CoPower Infrastructure Equity Fund, LP.

The CoPower Group ○

Offering Description

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CoPower is a clean energy investment platform whose mission is to empower Canadians to participate in and profit from the transition to a low carbon future.

Traditional energy infrastructure consists of highly centralized, large, often dirty power production. The decarbonized energy system of the future will be made up of smaller, decentralized, clean energy projects (“distributed clean energy”). The distributed clean energy market is growing quickly, but remains underserved by mainstream infrastructure investors, typically set up to undertake larger transactions.

Through CoPower Green Infrastructure Fund, LP. (GIF)  investors gain unique access to a pool of vetted investment opportunities in qualified distributed clean energy projects that offer strong risk-adjusted returns, while helping to accelerate our low carbon transition.

Investment Highlights

Security Offered: Units of CoPower Green Infrastructure, LP

Fund Size: Up to $20 million

Minimum Investment: $250,000 for institutions, $100,000 for individuals 

Use of Proceeds:  Provide equity, quasi-equity or royalty linked financing to clean energy, energy efficiency and other carbon reducing infrastructure projects in Canada

Target IRR: 10%, net of fees 

Distributions: Periodic distributions of income; principal and capital gains at portfolio sale (target 36 months)

Management Fee: 2% one-time closing fee on net invested capital; 1% annual management fee on net invested capital

Performance Fee: 15% of aggregate distributions after an 8% preferred return to Limited Partners

Eligibility: Accredited investors

Anticipated close date: November 23rd, 2018

 

Capital raised figures include amounts raised both on and off platform

Fund Overview

CoPower Green Infrastructure Fund, LP ("the Fund") will make equity, quasi-equity and/or royalty-linked investments in clean energy projects, including projects that generate revenue:

  1. From the generation and sale of clean electricity or clean energy, and in some cases associated ‘Green Credits’;
  2. By way of reducing the use of electricity or energy;
  3. By capturing and selling waste heat, waste energy, waste fuel, or waste electricity; and
  4. By providing ancillary services that support any of the above including energy storage projects, electrical vehicle charging infrastructure projects, and others similar infrastructure projects that reduce carbon.

To be clear, the Fund will not invest equity to purchase shares of start-up companies or growth-oriented companies. The Fund will also not provide capital to finance the more speculative early stage or development stage of a project or project company.

The Fund targets an IRR of 10%, net of fees, and plans to invest in a diversified pool of clean energy projects, where the minimum target gross IRR on an individual project is 8.5%. 

Current projects in the Fund pipeline include solar and renewable natural gas projects in Ontario, as well as geothermal projects in BC. A typical project structure is illustrated below:

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For further details on investment criteria and project finance structure, please refer to the Fund’s Private Placement Memorandum.

Traction

CoPower’s total equity pipeline (near and long-term) includes $105M over 20 possible deals (note that for larger transactions the Fund would seek co-investment.) These span the technologies areas of: Energy Efficiency, Storage, RNG, GeoExchange, LED, Biomass, and Solar PV:

  • The majority of these projects are located in Ontario (80%) with some in Quebec (5%), BC (2%) and projects with opportunities in multiple regions (13%)
  • The Fund has received $3.3M in subscriptions and commitments. Additional funds are currently for consideration, in mature talks with investors totaling a further ~$1M.
  • Anticipated initial investments are in final stages of due diligence and negotiation, and include:
    1. Acquisition of a 0.5MW portfolio of Ontario solar projects: 3 solar rooftop projects were completed in 2013 under the Ontario Feed-in-tariff program, and have met performance expectations to date. The Project achieves measurable GHG reduction by production of clean solar power.
    2.  Equity investment in an Ontario renewable natural gas (RNG) project: This construction-ready project will capture waste methane from a food processing factory to be cleaned using off-the-shelf technology and injected into the North American natural gas pipeline. The product qualifies as ‘renewable natural gas’. Revenues come from the sale of the commodity and from a long term (7-year) fixed contract for the sale of renewable gas credits. The Project achieves measurable GHG reduction resulting from i) limiting the flaring of waste methane and ii) replacing the need for a unit of methane from fossil fuel. This project is developing one of the first smaller ‘green gas’ plants in Canada. 

The table below is a summary of CoPower’s completed transactions to date:

traction.png

Competitive Advantage

CoPower has been providing debt solutions to the distributed clean energy market in Canada for four (4) years, and during this time, has identified a compelling opportunity to serve projects and project developers seeking equity financing for their projects. Within CoPower’s key markets – distributed renewable energy, energy efficiency and enabling technologies – access to project equity is a large barrier to deployment. CoPower is ideally positioned to address this gap and market opportunity, building on our track record as a lender and asset manager. The team has blended expertise in project finance and private capital markets that enable the Fund to provide financing for an underfunded project market, as well as matching these opportunities with investors seeking impact and strong risk-adjusted returns.

Barriers to entry include, but are not limited to, expertise and experience in project development, access to markets and understanding of newer technology markets (such as storage and biogas), capabilities and flexibility to target and cater to the distributed energy space, a sector focus on small-medium-sized distributed clean energy projects. CoPower’s operating and target market is quite fragmented - CoPower has developed strong relationships in this market, having built a broad network of project developers and investors through industry experience, and with team members recruited with varying experience and networks in the industry.

Competitors in CoPower’s space include traditional project financers and infrastructure financers, private equity funds, real estate development funds – although the traditional financers typically target larger, utility-scale projects, rather than smaller, distributed/onsite projects. Real estate funds often don’t invest specifically (or at all) in distributed energy systems in their buildings and therefore can be complementary investors. Particular examples of organizations that operate in our markets are CWB Maxium and PNC Bank (lenders); Stepstone, Elemental Energy, Maquarie Capital (equity investors).

Impact Narrative

The decarbonized energy system of the future is made up of smaller, more distributed, clean energy projects. Proven technologies can help our buildings and communities operate more efficiently and generate their own clean power, today -- but lack of available financing remains a barrier to deployment, as mainstream infrastructure investors are typically set up to undertake larger transactions. Meanwhile, most Canadians have limited access to opportunities to invest in clean energy infrastructure. CoPower was founded to bridge this gap. Our mission is to unlock capital for climate solutions by empowering Canadians to participate in, and profit from, our low carbon transition. 

CoPower-financed projects result in nearly 7,000 tonnes of CO2  avoided annually -- a figure that is growing steadily as we grow our portfolio of loans and investments. Our impact scales directly with capital invested, which enables the development of new distributed clean energy projects, and accelerates markets by helping project partners scale pioneering business models, such as geothermal-as-a-service. As a registered exempt market dealer with a proprietary online investment platform, we make it easy for Canadian investors of all sizes to align their portfolio with their values by investing in simple, diversified financial products backed by clean energy infrastructure. Additionally CoPower’s flexible financing approach also is able to work at the frontiers of technology implementation, where financing is not readily available.

Impact Metric

CoPower measures its impact using the following indicators:

  • Tonnes of CO2 equivalent greenhouse gas emissions avoided annually
  • kWh of energy saved and clean sustainable energy generated
  • Amount of capital mobilized for renewable energy initiatives
  • Number of investors engaged in financing renewable energy initiatives

To date, CoPower has provided $25M in financing for more than 1,100 clean energy projects via Green Bonds and Funds. Attributable impact to date includes over 82.2M kWh of clean energy generated and over 6.8M KG of CO2 avoided. 

Risks

All private securities listed through online investment platforms and Exempt Market Dealers (EMDs) like SVX are likely to carry more risk than those available on the public markets. Our goal it to make you aware of those risks before making an investment. 

Important disclosures about our investment criteria, risks of an investment in the Fund, conflicts of interest and risk mitigation procedures are outlined in the Fund’s Private Placement Memorandum. All investors should read the Private Placement Memorandum and the Limited Partnership Agreement, dated July 17th 2018, before investing in the Fund. The following risks have been identified for investors:

Lack of regulatory review: Limited Partners under this Offering will not have the benefit of a review of this Private Placement Memorandum by any regulatory authorities.

Business risks: The Manager is a company with a limited operating history and track record. There is no guarantee that the Manager will continue to operate in the future.

Liquidity risks: While CoPower intends to make liquidity options available, there is a risk that any and all of these liquidity options will not be available. While the intention is to have the Fund roll-into Fund IV after 24-36 months, , there is no guarantee that this roll-over will occur and Investors should be prepared to remain in long term investments for the full term.

Exchange rate risks: A portion of the fund may be invested in projects with some exposure to USD currency fluctuations. Those Investments are subject to exchange rate risk, whereby if the CAD strengthens against the USD, returns may be diluted.

Underlying asset risks: This investment relies on the performance of a set of underlying assets: the funded clean energy projects for energy efficiency. CoPower conducts a thorough due diligence process to assess each investment opportunity. We review the underlying project investment, the partners, the investment structure, the counterparty and credit, the equipment performance, and other material factors. There are however risks inherent to making these investments and investors should understand that their principal is at risk. These risks include:

  • Counterparty risk: The Fund targets investments in projects that have offtake agreements with a counterparty that is deemed by the Investment Committee to have satisfactory credit. There is no guarantee that a counterparty’s credit will continue in the future. Upon the event that a counterparty defaults on its payment obligation, investor capital may be at risk.
  • Performance and operational risk: In some cases, investments may be tied to performance and ongoing operation of energy equipment to generate energy, power, or other generate other types of carbon reduction. Project revenue may fluctuate according to amount of resource (for example, amount of solar irradiance in a quarter) and the performance of clean energy technologies. Risks related to performance or operations could materially impact the returns of the project, including risk to investor capital.
  • Sponsor risk: The Fund may invest in Projects where the Sponsor/Developer of the Project has a limited corporate operating history. The Sponsor may have ongoing contractual obligations to the Project including asset management, operations, and/or maintenance, There is no guarantee that the Sponsor will continue to operate in the future, and the Fund may have to contract a new party or step in to perform these roles, which could materially impact the returns of the project.
  • Regulatory risk: In some cases, investments in projects may rely on existing regulations. This may include but not be limited to: i) Clean energy projects that enter into long term offtake contracts with government or quasi-government entities; and, ii) Clean energy projects whose revenues rely in part or in whole, on various clean energy credit programs. These credit and/or regulatory programs may change in the future, which could materially impact investor returns, including loss of capital.

Management Team

David Berliner

David Berliner

Managing Director & Founder

David leads corporate strategy and is a member of the product and project financing teams at CoPower. He has spent the last 7 years working in clean energy finance and policy. 

Before founding CoPower in late 2013, David worked at Inerjys, a clean energy investment firm. He has consulted for the New York City Mayor's Office on renewable energy, was Sustainability Coordinator for the University of Toronto, and worked at the Carbon Disclosure Project. David has been named "Emerging Solar Leader" by the Canadian Solar Industries Association and "Top 30 Under 30" by Corporate Knights and co-recipient of the 2017 Clean50 Award for Environmental Entrepreneurship. David holds an M.P.A. from Columbia University and a B.Sc. from the University of Toronto.

Trish Nixon

Trish Nixon

Managing Director & Head of Capital

Trish leads product development, fundraising and investor relations for CoPower. She also sits on the Investment Committee overseeing project financings.

Trish has spent her career working to accelerate impact investing, primarily in private markets. In prior roles at MaRS Discovery District, she provided advisory services to investors and intermediaries, founded a social venture accelerator and led venture services for the SVX investment platform. She also led the design and development of the MaRS/Virgin Unite Catalyst Fund.

Trish is the 2016 Recipient of the Edward Newton Award for Social Innovation and co-recipient of the 2017 Clean50 Award for Environmental Entrepreneurship. She holds a Masters of International Relations from the University of St. Andrews.

Jonathan Frank

Jonathan Frank

Managing Director & Head of Projects

Jonathan leads CoPower’s project finance team, and is in charge of market strategy, deal origination and relationship management. He works with CoPower’s Chief Investment Officer on due diligence and term negotiations. Jon brings a wealth of clean energy industry experience to CoPower. Over his career working at companies like Sun Edison, PowerHub and RESCo, he has played a lead role in securing clean energy contracts valued at over $300 million. Jon is one of the founding executives of Emerging Leaders for Solar Energy and has served as Co-Chair of the National Board of Directors. He is also the 2015 recipient of the Canadian Solar Industries Association’s “GameChanger” Award for Emerging Solar Leader.

Kathrin Ohle

Kathrin Ohle

Chief Investment Officer

Kathrin oversees CoPower’s assessment, and structuring of clean energy investments, as well as ongoing asset management. She sits as a member of the Investment Committee responsible for approving project financings.

During her 25+ years of experience, Kathrin has closed more than $5.5 billion of financing transactions as a corporate banker with Deutsche Bank and TD Securities, as a financial investor with the Business Development Bank of Canada, and as a strategic investor with Emera. Kathrin holds an M.B.A. from the University of Cologne, Germany, and is the author of The Decision-Maker’s Guide to Long-Term Financing.

Junaid Subhan

Junaid Subhan

Director of Legal & Regulatory Affairs

As Director, Legal & Regulatory Affairs, Junaid oversees all matters related to corporate law, securities law, and regulatory compliance. Junaid joined CoPower from Stikeman Elliott LLP and is called to the bars of New York State and the Province of Ontario and earned degrees in common law and civil law at McGill University with an undergraduate background in science and finance.

Junaid has advised on public offerings, private placements, M&A, corporate governance, dealer/adviser/investment fund manager registration requirements and commercial law, including corporate and regulatory aspects of organic international expansions.

Junaid was recently honoured as the “Young Lawyer of the Year 2016” by FACL.

Matthew Rosenberger

Matthew Rosenberger

Director of Finance

As Director of Finance at CoPower, Matthew is involved in strategic decision making, corporate finance, asset management and investment performance analysis, as well as informing our investment strategy with financial modeling of CoPower’s products.

Before joining CoPower, Matthew was a senior auditor at a large Montreal accounting firm. After completing a B.Com. at McGill University he went on to earn his CPA, CA designation. He is currently pursuing a CFA designation and has passed the first two levels of the CFA exams. He is also an avid traveler and sports and music enthusiast.

$3,352,000.00

Raised Of $20,000,000.00 Goal*

Days Remaining 164
Hours 10
Mins 17
$3,352,000.00
 
Limited Partnerships (LP) Offer. Structure
10% Valuation
3 Years Term
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*Capital raised figures include amounts raised both on and off platform. Amounts raised off platform or committed have not been independently verified by SVX.