
LA / Brasil CAC
8%
18% 13% 5%
3%
15%
5% 19% 2%
7%
5%
Technology
Biofuels Biomass Biogas
W2E Clean Transport Hydro
Wind Solar Geothermal
EE Other
Closed Projects Analysis
12% 10%
3%
33%
27%
12%
3%
Region
Southern Africa E Africa W Africa
SE Asia S Asia China
LAC
Hydro 17%
13%
W2E 4%
Wind 6%
Biofuels 6%
Solar 18%
EE 14%
Biogas 16%
Clean Transport 6%
Technology
Hydro Biomass W2E
Wind Biofuels Solar
EE Biogas Clean Transport
PFAN Value Added
• Comparative advantage: Originating quality, investment-grade pipeline for multilateral and private sector investors
• PFAN is a complementary Technical Assistance Service focused on SMEs that facilitates effective disbursal of climate financing, including through the Regional Development Banks, the Green Climate Fund and the UN Climate Technology Centre and Network
• High degrees of financial leverage for Donors
USD 80–100 leveraged for every dollar of public funding
Unique low overhead networking business model based on fixed fee investment advisory services
Contact Us!
PFAN Global Coordinator: Peter Storey
UNIDO: Patrick Nussbaumer [email protected]
REEEP: Martin Hiller [email protected]
www.cti-pfan.net
Thank You!
Project ID 221/REEEP_022
Regions Southern Africa
Country South Africa
Technology Types Biogas
Business Type Greenfield
Debt Asking Amount
$9,450,000
Equity Asking Amount
$4,050,000
GHG Mitigation Potential (tonnes CO2e pa)
17,000
Bio2Watt Bronkhorstspruit Biogas Power Plant
South Africa
BPP uses cow manure from an industrial scale cattle lot to produce biogas and generate electricity for supply to a dedicated industrial off-taker, generating 4MW of electrical power and 4MW of thermal power
Project ID 280/NIG_204
Regions West Africa
Country Nigeria
Technology Types Biofuels
Business Type Scale-Up
Debt Asking Amount
$15,700,000
Equity Asking Amount
$850,000
GHG Mitigation Potential (tonnes CO2e pa)
5,400
SME Funds / Green Energy & Biofuels Ethanol Bio-Refinery Plant Scale-Up
Nigeria
SME uses waste saw dust and water hyacinth to produce bio-ethanol and bio-ethanol gel using its proprietary 2nd Generation biofuels technology in mini-refineries. The bio-gel is distributed with cook stoves to households in rural Nigeria through an innovative distribution model
Solar Project Fund for Commercial Off-grid Solar and Rural Micro-grids in
Nepal
Project ID 394/GCC_245
Regions Asia
Country Nepal
Technology Types Solar
Business Type Scale-Up
Debt Asking Amount
$18,414,000
Equity Asking Amount
$8,276,400
GHG Mitigation Potential (tonnes CO2e pa)
17,520
Gham Power uses a unique project aggregation platform that enables rapid qualification and development of large scale projects that primarily focus on powering commercial activities for financial sustainability.
Learnings from Projects Seen (1)
• Lack of Ask
• In-appropriate Capital Structure
• Investment Vehicle
• Un-realistic Valuation & calculation basis
• Unrealistic Exit Options
• eg listings or IPOs
• Investors prefer self-liquidating structures or strategic sales
• Poor Understanding of Business Model
• Project Rationale
• Pricing, Positioning, Value Proposition, Investment Readiness
• Plausible & verified assumptions
Learnings from Projects Seen (2)
• Poor presentation, manipulation of Financial Information
• Ownership & Understanding
• Appropriate Ratios & Metrics
• Poor Risk Analysis & Mitigation
• Which are the risks which put you out of business?
• Some risks not capable of mitigation
• Climate & Agricultural risks
• Some risks may also represent opportunities
• Correlation of risk to Key Success Factors
• Mismatch of Developers’ & Investors’ Expectations
• Approaching the ‘wrong’ investor at the ‘wrong’ time
Trends & Observations
• RE Assets are increasingly a recognized asset class in their own right
• Competitiveness of Solar without need for subsidy or support
• Esp in Rural Electrification & Off-grid Applications
• Innovative Business Models for BoP markets
• DESCOs / DREU / PAYG
• Integration of ICT / Mobile Technology / Mobile Money
• Demographic challenges of distribution & servicing rural communities
• Businesses face early stage funding gaps for stock replenishment and to support financing packages
• Biomass & W2E remain challenging technologies / business areas
• Logistics for feedstock supply
• Volatility of feedstock supply and pricing
Trends & Observations (2)
• Favoured funding instruments:
• Convertible Debt Instruments
• Guaranteed Preference Shares
• Lack of funding for early stage proof of concept and late stage due diligence and fulfilment of conditions precedent
• Local Banking Markets are shallow and illiquid
• Need to develop the secondary market and access to wholesale capital markets
• Issues of Scale
• How do we reconcile top down approach of financing and capital markets and necessity for bottom up project identification and development?
•