Thomas Jakobsen - RE Investment Strategies in Vietnam

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RENEWABLE ENERGY INVESTMENT STRATEGIES

IN VIETNAM

June 2011


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INTRODUCTION TO ANPHA CAPITAL

Formed in 2006, raised two funds which listed on Frankfurt Stock Exchange in 2007, management spin-out in 2008.

First Vietnamese fund management company to sign the United Nation Principles of Responsible Investment (UNPRI).

Has since 2009 focused on Renewable Energy.

Managed by a team of international and local professionals with outstanding track records , significant assetsmanagement and operation experience.


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RENEWABLE ENERGY


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ENERGY EFFICIENCY


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WHY RENEWABLE ENERGY IN VIETNAM?

Growing awareness growing market Renewable Energy awareness is growing in Vietnam. This is in turn effectingthe Governments policies which are progressing very rapidly.

Proprietary Deal flow The investment opportunities are sourced through Anpha Capitals extensivenetwork in the Renewable Energy space in Vietnam.

Nascent Industry High Returns Most clean energy industries in Vietnam are in a nascent stage. This givesthe opportunity for high returns, but also increases the risk profile. Theinvestment manager will be more active in the operations of the investment

than in a traditional Private Equity investment.

Strong Case for Development of Vietnam Vietnam has for over 10 years had economic growth rates of 7-8% andchanged dramatically. The development in Renewable Energy, but alsoEnergy Efficiency and Waste and Water Treatment is however lagging.

Entrepreneurial Management Team The management team has experience with young companies and start ups.The management team will be active in the operations of the investee

companies.

Advisors The Funds has among its advisors environmentally very knowledgeable andvery respected individuals, with influence on environmental opinions inVietnam.


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WHY RENEWABLE ENERGY IN VIETNAM?

Positives Negatives

Bio fuels(Ethanol, Bio diesel)

Exportable Food Vs fuel

Wind Proven technology Regulatory

Biomass Proven technology TransportationEfficiency

Hydro Cheap Social issues

Solar Sustainable Cost


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1. Does it make sense with low electricity cost?

2. Different segments

- Residential/ Commercial

- Industrial- Municipal projects

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ENERGY EFFIECIENCY


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PIPELINE

The following pipelines are examples of our investee candidates


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PIPELINE - BIODIESEL

Transaction Details Investment Thesis

Sector Renewable Energy Highlights

Exposure to pioneer position opportunity created by potential and encouragedindustry.

Abundant feedstock supply at low cost

Flexible supply sources thanks to multi-feedstock capability technology

Small foot-print factory to startup, hence low investment cost

The plants location is very near target market. Good access to seaports and

highways to minimize logistics cost.

The demand of biodiesel increases significantly as one the best substitutions for

mineral diesel

Board and management team has almost 10 years of biodiesel manufacturing

experience

Ethanol E5 is already a proven sales success

Risks

Operating in a new industry in Vietnam

The customers are unfamiliar with biodiesel at the early stage

The selling price is possibly controlled by the government

Epidemic diseases and weather may affect feedstock supply

Background Opportunity to gain exposure in aleading firm in the biodiesel market

Capital raise US$12 Mn

Ownership 40% maximum

Instrument Convertible bond/Straight equity

Key terms No lockup

Expected cash-on-cash x 2.3x

Holding period 5 7 years

Exit Listing/Trade Sale

Sector Fundamentals

Clean energy is fully supported by the government in terms of tax deduction,

raising public awareness, developing distribution infrastructure.

The technology used in producing biodiesel from fish oil is available at low cost.

There is about 145,000-260,000 tons of fish oil, input material for biodiesel

production, available in Mekong Delta. Fish oil price is cheap because it is

extracted from waste of fish processing industry.

The demand of diesel is estimated at 8.74 million tons in 2010 and increased to

11.14 million tons in 2015.

The biggest market of diesel is Ho Chi Minh City area, near the Mekong Delta,

minimizing the transportation cost.


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PIPELINE - SOLAR POWER PANELS


Sector Renewable Energy Highlights

Exposure to long term development of Green Energy in Vietnam

Be the first pioneer company in the industry in Vietnam, take the largest market

share while promoting clean and sustainable energy, reduce toxic gas emission

Led by experienced founder with deep know-how knowledge

Geographical advantage for solar power projects

Tax incentives from Government

Potential IRR is over 20% for 7 years

Risks

Hard to negotiate a future Feed-in-tariff (FiT) with EVN

Operational risk in the initial stage as employees are inexperienced with the new

technology and equipment

Unknown target market since domestic demand does not justify cost while

regional markets (China, Laos, Cambodia, Thailand) are largely unknown and

European/American markets are dominated by bigger firms

Most equipments and production chains will be imported, expose the company

to exchange rate risk

Background Opportunity to invest into the first green energy

equipment manufacturer in Vietnam

Capital raise US$18 Mn

Ownership 49% maximum

Instrument Straight equity, convertible bond 10% coupon,

special rights

Key terms No lockup


Expected cash-on-cash x 3.0x

Exit Listing/Trade Sale

Sector Fundamentals

There is a growing global concern about green-house effect and toxic gas

emission level.

Fast growing sectorGlobal accumulative solar photovoltaic (PV) electricity

market is expected to grow at 15% (Energy savings Weekly). Outside Europe,Asia is becoming a major demand centre as India and China announced plans to

increase their solar power capacities to 20 GW/each by 2020

Potential growth for renewable electricity in Vietnam Vietnam needs to

increase its supply capacity by at least 3 times of current capacity to meet

demands in 2020


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PIPELINE ENERGY EFFICIENCY


Sector Energy Efficiency Highlights

A huge potential market that has not been covered sufficiently

Two-three small size projects which require 0.5-1.5 million USD to retrofit

buildings with more efficient energy systems

The building owner gets new lighting and ventilation equipment for free. The

benefit from energy efficiency will be shared between the building owner and the

fund

The growth prospect comes from both geographic expansion of customer base

and the increasing return from energy saving bills

IRR=15% expected

Short pay-back period of 3-4 years

Governments commitment to rising energy prices

Risks

Current energy prices are relatively low which makes replacement of existing

energy system less attractive

There are not many big buildings with energy bills high enough

Tenants or apartments owners may refuse to change

Risk of energy prices not rising in expected horizon time of investment

Background Opportunity to invest in the brand new and

potential energy efficient field

Capital raise US$2-3 Mn

Ownership 51%-100%

Instrument 100% Debt

Key terms No lockup


Expected cash-on-cash x 2x

Exit Trade Sale

Sector Fundamentals

The electricity production and consumption gap is getting bigger and puts

pressure on electricity price

The fast urbanization and the presence of big buildings in large cities create a

chance for energy efficiency business. Instead of flowing into capital-intensiveenergy plants, investments can be better used by financing many relatively small

energy efficiency projects

The rising electricity price makes energy efficient solutions be more economic

sound options for both office buildings and residential apartments

There is not yet a comprehensive consultancy and execution solution found in

Vietnam so the competition for projects is relatively low


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MANAGEMENT TEAM

Bui Cong Giang CEO

Current Founding Chairman of A.N.P.H.A Corporation Prior Deputy General Director of Him Lam Group Member of BOD of Keppel-Agtex JV Investment and R&D Manager of Agtex Corp. Executive Masters degree in Finance & Banking in Switzerland Postgraduate in International Marketing from the University of Padova in Italy

Thomas Jakobsen - Head of Sustainability Current Founding Chairman of Gate To Asia a Vietnam focused ESG consulting company Prior Vice Director of Tropicdane Group in Vietnam Managing Director of Bowers and Wilkins Loudspeaker manufacturer in Denmark M.Sc in Economics and Business Administration from University of Aarhus in Denmark MBA program at Katholieke Universiteit Leuven in Belgium

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CONTACT

Thank you

Thomas Jakobsen - Head of [email protected]+84 (0) 903 757 565

ANPHA CAPITAL FUND MANAGEMENT COMPANY

Address : 7 Vo Van Tan Street, District 3, Ho Chi Minh City, VietnamPhone : +84 (8) 3825 8107Fax : +84 (8) 3825 8108Website : www.anphacapital.com

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Thomas Jakobsen - RE Investment Strategies in Vietnam