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Norfolk House31 St James’s Square LondonSW1Y 4JRUKTel: +44 (0)20 7434 1122 Fax: +44 (0)20 7437 1245
Impax Asset Management Ltd is authorised and regulated by the Financial Services Authority
Impax is a registered investment advisor with the SEC
Opportunities & Challenges in the World of “New Gas”- Strategies for Success
Bruce Jenkyn-Jones, Managing Directorsub-advisor, Pax World GEM Fund
October 3, 2012
2
Impax Asset Management – An Introduction
*As at 31 August 2012. **Fully diluted interest following vesting of employee incentivisation awards in September 2012.
Client Breakdown
Impax Ownership
Institutions 56%Private Label Fund Clients
31%
Private Wealth, Endowments/
Foundations 10%
Others 3%
BNP Paribas 25%
Staff 34%**Others 41%
• $2.9 billion AUM*
• Global firm, established in 1998, with a London base and presence in Hong Kong, New York and Washington DC
• 27 investment professionals, with 27 support staff
• Thought leaders on Resource Scarcity & Environmental Sector issues
3
“New Gas Changes Everything!”
Energy
Alternative
Transport
Industrials
Buildings
Power
Storage
EnergyEfficiency
Water
Infrastructure & Technologies
Infra-structure
Treatment Equipment
Utilities
Testing & Gas Sensing
ControlSolutions
PollutionControl
Waste
Waste Management & Technologies
Recycling & Processing
Hazardous
Carbon & Asset
Trading
Env. Consultants
Environmental Support Services
General
TechnologyEquipment
Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity
Developers & IPPS
Solar
Wind Power
Biofuels
OtherEquipment
4
New Gas and the Photovoltaics Market – Challenges & Opportunities
Energy
Alternative
Transport
Industrials
Buildings
Power
Storage
EnergyEfficiency
Water
Infrastructure & Technologies
Infra-structure
Treatment Equipment
Utilities
Testing & Gas Sensing
ControlSolutions
PollutionControl
Waste
Waste Management & Technologies
Recycling & Processing
Hazardous
Carbon & Asset
Trading
Env. Consultants
Environmental Support Services
General
TechnologyEquipment
Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity
Developers & IPPS
Solar
Wind Power
Biofuels
OtherEquipment
5
2007 2011
PV Module Manufacturing Capacity
2007 2011
Total61.4 MW
Total4.0 MW
17%
52%
31%
Europe
ChinaRest of the World
2007 2011
47%27%26%
Sources: SWS Research 2011, Impax Asset Management. 2011 figures are estimated.
European PV Plant Installation Cost (€m/MW)
2007 2011
1.8
2007 2011
6.5
Dramatic Economies of Scale
6
PV breakeven cost in 2012 for Commercial Facilities: Default Rate Structure With Incentives
• 51.9% of load covered at breakeven price of $3/Watt and greater
• 16.9% of load covered at breakeven price of $5/Watt and greater
• 10.3% of load covered at breakeven price of $7/Watt and greater0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
$0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 $13
Breakeven Price
Distribution of Load Covered Default Rate WithIncentives
DRAFT RESULTS: DO NOT CITE
Source: Ong, Denholm, Margolis, NREL: Draft Results
7
Demand/Supply Imbalance in PV Market
Substantial Overcapacity….
…leading to price pressure… … and underperformance
8
New Gas + Intermittent RE = New Demands, New Possibilities
Energy
Alternative
Transport
Industrials
Buildings
Power
Storage
EnergyEfficiency
Water
Infrastructure & Technologies
Infra-structure
Treatment Equipment
Utilities
Testing & Gas Sensing
ControlSolutions
PollutionControl
Waste
Waste Management & Technologies
Recycling & Processing
Hazardous
Carbon & Asset
Trading
Env. Consultants
Environmental Support Services
General
TechnologyEquipment
Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity
Developers & IPPS
Solar
Wind Power
Biofuels
OtherEquipment
9
New Grid Realities Require New System Capabilities
Power Network Efficiency
ABB• Efficient transmission & distribution (‘T&D’) hardware products• Developed markets –
• grid reinforcement, reliability and renewables integration. • Emerging markets –
• new construction and rural electrification
Hubbell• T&D connectors, insulators and surge arresters (~90% of components on a tower) • Positioned to benefit from $300bn of investment in the US T&D grid by 2030
Itron• Intelligent metering products for electricity, gas and water • Worldwide meter market only 10% automated; 7% compound growth forecast
10
Transport Fuel of the Future? Profitable Today
Source:http://3.bp.blogspot.com/-bhttp://3.bp.blogspot.com/-bMWkTcpYUKk/UEeGvLQZM3I/AAAAAAAA0wA/Xp_JVt6QZks/s1600/09-07-2012a.pngMWkTcpYUKk/UEeGvLQZM3I/AAAAAAAA0wA/Xp_JVt6QZks/s1600/09-07-2012a.png
Annual Sales of NG Trucks and Buses by Segment
World Markets: 2012-2019Landi Renzo • Automotive OEMs and aftermarket kits • Strong market position • Strong recovery
• (i) Euro V launches, • (ii) gasoline tax = improved $$
Westport Innovations • Gas kits for heavy trucks• Numerous strategic relationships• Less attractive financials• Unattractive valuation - 3x EV/Sales
(2013)
Natural Gas Vehicles
11
Production Boom Yields Clean-up Bonanza
Energy
Alternative
Transport
Industrials
Buildings
Power
Storage
EnergyEfficiency
Water
Infrastructure & Technologies
Infra-structure
Treatment Equipment
Utilities
Testing & Gas Sensing
ControlSolutions
PollutionControl
Waste
Waste Management & Technologies
Recycling & Processing
Hazardous
Carbon & Asset
Trading
Env. Consultants
Environmental Support Services
General
TechnologyEquipment
Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity
Developers & IPPS
Solar
Wind Power
Biofuels
OtherEquipment
12
Exploration, Production Growth Expands Pollution Control, Remediation
Clean Harbors• Leading US hazardous waste company• Strong market position + barriers to entry growth• Strong balance sheet; excellent M&A record
Tetra Tech• Environmental advisors focused on US/Canada water; well placed as regulations ratchet up• Rapid revenue growth; $100m to $500m in 3-5 yrs• Strong balance sheet (zero net debt) positions well for M&A
Ecolab• Treatment chemicals for water, energy markets• Energy 17% of sales with broad exposure & growing opportunities from shale gas• Attractive business model with defensive growth (consumables)
Xylem• World’s largest water infrastructure /treatment company• Instrumentation for remote monitoring of water quality near fracking sites• Membrane technology used in treatment water clean-up
13
Summary
Expanded natural gas production is re-writing US energy & environmental markets
Resulting shifts will produce predictable sector winners & losers
Broadly diversified environmental investors can limit downside risk, pursue upside opportunity
Wide range of new opportunities for investor gain are already emerging
Well balanced holdings offer strong potential in high growth markets
14
Thank You
This document has been prepared by Impax Asset Management Limited (“Impax”, authorized and regulated by the Financial Services Authority). Impax is a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. The information and any opinions contained in this document have been compiled in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. This document does not constitute an offer to sell, purchase, subscribe for or otherwise invest in units or shares of any fund managed by Impax. It may not be relied upon as constituting any form of investment advice and prospective investors are advised to ensure that they obtain appropriate independent professional advice before making any investment in any such Fund. Any offering is made only pursuant to the relevant offering document and the relevant subscription application, all of which must be read in their entirety. Prospective investors should review the offering memorandum, including the risk factors in the offering memorandum, before making a decision to invest. Past performance of a fund or strategy is no guarantee as to its performance in the future. This document is not an advertisement and is not intended for public use or distribution. Under no circumstances should any information contained in this document be regarded as an offer or solicitation to deal in investments in any jurisdiction including, but not limited to, the United States of America. In particular, the shares of Impax Environmental Markets (Ireland) Fund, Impax Environmental Markets plc, Impax Asian Environmental Markets (Ireland) Fund, Impax Asian Environmental Markets plc and Impax Asset Management Group plc are not registered under United States securities laws and, subject to certain limited exceptions, may not be offered, sold transferred or delivered in the United States or to US persons.
Bruce Jenkyn-JonesManaging Director – Listed [email protected] / +44 (0) 20 7434 1122
Ken LocklinUS Managing Director (Washington DC)[email protected] / 703 476 1561
David RichardsonUS Managing Director (New York)[email protected] / 646 543 8182