Written evidence submitted by Berkeley
Energy
1. EXECUTIVE
SUMMARY
This memo aims to provide information about the catalysing
role of CDC in the establishment of Berkeley Energy's Renewable
Energy Asia Fund, a private equity fund focused focused on the
development and construction of new renewable energy infrastructure
assets in Asia.
2. BERKELEY ENERGY
2.1 Berkeley Energy is a private equity fund
manager specialising in renewable energy infrastructure investments
in developing markets with an initial focus on Asia.
2.2 Berkeley's Renewable Energy Asia Fund ("REAF")
invests into post-permitted projects and project developers using
proven technologies in those geographies demonstrating mature
renewable energy legislation and deregulated power markets. Berkeley
Energy seeks to mature and consolidate these investments into
operating portfolios.
2.3 The Fund's technology focus is wind, small
hydro, biomass, solar, geothermal and landfill gas. The Fund's
geographical focus is primarily India with additional target markets
including Philippines, Sri Lanka, Thailand and Vietnam.
2.4 The Fund seeks to make equity investments
with a positive, significant and sustainable impact. The Fund
has a positive environmental impact by focusing only on constructing
new and clean power generating capacity in emerging Asian economies
otherwise reliant upon fossil fuels (eg diesel generators or coal-fired
power stations). The Fund has a positive social impact as renewable
energy resources are typically in rural, poorer areas, and the
Fund's investment activity results in new job creation, village
electrification, enhancement to the integrity of rural power grids,
and delivery of stakeholder projects such as building schools
or micro-finance activity.
3. BERKELEY AND
CDC
3.1 Berkeley initially met with CDC in October
2007. From that date until our first closing in December 2009,
a period spanning one of the trickiest ever fundraising times
in private equity, CDC were professional, supportive, and a powerfully
enabling force in the establishment of the Fund. A number of themes
stand out for Berkeley, including:
3.2 Leadership. CDC was at the forefront
of key milestones of the Fund's development. In December 2008
CDC became the first investor to commit to the Fund. In April
2009 CDC agreed to a "dry closing" of the Fund whereby
it would negotiate the Limited Partnership Agreement and commit
to the Fund, conditional upon the Fund raising a minimum sum.
In May 2009 CDC hosted and led the initial Fund negotiations.
During documentation CDC was prompt and articulate in its recommendations
and preferences facilitating an efficient process. CDC's pro-active
participation and reputation as a "thought-leader" undoubtedly
played a critical role in the successful launch of the Fund.
3.3 Partnership. Our fund-launching relationship
with CDC started before the financial crisis began in earnest,
strengthened when the Fund commitment was made just three months
after the collapse of Lehman Brothers, and matured up until our
first close. Throughout that time the CDC team were patient, supportive
and creative. Example activities include introductions to other
potential LPs, being available to speak with other potential LPs
about CDC due diligence process and investment decision, an understanding
approach to fundraising delays, and deciding to negotiate the
Fund's documentation to provide additional comfort to potential
LPs (work done at risk given the condition precedent of a minimum
amount may not have been reached in such a difficult fundraising
climate). From Berkeley's perspective CDC has acted throughout
our relationship as a supportive partner as opposed to simply
a client.
3.4 Professionalism. Over the three years
we have matured our relationship with CDC its experience and professionalism
has been apparent. Process has been clearly articulated, timelines
met, and effort expended on important issues at the right time.
This approach is much appreciated by Berkeley and clearly best-practice
in the market.
3.5 Accordingly Berkeley is delighted to be involving
CDC in the Renewable Energy Asia Fund. We are sincerely grateful
for the quality of engagement and leadership it contributed, playing
a stand-out role in the successful launch of the Fund in such
a difficult market.
4. RECOMMENDATIONS
4.1 Berkeley notes the "leverage" and
"development impact" achieved by CDC when deploying
its capital.
4.2 As the first investor into the Renewable
Energy Asia Fund (for €10 million), CDC played a crucial
role in attracting a further €40 million into the first close
(4x its own investment). The final fund size is yet to be determined
but is expected to be €100 million + (10x the CDC investment).
The Fund's equity will subsequently be leveraged at c.70% (€333
million total investment).
4.3 This means CDC will have meaningfully contributed
to activating 33x its original investment for the construction
of new renewable energy generating capacity in emerging Asia,
at precisely the time it was needed most, namely when these poorer
countries were struggling to attract private sector capital and
experience for clean energy investment.
4.4 Berkeley recommends further support for
CDC going forward.
9 September 2010
| 
