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Opportunities & Challenges in the World of “New Gas”- Strategies for Success Bruce Jenkyn-Jones PowerPoint Presentation
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Opportunities & Challenges in the World of “New Gas”- Strategies for Success Bruce Jenkyn-Jones, Managing Director sub-advisor, Pax World GEM Fund October 3, 2012. Impax Asset Management – An Introduction. $2.9 billion AUM*

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Opportunities & Challenges in the World of “New Gas”- Strategies for Success

  • Bruce Jenkyn-Jones, Managing Director
  • sub-advisor, Pax World GEM Fund
  • October 3, 2012
impax asset management an introduction
Impax Asset Management – An Introduction
  • $2.9 billion AUM*
  • Global firm, established in 1998, with a London base and presence in Hong Kong, New York and Washington DC
  • 27 investment professionals, with 27 support staff
  • Thought leaders on Resource Scarcity & Environmental Sector issues

Client Breakdown

Private Label Fund Clients 31%

Institutions 56%

Private Wealth, Endowments/ Foundations 10%

Others 3%

Impax Ownership

Staff 34%**

Others 41%

BNP Paribas 25%

*As at 31 August 2012. **Fully diluted interest following vesting of employee incentivisation awards in September 2012.

new gas changes everything
“New Gas Changes Everything!”

Energy

Water

Waste

Carbon & Asset

Trading

Control

Solutions

Env. Consultants

Infra-

structure

Recycling & Processing

Treatment Equipment

Infrastructure & Technologies

Testing & Gas Sensing

Waste Management

& Technologies

Utilities

Industrials

Storage

Hazardous

Power

Alternative

Transport

Buildings

Energy

Efficiency

Pollution

Control

Environmental Support Services

Developers & IPPS

Technology

Equipment

Solar

Wind

Power

Biofuels

General

Other

Equipment

Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity

new gas and the photovoltaics market challenges opportunities
New Gas and the Photovoltaics Market – Challenges & Opportunities

Energy

Water

Waste

Carbon & Asset

Trading

Control

Solutions

Env. Consultants

Infra-

structure

Recycling & Processing

Treatment Equipment

Infrastructure & Technologies

Testing & Gas Sensing

Waste Management

& Technologies

Utilities

Industrials

Storage

Hazardous

Power

Alternative

Transport

Buildings

Energy

Efficiency

Pollution

Control

Environmental Support Services

Developers & IPPS

Technology

Equipment

Solar

Wind

Power

Biofuels

General

Other

Equipment

Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity

dramatic economies of scale
Dramatic Economies of Scale

PV Module Manufacturing Capacity

European PV Plant Installation Cost (€m/MW)

Total

61.4 MW

6.5

Rest of the World

31%

China

Europe

52%

Total

4.0 MW

1.8

47%

27%

17%

26%

2007

2011

2007

2011

Sources: SWS Research 2011, Impax Asset Management. 2011 figures are estimated.

pv breakeven cost in 2012 for commercial facilities default rate structure with incentives
PV breakeven cost in 2012 for Commercial Facilities: Default Rate Structure With Incentives
  • 51.9% of load covered at breakeven price of $3/Watt and greater
  • 16.9% of load covered at breakeven price of $5/Watt and greater
  • 10.3% of load covered at breakeven price of $7/Watt and greater

Source: Ong, Denholm, Margolis, NREL: Draft Results

DRAFT RESULTS: DO NOT CITE

demand supply imbalance in pv market
Demand/Supply Imbalance in PV Market

Substantial Overcapacity….

…and underperformance

…leading to price pressure…

new gas intermittent re new d emands new p ossibilities
New Gas + Intermittent RE = New Demands, New Possibilities

Energy

Water

Waste

Carbon & Asset

Trading

Control

Solutions

Env. Consultants

Infra-

structure

Recycling & Processing

Treatment Equipment

Infrastructure & Technologies

Testing & Gas Sensing

Waste Management

& Technologies

Utilities

Industrials

Storage

Hazardous

Power

Alternative

Transport

Buildings

Energy

Efficiency

Pollution

Control

Environmental Support Services

Developers & IPPS

Technology

Equipment

Solar

Wind

Power

Biofuels

General

Other

Equipment

Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity

new grid realities require new system capabilities
New Grid Realities Require New System Capabilities
  • Power Network Efficiency
  • ABB
  • Efficient transmission & distribution (‘T&D’) hardware products
  • Developed markets –
    • grid reinforcement, reliability and renewables integration.
  • Emerging markets –
    • new construction and rural electrification
  • Hubbell
  • T&D connectors, insulators and surge arresters (~90% of components on a tower)
  • Positioned to benefit from $300bn of investment in the US T&D grid by 2030
  • Itron
  • Intelligent metering products for electricity, gas and water
  • Worldwide meter market only 10% automated; 7% compound growth forecast
transport fuel of the future profitable today
Transport Fuel of the Future? Profitable Today

Annual Sales of NG Trucks and Buses by Segment

World Markets: 2012-2019

Natural Gas Vehicles

  • Landi Renzo
  • Automotive OEMs and aftermarket kits
  • Strong market position
  • Strong recovery
    • (i) Euro V launches,
    • (ii) gasoline tax = improved $$
  • Westport Innovations
  • Gas kits for heavy trucks
  • Numerous strategic relationships
  • Less attractive financials
  • Unattractive valuation - 3x EV/Sales (2013)

Source:http://3.bp.blogspot.com/-bhttp://3.bp.blogspot.com/-bMWkTcpYUKk/UEeGvLQZM3I/AAAAAAAA0wA/Xp_JVt6QZks/s1600/09-07-2012a.pngMWkTcpYUKk/UEeGvLQZM3I/AAAAAAAA0wA/Xp_JVt6QZks/s1600/09-07-2012a.png

production boom yields clean up bonanza
Production Boom Yields Clean-up Bonanza

Energy

Water

Waste

Carbon & Asset

Trading

Control

Solutions

Env. Consultants

Infra-

structure

Recycling & Processing

Treatment Equipment

Infrastructure & Technologies

Testing & Gas Sensing

Waste Management

& Technologies

Utilities

Industrials

Storage

Hazardous

Power

Alternative

Transport

Buildings

Energy

Efficiency

Pollution

Control

Environmental Support Services

Developers & IPPS

Technology

Equipment

Solar

Wind

Power

Biofuels

General

Other

Equipment

Note: Some sub-sectors have an additional ‘diversified’ category not shown above for the sake of clarity

exploration production growth expands pollution control remediation
Exploration, Production Growth Expands Pollution Control, Remediation
  • Clean Harbors
  • Leading US hazardous waste company
  • Strong market position + barriers to entry  growth
  • Strong balance sheet; excellent M&A record
  • Tetra Tech
  • Environmental advisors focused on US/Canada water; well placed as regulations ratchet up
  • Rapid revenue growth; $100m to $500m in 3-5 yrs
  • Strong balance sheet (zero net debt) positions well for M&A
  • Ecolab
  • Treatment chemicals for water, energy markets
  • Energy 17% of sales with broad exposure & growing opportunities from shale gas
  • Attractive business model with defensive growth (consumables)
  • Xylem
  • World’s largest water infrastructure /treatment company
  • Instrumentation for remote monitoring of water quality near fracking sites
  • Membrane technology used in treatment water clean-up
summary
Summary
  • Expanded natural gas production is re-writing US energy & environmental markets
  • Resulting shifts will produce predictable sector winners & losers
  • Broadly diversified environmental investors can limit downside risk, pursue upside opportunity
  • Wide range of new opportunities for investor gain are already emerging
  • Well balanced holdings offer strong potential in high growth markets
thank you
Thank You

Bruce Jenkyn-Jones

Managing Director – Listed Equities

b.jenkyn-jones@impaxam.com / +44 (0) 20 7434 1122

Ken Locklin

US Managing Director (Washington DC)

k.locklin@impaxam.com / 703 476 1561

David Richardson

US Managing Director (New York)

d.richardson@impaxam.com / 646 543 8182

This document has been prepared by Impax Asset Management Limited (“Impax”, authorized and regulated by the Financial Services Authority). Impax is a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. The information and any opinions contained in this document have been compiled in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. This document does not constitute an offer to sell, purchase, subscribe for or otherwise invest in units or shares of any fund managed by Impax. It may not be relied upon as constituting any form of investment advice and prospective investors are advised to ensure that they obtain appropriate independent professional advice before making any investment in any such Fund. Any offering is made only pursuant to the relevant offering document and the relevant subscription application, all of which must be read in their entirety. Prospective investors should review the offering memorandum, including the risk factors in the offering memorandum, before making a decision to invest. Past performance of a fund or strategy is no guarantee as to its performance in the future. This document is not an advertisement and is not intended for public use or distribution.

Under no circumstances should any information contained in this document be regarded as an offer or solicitation to deal in investments in any jurisdiction including, but not limited to, the United States of America. In particular, the shares of Impax Environmental Markets (Ireland) Fund, Impax Environmental Markets plc, Impax Asian Environmental Markets (Ireland) Fund, Impax Asian Environmental Markets plc and Impax Asset Management Group plc are not registered under United States securities laws and, subject to certain limited exceptions, may not be offered, sold transferred or delivered in the United States or to US persons.