Private equity funds opportunities

Ambienta

Having raised 217.5 million euros, Ambienta I leads the European private equity funds specialising in environmental and climate change related investments. It is the principal fund with Ambienta sgr, an asset management company established in November 2007 and subject to the control of the Bank of Italy.

Mitigating climate change and finding alternatives to fossil fuels are among the, if not the greatest of, challenges mankind faces. Reducing emissions from industrial activities, transportation and heating is crucial to maintaining an acceptable quality of life.

Much of the effort towards these goals is centred on developing new technology. Ambienta is convinced, however, that great benefits can be reaped in the medium term by funnelling funds towards companies already in the environmental sector looking for growth or expansion capital or towards advanced start-ups using proven technologies. To this end, with its private equity fund, Ambienta can act as minority or majority investor. Through the use of mostly asset-backed financing, it is aiming at mobilising around two billion euros of investments.

The complete spectrum

Ambienta I covers a broad spectrum of opportunities spanning different drivers – renewable energy, energy efficiency, air and water pollution mitigation – and encompassing sectors including electricity generation and transmission, transport and automotive, industrial goods, buildings and construction, water re-use and treatment, waste and recycling as seen in Exhibit 1.

The fund’s target companies are expected to show a significant role, either current or prospective, in at least one of the following areas:

• Reduction of greenhouse gas emissions;
• Improvement of energy efficiency;
• Reduction of emissions deemed harmful to mankind or the environment;
• Enhancement in the use of water resources; and,
• Improvement in waste treatment through a reduction in waste or increased recycling.
  

Ambienta I typically invests in private companies, but reserves the right to invest in listed companies up to a maximum of 20% of the funds raised. It also plans to invest up to 10% in late-stage venture capital opportunities.

The firm plans to build a well-diversified portfolio of approximately 15 companies, with an average investment size between 10 and 20 million euros. The fund aims to acquire either qualified minority stakes or majority stakes, and to achieve a minimum internal rate of return of 20%. Companies need to have a clearly defined path for potential exit strategies in three to five years.

Geographic scope puts a heavier weight in Europe and the United States, US, (expected to take up approximately 80% of the total funds), in line with the fund’s objective of playing an active role in managing the invested companies, without however neglecting higher growth countries such as China. In the US, Ambienta is forging special links with the soon-to-be-launched New World Capital Fund.

Ambienta sgr is 70% owned by its management team of four partners who collectively decide Ambienta I investments. The team has extensive prior and diverse experience in the environmental sector, industry and private equity operations:

• Nino Tronchetti Provera, CEO and founding partner, formerly a senior executive in Telecom Italia and co-founder of Cam Tec, the company that developed Gecam (also known as ‘white diesel’, a diesel fuel substitute that brings particulate matter pollution down by 50%);

• Rolando Polli, founding partner, a former McKinsey managing director of Italy and Spain and subsequent business angel who co-founded Atmos, the first Italian investment club focused on the environment;

• Guido Rivolta, with a strong technical background in energy and automotive and prior experience in Piaggio, Pirelli Ambiente and Cam Tec (which he co-founded with Nino Tronchetti Provera); and,

• Mauro Roversi, formerly a partner in SG Capital Europe Advisors in charge of the Italian investments within this multinational Private Equity Fund.

The remaining 30% is owned by Italy’s second largest bank IntesaSanPaolo (at 40 million euros, they are the fund’s largest investor) and a group of well-known individuals, contributing 53 million euros. The remaining funds raised by Ambienta I have been provided by insurance companies (83 million euros) and pension funds (56 million euros). International investors include Doughty Hanson and Macquarie.

Investments to date

• ICQ, a leading independent Italian renewable energy developer active in wind, hydro, solar, biomass and landfill gas power generation, with 95 MW of installed capacity and an additional pipeline of 380 MW (200 of which fully authorised), in which Ambienta I invested 20.5 million euros for a 15.6% share in September 2008; and,

• Italiana Pellet, a start-up for the production of wood pellets in northern Italy poised to become the largest player in a fast growing industry, in which Ambienta I invested 5.4 million euros for an 80% share in August 2008.

Ambienta sgr is supported by a diverse and broadly represented advisory board, ensuring it is ahead of expected developments in the environmental and climate change sectors and maintain best-in-class opportunities.

Ambienta
W: www.ambientasgr.com

The internal combustion engine is a major source of CO2 emissions. Vehicles emit CO2 during manufacturing, use, and disposal. The split between the three areas has been estimated as 10%, 85% and 5% by a British auto industry trade group. Manufacturing a 2009 Honda Civic uses 715 gallons of petrol, while a new Prius needs 1,000 gallons. The Prius uses more energy because of the nickel batteries. The US Department of Energy has produced a model that will calculate the energy cost of new cars, based on the amount of energy needed to transform raw materials into car parts. This can be found by visiting here