willem appel

Roodhals Capital™

Willem Appel - CEO

Co-PM - Branta Solutions Fund

12 November 2010

Credit and SustainabilityTBLI Conference London 2010

Workshop 25: TBLI and Fixed Income

Important Notice

Roodhals Capital - Confidential 2

This document has been provided to you by the principals of Roodhals Capital B.V. ("Roodhals") forinformation purposes only.

Roodhals Capital B.V. and Stichting Bewaarder Branta Solutions Fund (“Branta Solutions Fund”, orthe “Fund”) are incorporated in the Netherlands and are specifically NOT authorised or regulated bythe Netherlands Authority for the Financial Markets, the Financial Services Authority in the UnitedKingdom nor by any other regulatory body in any other jurisdiction.

This document is for private circulation only. The information and opinions contained in thisdocument are for background purposes only, do not purport to be full or complete and do notconstitute investment advice nor the arranging of deals in investments. No reliance may be placedfor any purpose on the information and opinions contained in this document or their accuracy orcompleteness. No representation, warranty or undertaking, express or implied, is given as to theaccuracy or completeness of the information contained in this document and no liability is acceptedfor the accuracy or completeness of any such information or opinions.

This document does not constitute or form part of any offer to issue or sell, or any solicitation of anyoffer to subscribe or purchase, any investment or to provide services nor shall it or the fact of itsdistribution form the basis of, or be relied on in connection with, any contract therefore.Specifically, neither Roodhals nor its principals has provided you with this document for the purposeof soliciting any investment in the shares of any investment or service contemplatedherein, whether by you or any other person and any such investment can only be made on the basisof the full Information Memorandum of the Fund.

Characteristics of Sustainable Investment compared

3Roodhals Capital - Confidential

Sustainable Investment

Screening based SRI

CleantechInvestments

Risk Managed,Beta <1

Market,Beta ≈ 1

High,Beta > 1

Bias Opportunistic, Trend-based, Alpha

Best-in-class,Tracking error

High sectorconviction

Credit Opportunity

HY; L/S credit; capital structure arbitrage

TBL credit fund Cleantech loans and bonds

Exposure to Scalable solutions, all sectors

Index-plus Innovation, new industries

Likely credit quality

HG to HY and Loans HG HY, Loans

Scalability High, albeit research intensive

Limited by screening costs

Limited now, improving

Can a corporate credit portfolio be sustainable and profitable?


Creditors don’t own a company

Shareholders’ ownership rights create responsibility (UN PRI etc.)

Equitable subordination risk

Lenders: screening is crucial pre-funding, do not expect much protection from covenants

Bondholders/rating agencies: vulnerable to bad news

Make opportunity of sustainable development central thesis

Tendency to focus on downside risk of “the unsustainable”

Solutions based portfolio, including step-changes

Consider sustainability in all sectors and industries

Reputational risk

Higher with screening-based allocation models (BP spill)

A green company is not necessarily a sustainable company

Rationale for credit


General idiosyncrasies of sustainable investment1:

Status Quo: it takes a Herculean effort to displace existing technologies.

Scale: solutions need to be scalable to make a dent in most sustainability issues.

Size: the enormity of investment to achieve sustainability targets.

Speed: solutions should deliver returns in time: economic, political and ecological time.

Credit markets provides diversification of funding sources for sustainable investment

Sustainable investment offers positive dynamics for corporate credit over time:

Improving credit quality with size

Growing cash flow emphasis with scale

Enhanced sustainability: reduced default risk

1After Angelo Calvello “Environmental Alpha” 2009.

Current Opportunities in Credit


Corporate Bonds

Tailwind since early 2009 - Graph spreads

Cleantech sector hit snag: bonds offer better value relative to equity

Interest rates a concern

Next stage Loans for renewable energy generators

$200bn of projects, over half financed with private equity. Less than 2% financed with debt (source: BNEF)

Opportunity for DCM: finance based on future cash flows

Likely need for industry consolidation (for example Green GECCO in Germany)

New governance model for structured credit?

In 2007 Alt-A market started a MBS governance crisis

Restructuring and workouts provide opportunity for distressed investors

A sustainable MBS, model 2.0, would be a game changer in financial markets

Crossover index 5Y

12/08 11/10

Invest in today’s opportunities from tomorrow’s sustainability challenges

Branta is an alternative investment fund focused on sustainability.

Launched in July 2009 with seed capital from , an initiative of APG Investments.

The opportunity: trend towards sustainable development as a value driver for companies.

Pursuit of absolute returns in the 13-18% range while seeking to maintain portfolio volatility of 8-12%.

Corporate multi-strategy model of equity and debt investments to mitigate risk and limit market correlation.

Branta Solutions Fund


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The Branta EdgePerformance from Thematic Drivers

Long Term Sustainability Themes

•Focus on Agriculture/Food, Renewables, Resources, Engineering and Materials

•Select investible, scalable and material themes

Current and Near Term Market Trends

•Key drivers: Resources, Population and Environment

•Select Market moving trends

Identification of Companies and Value Triggers

•Companies: select beneficiaries from the trend

•Value Triggers: soft or hard, look for a quantifiable effect

Portfolio composition and management

•Risk/return

•Liquidity

•Equity long/short, credit or event

Roodhals Capital - Confidential

Top

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*

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Dis

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*

Branta’s Investable Trends

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* EROI = energy return on investment (Energy acquired/Energy expended)

Theme Key Investment Angle Examples of recent trends

Agri/Food Meeting global demand amid economic and ecological challenges.

Consolidation and price recovery in the fertilizer sector Price pressure on premium processed food brands Changing technology in irrigation and water treatment Seed technology to gain greater acceptance and demand

Renewables and Technology

Renewables, energy efficiency and CO2 reduction targets will change energy mix. Renewable energy is currently challenged in capital markets and government budgets.

Semiconductor sector benefits from led and solar tech. Feed-in-tariffs for solar and wind energy lowered in most

markets Renewable energy to take the back seat to economic

recovery concerns

Engineering Opportunities from adaptation to carbon constrained world; creators of technologies for diversified sources of energy

Renewed worldwide focus on nuclear energy Demand for safety and improved infrastructure in

offshore drilling

Resource Inflation

Global demand and strategic inventories remain supportive of commodity prices. Key resources are metals and energy.

China and India in strong pursuit of natural resources Uranium demand to strengthen, as nuclear energy

capacity to rise over time The large oil firms to switch focus to natural gas from

renewable energy, citing footprint and EROI*

Materials Products and Services

More companies are pursuing sustainable products and services for profits and strategic (stakeholder) reasons.

Ships ballast regulation to prevent exotic species contamination will benefit filtration industry

Increased competitiveness of high-EROI* products

Sustainability is a financial performance driver

Roodhals Capital - Confidential


Multi-Strategy Model

SEGMENTS Large cap Mid cap Small cap

STYLEIndicative

Investment horizon*

Indicative

allocation*50% 30% 20%

Value

and special situations

Long: 3 months to 2 years

Short : 1 month to 1 year50%

Investment value from:

• Sustainability strategy

• Balanced stakeholder

approach

High liquidity and quality of

information.

Theme focus:

• Adaptation

• Mitigation

• Supply Chain

Strong value profile and

fundamentals-based investment.

Winners in sustainability:

• Exceptional growth potential

• Innovation

• Clean tech

CreditLong: 3 months

to 2 yearsShort : 1 month to 1 year

25%

Event driven 1 to 6 months 25%

* % of Exposure. Actual allocations and holding periods may vary significantly from the indicative allocations in the table.

Delivering the risk-return and liquidity objectives

The manager will look at a company’s capital structure for the appropriate risk-reward Style allocations are driven by opportunity and market outlook. General market hedges may be used to further manage market risk.

Contact Details


Roodhals Capital B.V.Gustav Mahlerplein 3, 27th floor1082MS AmsterdamThe Netherlands

P.O. Box 759261070AX AmsterdamChamber of Commerce #: 34301643

[email protected]: (31) (0)20 708 5820www.roodhals.comwww.brantasolutionsfund.com

Willem [email protected]: (31) (0)20 708 5822M: (31) (0)6 1255 7635

willem appel

Economy & Finance