NewNet Investor Profile: Dr Helmut Vorndran, Ventizz Capital Partners

30 March 2009

Dr Helmut Vorndran

Ventizz Capital Partners Advisory was established in 2000 by Dr Helmut Vorndran and Reinhard Löchner. The firm invests in technology-oriented growth companies. In 2007, the firm closed its fourth fund, Ventizz Capital Fund IV, on €450m.

Dr Helmut Vorndran is a co-founder and the CEO and managing partner of Ventizz. Prior to that, he had purchased in an MBI transaction all stakes in Rolf Schnakenberg GmbH & Co. Prior to that he worked for US management consultancy A.T. Kearney, Inc. in Munich and Tokyo. His most recent position at A.T. Kearney was vice-president worldwide and managing director of the Japanese operations. Since 1991, he has also been a managing director and the sole shareholder of Fritz Schübel GmbH & Co. and of Vorndran Beteiligungs-GmbH.

Why clean energy?

‘The main reason was that the management team here has significant renewable energy experience, going back to the early 1990s. I was former head of the German electric utility practice group at A.T.Kearney, and was therefore familiar with the fields of solar, wind, biomass, biodiesel and biogas.

The reason Ventizz was established was based on the fact that in 2000 we did not regard these new e-commerce or internet-based business models to be reliable or sustainable in the long-term. In the mid-European, German-speaking market, business success is mostly based on technology, proprietary knowledge and hardcore expertise. Clean energy is very much in this category, and we see a lot of interesting opportunities in this area.

We made our first clean energy investment in 2002, in a company called PV Crystalox Solar, a solar ingot and solar wafer manufacturer. Today the company is listed on the London Stock Exchange and peaked in 2008 on app. a €1bn in market cap.

The investment yielded a multiple of more than 11 times, this signaled our entrance into solar industry. Following that, we analysed even more solar investment opportunities.

In 2003, you really did not have to do much due diligence or research to throw up promising deals. Around that time we identified Ersol, which in 2004 became our flagship investment. The value of the company was €15m in 2004, and the market cap at the Frankfurt stock exchange today is roughly €1.2bn.

We target the technology sector. Of our investments to date, more than 50 per cent has been done in the field of clean energy, and I expect that to rise.’

How much capital do you have under management?

‘We have almost €675m capital under management, and we still have approximately €350m of dry powder.’

What is the appetite of your investors for the clean energy sector?

‘The appetite of our investors for cleantech investments is very high, which is not that suprising, because we marketing our funds as cleantech funds. We raised our fourth fund between May and December 2007. We invest in renewable energy, cleantech and also high-value add engineering, which often overlaps with energy and clean technologies.

Our cleantech focus is one of the major reasons why our most recent fundraising was a relatively fast and easy process. We are often hearing that are so many teams in the market, but their cleantech history is not deep, whilst our decade-long experience serves as a clear differentiator.’

Which are your main areas of focus?

‘In terms of geography, our fund invests primarily in German-speaking region, but also includes to a lesser extent the Nordic countries, Denmark, the Benelux region, Poland and Eastern Europe; the areas surrounding the German-speaking areas.

In terms of industry, our clear focus is solar and wind. On a short-term basis, we regard wind as a little more favourable, as there has been some over-investment in solar in the past couple of years. In the long term we are convinced that solar is the more promising area, as it has by far the more attractive cost position if you look to the future.

The photovoltaic industry will eventually end up with electricity generated at around €0.04 per KWh, though right now they are between €0.30-€0.040 per KWh. In the long term this will definitely fall.

Wind energy is already today at around approximately €0.09 per KWh, and while there remains the cost-saving potential to lower this further, it lacks the viability and long-term targets of the solar industry. The short-term opportunities in the wind energy sector are by far the more interesting, but the future opportunities in solar are unbeatable. I do not know of any other industry that has such promising prospects.’

What are the advantages of operating in this sector?

‘The advantages of an industry where you have relatively high degree of development or maturity, and one that is already just established, is that you do not have the possible uncertainties or issues you might have if the industry was just starting out. We have seen this in the dotcom bubble a few years ago, where a new industry grew beyond the initial capacity and the capabilities of those involved.

The cleantech space is experiencing significant market growth, highly likely up to 40 per cent. It is a tremendously exciting space to be involved in. We still see a lot of new technologies and innovations, which of course will lead to structural changes. Change is always a risk, but also an opportunity for investors. Solar and wind is also an extremely capital-intensive industry, and as such very dependent on investment, which provides a favourable angle for the private equity industry.

A huge benefit is that the concept is already accepted. You do not have to make too many market analyses, whether the photovoltaic industry will have a market or not. We know it will. The only issue currently is when photovoltaic will become cost-competitive with other traditional forms of energy, to the point that it is also no longer dependent on subsidies. It will happen soon in the sunnier regions, and will happen everywhere in the world, eventually.’

What are the challenges you face?

‘Currently the major challenge is that, if anything, too much money – silly money almost – has been invested into the calean energy and solar markets, especially in silicon-based thin-film, where you can buy turnkey solutions and in crystalline solar-grade polysilicon production.

The financial crisis has the primary effect, that not every investment will become reality. This is not necessarily a bad thing. Too much money has been invested throughout the recent years, and we have therefore been very reluctant as a solar investor to participate in this market currently. All our key investments were made between 2002 and 2005.

When the valuations became too high, especially in 2006 and 2007, we became reluctant to invest in solar, though I would not be surprised if distressed solar assets could not be purchased at very attractive valuations.

This dip in the market also happened in wind in 2004, and it fully recovered having gone through a difficult phase. We will see similar dips in solar segment.’

What is the biggest issue facing the industry?

‘The major issue is that currently we probably have too much capital flowing into renewable energy and cleantech funds. The profitability and performance figures will go down and the sector might experience fundraising difficulties for the next couple of years.

My concerns are that many private equity firms now in the space were not active in 2002-2005, where there were not many investors in cleantech. They are not necessarily proven investors.

A period of strong investments, with a tendency to over-invest will definitely be followed by situation where difficult fundraising and lower performance numbers will be the case. My main concern is that the cyclicality of the private equity industry will be a big issue for energy-related private equity funds.

If you look at any energy forecast, you will see that photovoltaic, wind and other alternative energies will conquer a significant part of the world’s energy consumptions. If this does not take place in the next decade, mankind has a different problem to solve.

I am convinced that renewable energy and cleantech will be one of the dominating industry segments for the private equity and venture capital spaces.’

Copyright © 2009 newnet

Tags: photovoltaic, private equity, solar, venture capital, wind

This story was published on Monday, March 30th, 2009 at 9:04 am and is filed under 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.

One Response to “NewNet Investor Profile: Dr Helmut Vorndran, Ventizz Capital Partners”

1. Rajat says:

   31 March 2009 at 8:55 am

   Interesting interview. What is the scenario of PE and VC frims investing in clean technology companies in India and China, the two economies which are forecaseted to consume much of the incremental energy requirement of the world.

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