The Rise of the Portfolio Investor: Acquisition Strategies in a Sellers Market

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The Rise of the Portfolio InvestorAcquisition
Strategies in a Sellers Market
9 May 2007 Milan
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The Rise of the Portfolio InvestorParticipants
Market Approach

• Evolve from successful local developer

• Not on my grid

• Too risky

Historical

• Expand beyond local market
• Project based opportunity

• Clean pressure
• Scale - generation assets

• Fund rationale growth or annuity
• Established markets industry

Growth Drivers

• Buy projects and restructure
• Higher price for lower risk

• Reaching growth targets buy and partner
• Leverage balance sheet

• Opportunity driven
• Leverage skills

Outlook

• Buy packaged assets
• Quick decisions

• Absorb at home acquire abroad
• Slow but steady

• Partner to build pipeline
• Chunky growth

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The Rise of the Portfolio InvestorTop 20
European Owners (MW)
Top 20 Asset Owners

• Account for 31 (15.2GW) of total base (45.5GW)
• Added 41 (3.1 GW) of total new (7.5 GW)
• Utilities added 1,700 MW - IPPs just over
  1,000MW

2006 Added
2005 Installed
IPPs
Utilities
Institutional
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The Rise of the Portfolio InvestorIPPs

• Growth from transmission business - Elecnor
• Spain 330, Brazil - 140

• EHN, CESA, GREP Pipeline, CDV, outbid for Pacific
  Hydro
• Europe (ES/IT/FR/DE/GR/HU) 2,300, NA 35, Asia
  30,

Historical

• Continue to build on existing business

• Diversified energy
• Consolidate at home and move abroad via
  acquisition
• Vertical business

Growth Drivers

• Cautious Expansion
• Offshore in Spain with Endesa
• Expanding into Solar and Biofuels

• Leverage experience from home market - UK,
  Hungary, Greece, Italy, Poland
• Offshore Spain, France
• Target additional 5,000 MW next 4 years NA/CN
• Turbines Endesa

Outlook
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The Rise of the Portfolio InvestorUtility
Historical
Growth Drivers
Outlook
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The Rise of the Portfolio InvestorUtility

• Local development into umbrella- Add EnXco
• Europe (FR/PT/DE/GR/IT/UK) 385, NA - 300

• Hidro Cantabrico, DESA/Nuon Horizon
• Europe (PT/ES/ FR) 1100, US 560 MW

Historical

• Acquire developers with pipeline and assets
• Diversify portfolio
• High growth markets

• Partnerships - own less than 50 of
  participated
• EnXco over 1,200 mw experience maintain
  ownership of pipeline

Growth Drivers

• Continue partnerships and local project
  acquisition ie Italy (2 operating farms)
• EnXco 200 300 MW per year
• Target over 3,000 MW by 2011

• Execute on acquisitions
• 2,200MW new wind capacity in France, Italy, UK
  and Poland by 2010
• Over 1,000 in US

Outlook
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The Rise of the Portfolio InvestorInstitutional
Investor
Trinergy

• Purchase UPC assets in Italy - IVPC, German
  projects
• Europe (IT/DE,IR) 620

• Enersis, Gamesa portfolio, German projects,
  Superior
• Europe (ES/PT/DE/FR/IT) 806, NA 450, Asia - 170

Historical

• Financial engineering
• gt1bn Refinance 680 MW

• Mix of IPP and Financial engineering
• Development partnerships, acquisition and
  refinancing

Growth Drivers

• Content with current portfolio build out from
  existing acquisitions
• Additional acquisitions in stable markets

• Agreements with Plambeck, Ostwind, Renerco and
  Nordex for France and Germany
• Will continue to draw on Gamesa in US will look
  for new projects acquisition

Outlook
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The Rise of the Portfolio InvestorEuropean Wind
Investment in US
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The Rise of the Portfolio InvestorTrends

• Hot markets Italy (19 cents / Kwh), UK ROCs,
  France pent up pipeline, Eastern Europe local
  heroes, US its big and I can play, Offshore -
  scale
• Entire industry becoming more consistent more
  investors willing to participate (long way from
  the doctors dentists, sandal wearing, backpack
  toting explorers with hand held anemometers )
• New Entrants GE finance / Theolia, Novera
  (Germany, France), Allianz
• Small locals no longer able to fund turbines
  10-20 down 18 months in advance of delivery.
• Land grab - Not much real greenfield left in next
  few years realizing identified projects
• Large players acting in similar manner - Scale
  definitely brings synergies balance risk
  (permitting, support schemes, access to turbines,
  diversity of supply ..
• Speed to secure project pipelines offset by
  turbine lead times benefits those that can build
  a diversified development portfolio