peter adriaens, phd, bceem investment professor...
TRANSCRIPT
Peter Adriaens, PhD, BCEEMProfessor of Environmental Engineering, Finance,
and EntrepreneurshipCenter for Venture Capital and Private Equity, The
Ross School of Business
Director, Center for Smart Infrastructure Finance, College
of EngineeringThe University of Michigan, Ann Arbor
[email protected](734)709-0065
Investment Strategies in the Forestry Value
System: A Great Lakes Regional
Perspective
Benchmarking Great Lakes Forest Investment
Data sources: Bloomberg, Michigan Forestry Industry
1. Impetus for study: The Finnish Experience
2. Emerging Forestry Ecosystem
3. Traditional investment in paper mills
4. Equity and P3 investments for forest bioeconomy industries
5. A snapshot of the Great Lakes forest investment ecosystem
6. Project Finance: Bankable projects for
Forest Bioeconomy Strategy: A Finnish Story
Data sources: Finnish Forestry Industries, Ministry of Economic Affairs and Employment
• By 2005, competition on cost for the same product was impacting Finnish forestry companies, resulting in layoffs and poorfinancial performance
• A government policy strategy to promote the bioeconomy started taking hold in the first decade of the 21st century
• By 2016, the bioeconomy represents 16% of the national economy, whereby 40% is derived from forestry
• The target by 2030 is to increase the bioeconomy to $109 bn and increase forest products to 70%.
Tactics: Setting the Strategy in Motion
Criteria for public procurement and incorporation of bio-based products in urban sustainable development
Fund structures for pilot and full-scale demonstration projects using public-private partnerships
Education of consumers and industries to promote demand of forest biobased products and services
Development of standardization and certification processes of bioeconomy products
Retraining and re-education programs to ensure workforce development and availability
Blue Ocean Strategy:Forests as Biorefineries for Green Chemistries
Brands
Potential Investment Universe
1. Textiles: 141 deals; $1.6 bn.2. Plastics: 461 deals; $3.5 bn. 3. Pharmaceuticals: 63 deals; $0.7 bn.4. Cosmetics: 92 deals; $2.1 bn.
Source: Finnish Forestry Industries
Traditional Investment in Mill Operations
Data sources: Bloomberg, Michigan Forestry Industry
Investing in Emerging Forestry Value Chain
Data sources: Bloomberg, CleanTech Group, Pitchbook
Private equityVenture capitalCorporate venture, strategic, M&A
Corporate strategic, M&A, sales-driven reinvestment
Private Investment Risk and Expectations
Type of Financing
Bus/TechStage
What’s Happening
Gov’tGrant
or Angel
Concept
Research
Seed
BusPlan
TechDev
EarlyStage
VC
Proto-type
MarketDev
Expan-sion
Capital
Pilot
EarlySales
GrowthCapital
Commer-cial
Product
RecurringRevenue
Venture/MezzDebt
MarketAdoption
PositiveEBITDA
Proj FinDebt,
Equity,Tax Equity
MarketAccept-
ance
Securable Assets
IPO/Acq
MarketAccept-
ance
RevenueGrowth
CorpDebt
Mature
StableRevenues
PIPE(private
investment in public
equity)
Mature
StrategicPartner
Buy Out
Rebirth
Un-coveringHiddenValue
VC (money in) ‘Exit’ (money out)
Venture Capital Investment:A Regional Perspective of Great Lakes States and Provinces
0.0001%
Technology:2%
Forestry Investor Universe in the Great Lakes Region
Source. CleanTech Group i3 Platform
Exemplar VC Investments
Source. CleanTech Group i3 Platform
Specialty chemicals (e.g. Vertichem, Ontario; $4 M.). Green specialty chemical company. Investors are Dundee Venture Capital and Bank GutenbergCommodity chemicals (e.g. Renmatix, Pennsylvania; $132M). Production of cellulosic intermediaries for biochemicals and biofuelsInvestors include Kleiner Perkins, Waste Management, Total, Bill GatesFiber (e.g. Fiber Byproducts Corp, Indiana). Recycler and reprocessor of wood waste for consumable products. Investors include BeringeaBiofuels (e.g. Woodland Biofuels, Ontario; $20M.). Cellulosic conversion to biofuels. Investors include InvestecoCapital, Arctern Ventures, Middleland CapitalCarbon (e.g. Finite Carbon; Pennsylvania; $2 M). Carbon aggregation platform. Investors include TL VenturesDrones/software (e.g. DroneSeed, Washington; $5 M.). Reseeding technology for forests. Investors include Techstars and Social Capital SyndicateAdvanced Materials (e.g. Spinnova, Finland; $3.2 M.). Producer of novel fiber products from wood-based biomaterial. Investors: Lenzing AG, VTT Ventures Ltd, Besodos Investors Ltd and Finnish PE.
Venture Capital Investment:Exit Valuations Relative to Other Sectors
Project Finance (Debt + Private Equity): Investing in Bankable Technologies and Products
Structure
*SPV, Special Purpose Vehicle No Great Lakes forestry companies involved in project finance!
Execution
Developing a Blue Ocean Investment Strategy: Scaling Value-Added Great Lakes Industries