NewNet Investor Profile: Ron Mahabir, Asia Cleantech Capital

23 June 2009

Ron Mahabir

Asia Cleantech Capital is an investment management firm formed in 2006 to focus on clean energy in the Asia Pacific region.

Ron Mahabir is a co-founder of Asia Cleantech Capital. In anticipation of the current housing crisis, Ron oversaw the 2005 investment in and turnaround of the largest mortgage default communications company in North America, The Walz Group. Previously, Ron established the Tokyo office of Colony Capital, a private equity fund manager which has acquired $39bn in assets since 1991.

As president of Colony Japan, he oversaw the acquisition, asset management and disposition of corporate, property and non-performing loan transactions. Ron began his investment career with MSREF, a global real estate private equity fund manager.

Why cleantech?

‘Our focus has really been on major macro events of recent years, such as the Internet in the 1990s, distressed debt in Asia, the whole commodities market at the turn of the century, and the recent housing crisis. In 2006, we decided to focus on clean energy given the massive changes occurring in the energy markets as well as pressing environmental concerns.

For us, there are two aspects to the industry – clean transportation, which we think is going to be a major opportunity, and obviously we also look at clean energy generation. Both sectors we feel are increasingly coming to the fore and are offering growing investment opportunities.’

Do you have a specific focus?

‘As the name suggests we invest in clean technology and renewable energy in Asia. Within that we are currently focusing particularly on China and India, which are really the growing forces in this sector at the moment. They have particularly positive renewable energy legislation, and China especially is interesting given the costs manufacturers are driving lower. We are also looking at North Asia, Japan and Korea more from the technology side of things.

In terms of technology, we invest in clean power generation, including solar, wind, biomass and small hydro. We invest along the value chain, from the enabling technologies to project development and energy generation itself.

We are also focused on clean transportation, including electric vehicles and infrastructure, and we have recently invested in an electric vehicle infrastructure company that provides charging stations for electric vehicles.

Solar is an interesting area to look at, as module prices are dropping rapidly and China will continue to lead the way as it has done already with wind.’

What kind of investments do you target?

‘We tend to target later stage, growth capital investments, where there is already cash flow in place. Valuations are certainly now more attractive, as previously, we were perhaps more early stage. Our scope is now widening with the recent dislocations of capital.’

Which areas are you less interested in?

‘There are bound to be bubbles to every trend. Solar was extremely overvalued last year though is becoming more attractive. First generation biofuels appear to have run its course, and has been shown to be less than sustainable in many of its current forms. We have not touched the sector, though we are looking to at the development of the next generation of biofuels with signigicant interest.

Smart grid was seen as the next big thing, and as such we are not seeing a lot of near-term value in the space, with valuations growing in proportion with the increased interest.’

Which regions in Asia interest you the most?

‘If you had to pick one area today, then it would be China, as it is driving down costs of clean technologies. The key issue now for the Chinese government is energy security and cleaning up of their environment. China has blown everyone out of the water. In terms of manufacturing it is huge, and this is across all sectors, such as wind turbines and solar modules.

The industry is evolving quickly in China, and it has the most growth opportunity in terms of projects in the pipeline, equipment and services.

Encouragingly, we are also seeing more favourable legislation in places like the Philippines, Taiwan, Thailand, Singapore and Japan, which will only encourage growth in this space.

A lot of governments are looking in particular at where they can create jobs, and clean energy is the answer to many people. Many countries in the region including Japan have recently unveiled stimulus packages for clean energy which will only help things along.’

How is the wider financial crisis affecting the industry?

‘Listed equities are being hit hardest and resulting in more attractive valuations for us. On the private side, until there are forced liquidations we are not going to see them down to a truly realistic level. Debt, however, is being offered on increasingly more attractive terms.

We are also seeing more realistic valuations on the listed side, which is informing the private side, but it is a slower process, like a real estate cycle in many ways.’

How important is local expertise when looking to target investments in Asia?

‘It is extremely critical. The biggest challenge we found was sourcing experienced local partners in Asia. The model has not been around for that long, and there are not that many people with on-the-ground experience.

The market is culturally and politically different between many of the countries in Asia in a way that is not so obvious in Europe, for example. There are huge barriers to entry if you do not have the local knowledge and access, which is good for us, because we do have that knowledge.’

What is the biggest issue facing the industry at the moment?

‘Clean energy is priced against fossil fuels, which themselves are underpriced if you factor in the environmental cost. We are also not taking into account the fact that the finite supply is rapidly being depleted. By not factoring this in, we will see costs jumping higher in the next ten years as supplies dwindle.

It makes no sense to price our resources against the historic fossil fuel prices. Renewable energy will only get more competitive as scale and technology take hold.

Asia is less concerned about green issues as compared to Europe. It is all about low cost, and this is certainly the greatest immediate challenge for clean technology.’

Copyright © 2009 NewNet

Tags: biofuel, cleantech, electric vehicle, private equity, smart grid, solar, venture capital

This story was published on Tuesday, June 23rd, 2009 at 10:11 am and is filed under investors, profiles. You can follow any responses to article entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

7 Responses to “NewNet Investor Profile: Ron Mahabir, Asia Cleantech Capital”

1. Günter Eberz says:

   24 June 2009 at 8:05 am

   Dear Mr Mahabir,

   do you consider the following but often overlooked technologies to be viable energy sources in Asia:

   - household waste (landfill) methane capturing
   - human waste biogas generation, as stand-alone or add-ons to sewer treatment plants

   Both represent simple and proven technologies. Would there be scope for German/Asian joint ventures backed by PE?

   Regards

   Günter Eberz

   http://www.greentech-consulting.de
2. Michael Cunningham says:

   24 June 2009 at 10:38 pm

   Agree, the green game is all about low cost.
3. Ajaypal says:

   21 July 2009 at 5:07 pm

   we have been working in india and are set to create a ground level working Invstments,Feasibility,Valuations and deals for approvals of Projects from government under http://www.thelandsmiths.com and trying to create network for funds for the projects kindly if you can pitch for bringing funding comunity to india and creating project vilbilities for RE,infrastucture projects,hydro projects,roads,Telecom Infra,and Agro/Organic, Waste managment, Renewables & Environment,sectors in Partnership or Joint Venture .Fund houses also invited,Kindly do connect we are looking for deal makers. We have good projects in Renewables & Environment or checking.
   Ajaypal
   http://www.thelandsmiths.com -Corporate Finance, Project Finance, Term Loan Syndication, Working Capital – Fund based and non-fund based facilities arranging, Pre-IPO and QIP Placements
4. Robert Schechter says:

   22 July 2009 at 4:40 pm

   China’s National Energy Administration & Strategic Partnerships for Nuclear Power Projects

   BOISE, ID–(Marketwire – 07/22/09) – Alternate Energy Holdings, Inc. (Pinksheets:AEHI – News): AEHI CEO, Don Gillispie, during a recent trip to Beijing to open AEHI China’s new office in the Fortune Plaza, met with Sun Qin, Vice Minister of China’s National Energy Administration (China’s NEA equates to US Department of Energy). Mr. Sun openly supports AEHI joint ventures, strategic partnerships, and investments in the company’s projects as part of cooperation with the US-China agreement to work together on clean energy sources per US Secretary of Energy Steven Chu’s visit to China last week. AEHI is working to get China producing internationally qualified products for use in nuclear plants to help lower the high cost of these components. Don Gillispie said, “In addition we have been warmly received by nuclear component suppliers and operating companies such as China Shipbuilding Industry Company and Guangdong Nuclear Power Holding Company.”

   The company has been given an MOU from Dalian Shipbuilding Industry Company, a division of China Shipbuilding, to work together to produce components such as nuclear containment liners, stainless steel piping, and desalination units.

   Also, AEHI will work with Chinese companies to produce a new advanced nuclear reactor for international markets to improve competition and lower costs.

   About Alternate Energy Holdings, Inc. (www.alternateenergyholdings.com)

   Alternate Energy Holdings develops and markets innovative clean energy sources. Current projects include the Idaho Energy Complex (an advanced nuclear plant and bio-fuel generation facility), Energy Neutral which removes energy demands from homes and businesses (www.energyneutralinc.com), Colorado Energy Park (nuclear and solar generating plants) and International Reactors, Inc., which assists developing countries with nuclear reactors for power generation, production of potable water and other suitable applications.

   This press release may contain certain forward-looking statements within the meaning of Sections 27A & 21E of the amended Securities and Exchange Acts of 1933-34, which are intended to be covered by the safe harbors created thereby. Although AEHI believes that the assumptions underlying the forward-looking statements contained herein are reasonable, there can be no assurance that these statements included in this press release will prove accurate.

   Contact:

   US Investor Relations:
   208-939-9311
5. Chetan Shukla says:

   28 July 2009 at 2:17 pm

   The next generation of Biodiesel is already being tested successfully in the U.S. This is generated out of Algae and not from Feedstock. Are you open to look at these types of projects even in seed stage?
6. Phan says:

   11 September 2009 at 10:33 am

   Dear Mr Mahabir,
   I am Vietnam student. I am researching about energy benchmarks in some countries and the method that they used to design energy benchmarks. I only understand a little about energy benchmarks. Please help me understand about energy benchmarks for office building, school.. and energy benchmarks method in your country or another country that you know.
   Thanks for your help.
   Best wishes.
   Phan
7. Martin says:

   7 May 2010 at 6:29 am

   Great inside View of what Cleantech in Asia is like – I would Be Glas to get à 2010 Update – is IT possible?

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