SunShare: A New Way of Investing in Green

• SunShare is a renewable energy company offering the unique opportunity for individuals to invest in small shares of a photovoltaic power plant (average investment of 10,000 €):

o Contributing to a clean environment

o Limiting risk

o Receiving a high annual dividend of 12%

• Due to the attractive regulatory framework, the Italian photovoltaic energy market is a sound investment opportunity. Maximum profitability will be achieved by building in 2010 thanks to high government incentives (fixed for 20 years) and a large decrease in plant set-up costs in recent years

• The company’s business model is based on two key activities:

1. Fundraising, managed by a team with different expertise in private equity, consultancy and entrepreneurial ventures

Executive Summary

entrepreneurial ventures

2. Operations, managed by a well-known industrial partner (Solar Ventures) that would act as the general contractor, managing the project down to the smallest details:

o purchase of pre-authorized land

o supply of solar panels and all required equipment

o plant installation and maintenance

• Target investors are private investors looking for a high-return investment opportunity or people who are environmentally conscious. Investors will be reached through innovative channels

• Total investment is 4 million €* to be financed through 20% equity and 80% leverage

• The overall risk of the project is considered medium-low because 80% of the revenue stream is given by incentives that are guaranteed by law

• The exit strategy for investors would be through sales of shares to other investors or sale of the entire plant to a bigger company for a high premium

•We believe in this project so much the we are investing our personal money.

* Plus 440.000€ VAT that will be reimbursed by the government at the end of the first year

Agenda

• The Opportunity

• Market Trend

• Industry Profitability

• Investment Benchmarking

• The Investment

• Business Model• Business Model

• Team

• Industrial Partner

• Target Investors

• Financials

• Risk Analysis

• Exit Strategy

3

SunShare offers the opportunity for individuals to invest in

green energy production at a 12% return

• SunShare is a renewable energy company offering the unique

opportunity for individuals to invest in small shares of a photovoltaic power plant (average investment of 10,000 €):o Contributing to a clean environment

o Limiting risk

4

o Limiting risk

o Receiving a high annual dividend of 12% (beginning in year 2)

• The photovoltaic power plant will be built in the south of Italy (Apulia) by the end of 2010, thus taking advantage of the government incentives before the foreseen reduction for plants built in 2011

Due to an attractive regulatory framework, the Italian solar

energy market is a robust investment opportunity

5

…

15,417,0

5,2

20,020,0

8,5

Italy

European Union

-9%

Consumption of renewable energy out of

total (%)• EU target of renewable energy consumed out of total production =

20%

• Incentives from the Italian government in order to achieve this target:o fixed amount per unit of energy produced

The renewable energy market is expected to keep growing

fast…

2005 2020 Target 2020E

Solar power plant installation trend (MWp)

o duration of 20 years post-construction

• The incentives have resulted in a 142% CAGR of Italian solar installations, but this is not enough for Italy to reach the 2020 target. For this reason, the government could not significantly decrease incentives. Italy together with Belgium, Luxembourg, Malta, Bulgaria and Denmark are the only EU countries that are unlikely to reach the EU target

2.750

1.600900

41880

2007 2008 2009 2010E 2011E

+142%

Source: http://www.terna.it/default/Home/SISTEMA_ELETTRICO/statistiche/dati_statistici.aspx;

http://ec.europa.eu/energy/renewables/transparency_platform/forecast_documents_en.htmhttp://qualenergia.it/UserFiles/Files/Which_Member_States_will_meet_their_targets.pdf

6

Government

Incentives

DescriptionDrivers

34,635,336,0

0

20

40

2008 2009 2010

-2%

-20%

Incentives€ cent

€ Million

Trend

• In 2008 the government set an incentive per KWh produced, fixed for 20 years

• Plants going live in 2011 will benefit from different incentives (still to be determined) • These drivers make

2010 the most profitable year to complete construction

…and maximum profitability will be achieved by building

in 2010

Set-up Cost

Interest Rates

• The current low interest rates positively impact the financial structure for this operation (project financed with 80% leverage)

3,54,5

5,5

0

5

2008 2009 2010

-20%

4,03,84,8

0

5

2008 2009 2010

-9%

€ Millionper MWp

IRS 20y %

* incentives decreased by 2% per year as stated by the initial law

Source: Borsa Italiana, Interviews with suppliers7

• The set up cost for solar power plants dropped by 20% per year over the last two years

construction

• Next year, incentives will be

reviewed and profitability for future plants will be reduced, as law-makers take lower set-up costs into account

Euro Investment

Bond (20 y)125

150 Solar PowerPlant

Investment benchmark (100€ invested, end of 2005)

+48%

+30%

5-year

returnWe compared available investments and

their return over the last 5 years:

• Solar power plant (our project): This option has less risk because it is not linked to the volatility of the stock market and has a fixed rate of return. It is less liquid than an investment in listed stock and it starts distributing dividend in year 2.

• Bond (20 years): The reference base

The Opportunity: Investment benchmarking

2005 2006 2007 2008 2009 2010

Enel

Cir (Sorgenia)

MIB 30

100

75

0

100

50

Source: www.borsaitaliana.it

* Assuming dividend 0% the first year and 12% the following four

-28%

-29%

-34%

• Bond (20 years): The reference base rate for bonds with 20 years expiration date (IRS) plus a 2% spread (average of EU).

• MIB 30: Average of Italian Blue Chip listed companies

• CIR (Sorgenia): The industrial group that owns Sorgenia, the first green electricity producer/distributor. The market price reflects the entire portfolio of businesses, of which Sorgenia is only a small part.

• ENEL: The Italian incumbent electricity producer is one of the most traded stocks in Italy due to its low risk and stable business.

8

• The Opportunity

• Market Trend

• Industry Profitability

• Investment Benchmarking

• The Investment

• Business Model

Agenda

• Business Model

• Team

• Industrial Partner

• Target Investors

• Financials

• Risk Analysis

• Exit Strategy

9

DescriptionValue Chain

Fund

Raising

Key Success Factors

1 This is our innovation. We will raise funds from private investors, through small individual investments (average investment of 10,000 €)using both typical and innovative channels:

• Our personal network (friends, colleagues)

• Social networking (LinkedIn and Facebook)

• Environmental associations (their members)

• Innovation: we are offering a new opportunity to private investors to have a high

SunShare’s business model is based on two key

activities…

Operations

2

10

• Environmental associations (their members)

We have contributed 27,500 € as initial capital

The operations will be outsourced to an industrial partner that will deliver a turn-key solar power plant. They will manage the following aspects of the project:

• Project financing with banks

• Supply of materials (panels, inverters, wires...)

• Pre-authorized site preparation and plant construction

• Connection of the plant to the electricity network and testing for overall efficiency

investors to have a high return at low risk with a green investment

• Key trusted partners:

o Industrial: Solar Ventures

o Financial: two of the largest banks in Italy will provide us with the required support to finance the project

Marino graduated with a degree in Business from LUISS in Rome, and is currently attending the International MBA program at IE Business School. He has

worked for P&G, Accenture and McKinsey & Company. Through his experience as a strategic consultant he has developed outstanding problem structuring and solving skills. He has also developed considerable management skills during his entrepreneurial experience as founder of the renewable consulting company Renova Power (2007) and as the Executive Director for the start-up uSport S.r.l. (2009).

Suzanne graduated cum laude from Iowa State University with a degree in Advertising and is currently enrolled in the International MBA program at IE Business School. Through her

experience working as a project manager in marketing, she developed strong negotiation skills, increasing revenue by 30% and reducing costs by 23%, while managing a budget of over $1 million. More recently, Suzanne has gained further experience working 3 years for the Center for Education Abroad, responsible for developing and maintaining partnerships resulting in a 17% improvement in revenue.

Marino Giocondi Suzanne O’Brien

1

…the team will manage fundraising leveraging its expertise

External

collaborators e.g.

associations would

be leveraged for

fundraising

as the Executive Director for the start-up uSport S.r.l. (2009). improvement in revenue.

Giovanni graduated cum laude in General

Management from Università Commerciale Luigi Bocconi in Milan and is currently attending the International MBA program at IE

Business School. He has developed significant expertise working as a management consultant for McKinsey & Company. He has been assigned to nine projects diverse in industry and function, thus developing both problem solving skills and a multi-functional business perspective ranging from strategy and operations to marketing and sales.

Giovanni Miserotti Fabio Pisi Vitagliano

11

Fabio graduated cum laude in Mechanical Engineer (specialization in Energy) and is currently attending the International MBA program at IE Business School. He has been

working for 5 years for Accenture, leading teams of up to 18 members and interacting with clients daily. He has, therefore, a solid quantitative and managerial background. Moreover he has improved his financial skills and his knowledge of the energy market, having interned at an investment fund focusing on projects in renewable energy.

“One of the top 50 pioneer European companies to have

invested in renewable energies, as classified by CNBC

European Business.” - Italian Trade Commission

• The company has a strong market share and reputation in the Italian photovoltaic market

• It has the required skills to act as the general contractor, following the project down to the smallest details:

47Q1 201089 MWp to be built during 2010 in Italy

Project pipeline (MWp ready to be built)

2…whereas the industrial partner (Solar Ventures) will

manage all operations

down to the smallest details:

o site screening

o purchase of pre-authorized land

o purchase of solar panels and equipment

o plant installation and maintenance

• The management team is very experienced and it is lead by Michele Appennino:

o ex McKinsey partner

o founder in 1997 of the first venture capital fund focused on Internet companies (215 million € raised with the highest IRR in Europe in the sector)

42Q2 2010

121Deal ready

2011

210Total

during 2010 in Italy

International presence:

• 21 MWp in France

• 100 MWp deal signed in Jordan

12

Investment funds

Companies

Potential investors Description

Detailed next

• Investment funds do not represent a target investor for SunShare because they have already invested in the renewables market, thus proving the opportunity in this field

• Renewables represent a very interesting investment opportunity for companies to diversify their risk, assure high

We are targeting individuals like you…

Private individuals

Companies

13

opportunity for companies to diversify their risk, assure high returns on capital and promote a “green” corporate image

• Nevertheless, the financial crisis is having a strong impact on their financials, thus making injection of funds in core business a priority

• Companies represent therefore a secondary channel to find potential investors for SunShare

• Opening the opportunity of investment to the mass marketrepresents the real innovation

• Private investors will have the possibility to contribute, investing in small shares of a photovoltaic power plant (average investment of 10,000 €) while diversifying their assets with a low-risk, high return project

• Investment opportunity seekers will be attracted by the high return and low risk of the investment. The green externality will reinforce their interest, even for those who are more financially-oriented.

• Portfolio diversification is another strong value proposition for them. In fact, this investment represents an increase in available opportunities for diversification, as currently private investors do not have direct access to this investment, or other investments which may be linked to this model.

1

…who are looking for a unique investment opportunity or

those who are environmentally conscious…

14

• Environmentally conscious individuals value the green impact of our project more than the economic return of the investment.

• They will feel involved in our initiative because of our common goal to make the world a cleaner place and to reduce our reliance into fossil fuel. Together with us they will have the opportunity to concretely and actively produce green renewable energy.

investments which may be linked to this model.

2

Potential investors Approach & Marketing actions

• The capital raised in phases 1 and 2 will serve as a strong foundation for the broad fundraising efforts of phase 3

• Current status of funds raised: 27,500 €

Phase 1

• Founders

• Family

• Relatives

• Friends

• Professional network

Fundraising plan

• Current status of funds raised: 27,500 €

• Free publicity together with a further injection of credibility is required (e.g. articles in newspapers, green and consumer associations*)

• Marketing actions are based on viral marketing and the extensive utilization of WEB 2.0

Phase 2

Phase 3

• Professional network

• Academic network

• Social network

• Mass market (to broaden our audience)

* Such as Legambiente, Greenpeace, Altroconsumo 15

Solar power plant total investmentbreakdown (Mln €)

3.60Set Up

0.40Authorization

for Land

0,80

3.20

Equity

Project

Solar power plant total source breakdown (Mln €)

The investment is € 4.44 million, to be financed through

equity and project financing

4.00Turn-Key

0.44VAT

4.44Total4,44

3.20

Total

ProjectFinancing

0,44Short Term

Debt• VAT is to be paid upfront;the government will refund it in1 year

• Financed by short-term debt

16

Revenue and Cost stream (thousand €)

Sample year # 2 % of Revenues

Around 80% of the total revenue comes from government incentives fixed for 20 years

Around 20% of the total revenue comes from electricity sales, it is assumed that the price increases 2% annually

Description

SAMPLE YEAR #2

79%

20%

1%

100%Revenue stream

EBITDA is 88% of the total revenues

5

498Incentives

125Electricity

Sales

Transmissioncontribution**

628Total

Insurance is required by the financing banks, to reduce risks associated with weathering, vandalism, etc.

Maintenance is outsourced to the general contractor to ensure a high level of productivity, security and daily monitoring

*All costs are based on an assumed growth rate of 2% per year** Rebalancing between revenues and costs with transmission network company

100%

7%

3%

2%

0%

88%

Operating cost*

Revenue stream

17

1

12

16

46

628Total

Revenues

Maintenance

Insurance

Land rent

Transmission costs**

553EBITDA

Net Income breakdown(€) % of Revenues

Italian law allows a 5% accounting depreciation per year, while the fiscal depreciation of 9% minimizes taxes for the first 10 years

Long term debt assuming 6,7 % fixed interest rate per 18 years*

Description

88%

31%

57%

32%

SAMPLE YEAR #2

Net Income is 23% of total revenues

567EBITDA

203Accounting depreciation

364EBIT

203Project financing

interest rate per 18 years*

Interest due to short-term excess or need of cash. In the first two years small debt is required, after that the balance will become positive (credit)

Taxes during the first 10 years are low due to the high depreciation of CAPEX and the tax shield given by high leverage

*In the first year there is an upfront fee (1,5% of the loan) to be paid to the bank

32%

0%

1%

26%

3%

23%

18

17

6

0

203Project financing

debt interest

VAT short term debt

Debt/Credit interest

167EBT

Taxes

150Net Income

Free Cash Flow to Firm (FCF2F) trend (‘000 €)

396399402404407409472

415

Variation Working

Capital

431 432 415

Depreciation

Taxes

EBIT

FCF2F

391

806

440 437 434 432 431

Capex

400

500

600

700

800

900

1.100

1.000

394431

The green line show the Free

Cash Flow to Firm, while the

bars represent its components:

• EBIT slightly decreases during the 20 years

• Taxes accounts accordingly with EBIT

Free Cash Flow to Firm stabilizes after the third year

2010 2015 2020 2025 2030

-4.501

200

300

400

0

-4.600

100

-400

-100

-200

-300

• Depreciation has a positive impact for the first 20 years, becoming zero in year 21

• Variation in working capital

is negative in the first two years due to VAT reimbursement from the Italian government

• CAPEX refers to the initial investment in the plant

19

Delta Working Capital

Capex

Debt

188

3.800

3.900

400

103

196 192 184 183

300

181 180 178 160 157213

144 136 128119 110 261

418 419

EBT

Taxes

Depreciation

4.000

500

FCF2E

700

600

Free Cash Flow to Equity (FCF2E) trend (‘000 €)

The green line show the Free

Cash Flow to Equity, while the

bars represent its components:

• EBT is growing for 20 years

• Taxes increase accordingly with the EBT

Free Cash Flow to Equity becomes positive in the second

year allowing dividends distribution

0

100

200

-756

300

-100

-200

-300

-400

-4.600

-500

-600

-700

• Depreciation has a positive impact for the first 20 years, becoming zero in year 21

• Variation in working capital

is negative in the first two years due to VAT reimbursement from the Italian government

• CAPEX refers to the initial investment in the plant

2010 2015 2020 2025 2030

20

Description of financials

12

31

88

100Revenues

OperatingCosts

EBITDA

SAMPLE YEAR #2

• Risk #1: government incentives, which account for ~80% of revenues, decrease

• Risk #2: electricity sales, which account for is ~20% of revenues, decrease

• Risk #3: plant operative at the beginning of 2011 due to

The two main sources of risk are revenues and financial

costs

21

31

23

26

31

57

3

Depreciation

EBIT

Financial

Costs

EBT

Taxes

Net Income

beginning of 2011 due to extraordinary circumstances

• We believe that the best option for the project is to seek financing with a fixed rate that would be slightly higher at the beginning, rather that a floating rate, due to the nature of the investment (known revenues and fixed costs)

Solar power plant financial return

15

20IRR (FCF2E)

IRR % • IRR of the business is positive even if the government incentivesdecrease by 40%, which is highly unlikely

Risk on revenues #1: government incentives decrease

Incentives (€

cent per KWh

produced)0

5

10

0,15 0,20 0,25 0,30 0,35

IRR (FCF2F)

• If we consider the new incentives in the draft of the new law (31 € cents per KWh produced), and the average drop in plant construction costs (-36% per year), the IRR would not be impacted significantly

22

Solar power plant financial return

20

25

IRR %

• A reduction, even down to zero, in the electricity price would still result in a high

IRR (15,6% in the case of

Risk on revenues #2: free electricity is discovered

Electricity

market price

decrease (%)

0

5

10

15

IRR (FCF2F)

0 -20 -40 -60 -80

IRR (FCF2E)

IRR (15,6% in the case of free electricity)

• Sales of electricity account

for only 20% of revenues, thus explaining the low impact of price changes on the IRR

23

-100

Return on the project

4-month delay in

construction

Potential scenario Description

• If the solar power plant starts operating in the first quarter of 2011, government incentives will be lowered by 9,2% due to the ongoing revision in the legislation

• If the solar power plant starts

7,18,1

17,1

22,1

I Q 2011

IRR FCF

IRR ECF

2010

22,1

Risk on revenues #3: plant operative in 2011

24

Target equity

not reached

• If the target equity is not reached, money will be returned to shareholders without any transaction cost

• The solar power plant will not be built

N/A

2010

N/A

2011

8-month delay in

construction

• If the solar power plant starts operating in the second quarter of 2011, government incentives will be lowered by 10,6% because of the ongoing revision in the legislation

6,88,1

15,5

22,1

2010 II Q 2011

Option 1:

• SunShare will create/develop a peer-to-peer market in which shares can be traded between individuals

• High proven return will be an attractive investment

Exit strategy

attractive investment opportunity for individuals

Option 2:

• Sell to a large electricity provider/producer

• Plant is of higher value for large suppliers because they can directly distribute power and charge a premium for green energy

25

Representatives in Italy:

Marino Giocondi marino.giocondi@googlemail.com (+39) 346.4136355

Giovanni Miserotti giovanni.miserotti@libero.it (+39) 346.5053585

Our contact information

26

Representatives in Spain:

Suzanne O’ Brien sobrien.imba2010@alumno.ie.edu (+34) 656.651194

Fabio Pisi Vitagliano fpisi.imba2010@alumno.ie.edu (+34) 658.593309