Long-Term Asia Focused Private Equity Investors. Specific Initiatives in Asian Environmental Sector

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Deirdre Newton
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1 Long-Term Asia Focused Private Equity Investors Specific Initiatives in Asian Environmental Sector

2 Overview Formed March 1997 and focuses exclusively on long-term investments in leading Asian companies Our offices Our investors (LPs) include global DFIs, major U.S., European, Japanese and Korean financial institutions, pension funds and endowments To date, Olympus Capital has led over $2 billion in investments and commitments into 45+ companies. Currently managing ~$1 billion of investments ~50 investment professionals operating from 7 offices across the globe (6 regional offices in Asia) India Office: New Delhi Southeast Asia Office: Singapore Greater China Offices: Hong Kong & Shanghai South Korea Office: Seoul Japan Office: Tokyo Experienced, highly collaborative and stable investment management team 11 Managing Directors, of which 5 have worked in Olympus since

3 Investment Strategy Strong management team Seeks to back strong management teams with established expertise and track record in high growth industries Management teams in our portfolio companies have significant shareholdings and incentives to align their interests with those of investors Sector exposure Invests in wide range of sectors including: Environmental Healthcare Manufacturing Financial and business services Agri-business & food Telecommunications & consumer Our value-add Flexible exit strategy Growth capital and financial support ESG upgrade to highest standard Management additions. We have track-record of committing our team members to assisting companies on part- and full-time basis Growth initiatives including M&As and regional expansion through our extensive sector network Flexible exit strategies aimed at fulfilling Company and management aspirations Track-record of exits via IPO, strategic sales, trade sales 2

4 The Case for focusing on the Environmental Sector

5 Key environmental issues Critical environment related issues affecting our society High impact on daily lives of our people Significant business responsibility and opportunity in addressing the issues energy solid waste climate water air 4

6 Environmental sector investment thesis Demand driven More electricity More clean water More waste Demand growth and profitability by environmental segments Policy driven Emission control Energy mix Pollution control Efficiency Macro driven GDP and consumption Regional driven China India Southeast Asia Source: Credit Suisse estimate (2015) 5

7 Chart in focus: China environmental related investment 2015E-2020E: China estimated investment in environmental related industries, expected to grow at 12% CAGR Source: CEIC, Credit Suisse estimates (Oct 2015) 6

8 Freshwater resource per capita (cubic meters) Chart in focus: Freshwater resources per capita On a per capita basis, water resources is scarce for major Emerging Markets nations such as China and India 25,000 20,000 20,963 15,000 10,000 8,838 5, ,961 3,382 3,315 3,020 3,002 2,062 1,116 Australia USA Vietnam Japan Thailand France Italy China India Source: World Bank, 2014 freshwater resource per capita 7

9 Chart in focus: Global share of energy generation Reliance on traditional energy source expected to decrease, while renewable and hydro energy sources anticipated to be an increasingly important source of energy 8

10 Our Environmental Initiatives

11 Environmental sector initiatives Since 2005, Olympus Capital began investing in the environmental sector, including waste, renewables, and carbon In 2008, we established a dedicated funding vehicle, Asia Environmental Partners I ( AEP I ), to undertake environmental investments initiatives. Since then, we have invested in a variety of environmental sub-sector leaders, with US$370mm total capital deployed, across Asia with investment size ranging between US$20-100mm In 2015, we raised our second environmental-focused fund, Asia Environmental Partners II ( AEP II ), with a final close of over US$300mm Environmental Initiatives: AEP Funds AEP I AEP II Vintage Size (US$mm) $370 $300+ Status # investment 9 3 Dedicated AEP team focusing on energy and environmental sector Offices in Dubai, Hong Kong, Shanghai, Singapore, with over 20 investment professionals across these offices 10

12 AEP investment areas Solid and hazardous waste management Materials recycling and re-use Energy efficiency products and services Renewable energy projects and services Clean energy and infrastructure Water quality and treatment management Pollution control and prevention devices and services Carbon credit projects and developers Specialty materials and other clean technologies 11

13 Our investments Electronic waste Olympus invested in one of Asia s e-waste leading operators, LTG, in 2015 LTG is headquartered in Hong Kong and operates globally Provides e-waste solutions to global OEMs and mobile device manufacturers Olympus value-add includes management team and financial systems upgrade, strategic advices, and sector consolidation ideas Renewable power: WTE / Hydro / Wind Investments include China s largest private WTE and mini hydropower operators, and one of China s largest windpower producers. Also invested in India s leading wind + bio-mass power producer Extensive track-record in renewable energy platform build-up and consolidation. Built China s largest hydropower platform from 150MW to 1,200MW in 8 years and helped a WTE platform to 2x its EBITDA within 2 years of investment New materials / efficiency products Olympus invested in a global top 5 meta-aramid fibre manufacturer in 2015 Meta-aramid fibre is strong and highly heat resistant Core materials for air filtration system in high emission industries. Also essential for safety uniform and lightweight, high strength construction materials Olympus value-add includes management team upgrade, strategic and consolidation advices, and upgrading Company s ESG systems Water Invested in two of China s largest private water treatment and water supply companies and one of India water treatment sector leaders Our value-add includes driving management s sector consolidation plans, growth capital raising, and management upgrade 12

14 Selected investments overview Company Sector Investment Scale A Hydro power Three rounds of investments (Series A+B+C) since July 2009 Total investment US$140mm by Olympus/AEP Total installed capacity of 150MW at investment Currently owns 60+ assets across 9 provinces with total installed capacity of 1,200MW FY2015 EBITDA: US$109mm B E-waste recycling US$45mm investment in November 2015 Top 3 TET e-waste recycler in APAC and top 5 globally Presence in HK, China, USA, Europe, and Middle East FY2015 EBITDA: US$10mm+ C Waste-toenergy US$25mm of pre-ipo investment in May 2014 Subsequent public market follow-on investment in 2016 of US$10.5mm total Treatment capacity of 6.4kt/day at investment Current treatment capacity of 15.7kt/day FY2015 EBITDA: US$65mm D Waste-toenergy US$26mm investment in December 2010 Total operating capacity of 10.8kt/day at our investment Current operating capacity of 22.8kt/day FY2015 EBITDA: US$144mm E Waste water treatment US$25mm investment in September 2010 Current treatment capacity of ~4mt/day FY2015 EBIT: US$161mm 13

15 Selected investments overview (cont d) Company Operational value-add ESG upgrade Strategic value-add A Capacity expanded from 150MW in 2009 to 1,200MW now Identify operational risks Provide technical support to develop organizational capacity to manage E&S issues Developing and implementing formal ESMS Seconded our resources as interim CFO to upgrade financial system Led 3 rounds of capital raising, total US$280mm (of which US$140mm from Olympus) B Company s management upgrade, strategic growth plan and sector consolidation Obtaining all regulatory permits Compliance with operational regulations Financial system upgrade CFO / COO recruit C Capacity growth from 6.4kt.day in 2014 to 15.7kt/day now Introducing potential project acquisition targets Adopt international E&S best practices/standards Proven ESG track records that attract international investors Growth capital raising, IPO, advise on debt financing D Capacity growth from 10.8kt.day in 2010 to 22.8kt/day now Identify and close non-compliance issues Assist in the IPO process Advise on financial system upgrade E Driving management s sector consolidation plans Identify and close non-compliance issues Assist in growth capital raising 14

16 Responsible investing One of AEP s key missions is to create portfolio of companies that both (1) invest / promote environmental efforts to the community, and (2) operate under the highest ESG (Environmental / Social / Governance) standards for its stakeholders We have a team of dedicated ESG officers / specialists who focus on identifying, assessing, and monitoring our portfolio ESG standard Our approach: Before investment Detailed ESG standard due diligence and gap + risk assessment. Satisfactory results are cornerstone to our investment decision As part of our investment framework, we work with investment company to develop sustainable ESG and ESMS framework for the company and dedicate our environmental officers to design relevant policies to address any ESG gaps we identify After investment Dedicated ESG team to develop and execute ESG and ESMS framework for our companies Active review and strengthening of ESG policies and execution capacity 15

17 Electronic Waste Investment

18 E-waste sector opportunities E-waste: a growing market in the TET world Unprecedented consumption increase of TET products worldwide. By 2015, ~2.1 billion mobile phones (up from 1.4bn in 2010), 365 million tablets and e-readers (up from 250mm in 2010) / circa ~US$600 billion worth of smart device was shipped globally. Replacement rate also increases significantly. With new models of mobile device coming out every year, our generation is replacing our devices at lease once or twice each year Global TET e-waste is expected to grow at CAGR of 24% with a US$50bn market by 2020, of which half would come from APAC region Value is also increasing, as devices are manufactured with higher value metals and components, ranging from precious metals to high reuse value electronic components Investment opportunity INDUSTRY CAGR at 24% to 2020 Growing awareness of severity of e-waste Stricter regulations globally in-demand for e-waste operations and managers Lack of total solutions in the market Ability to re-create value from e-waste 17

LTG leading RSCM solution provider in TET In 2015, Olympus invested in LTG, a global leader in Reverse Supply Chain Management in the TET (telecom, electronics, technology) sector LTG has more than

19 LTG leading RSCM solution provider in TET In 2015, Olympus invested in LTG, a global leader in Reverse Supply Chain Management in the TET (telecom, electronics, technology) sector LTG has more than 15 years of global operations experience in RSCM solutions Clients include a number world s top OEMs in the TET segment Well credentialed and qualified for value chain optimization and EOL (End of Life) solutions Total Reverse Supply Chain Management ( RSCM ) Reverse logistics and online tracking Compliance and integrated reporting Component harvesting and repurposing Enterprise asset management Downstream management Re-manufacturing & Recovery Data security and destruction Industry leader in RSCM More than 20 facilities worldwide supported by over 1,000 RSCM professionals & engineers Solutions for both post-industrial (ie along production chain) and post-consumer (ie after sale to consumer) RSCM solutions and platforms Help clients through e-waste processing, data security, compliance solutions, and realization of financial returns Credentials: R2 / RIOS, ISO, NAID AAA Global RSCM Network LTG is globally operated and offers solutions across all regions 18

20 Q&A

Report and Recommendation of the President to the Board of Directors

Report and Recommendation of the President to the Board of Directors Project Number: 48292 October 2014 Proposed Equity Investment Asia Environmental Partners II, L.P. (Regional) This is an abbreviated