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“ Change is the law of life. And those who look only to the past or present are certain to miss the future.” —JOHN F. KENNEDY

3GCA 2015 ANNUAL REPORT

02 Letter from the Managing Partner

05 Sectors of Focus

06 Feature Stories

A View from North America

A View from Europe

A View from China

Trends in Advanced Transportation

Infrastructure Rising – An Asset Class Takes Shape

17 GCA Investment Management

20 An Investor’s Perspective

22 Case Studies

Al-Bahar

Allegion

Conservation Services Group

Infigen Energy

RBI Solar

Solairedirect

UpWind Solutions

29 Recent Transactions

30 Our Senior People

32 Advisory Council

33 Investor Focus in 2016

M&A Volume and Trends

Private Placement Activity

IPO Activity

Public Markets

36 Social and Environmental Responsibility

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It’s a question of when, not if, society’s demand for Resource Responsibility dramatically transforms our energy, water, food and waste infrastructure systems. Looking back a decade from now, 2015 will have been the year in which it became blindingly obvious that resource innovation and productivity were set to become the great value creators of the 21st century.

A LETTER FROM THE MANAGING PARTNERJEFF MCDERMOTT

In 2005, the aggregate equity

market capitalization of companies

in the global coal industry was $165

billion, and the aggregate market

cap of companies engaged in the

wind and solar value chain was

$200 billion. 10 years later, at the

end of 2015, coal was largely the

same (buoyed by Chinese coal

company IPOs), but wind and solar

was $500 billion, up 2.5x. Just to

frame the situation in America, the

wind and solar industries today

employ 250,000 Americans and

the number of jobs in the U.S. solar

industry has grown over 15%

annually since 2010. In comparison,

coal mining employs approximately

80,000 Americans. What a

difference a decade makes.

Resource Responsibility provides

a framework that everyone under-

stands. The plummeting costs of

various technologies – renewable

energy, hardware and big data

analytics, water asset management,

waste heat recovery, energy

efficiency products and battery

storage systems, to name a few –

have created a dynamic in which

it is irresponsible for management

teams, boards and regulators

to ignore resource innovation

and productivity. It can be done

today – economically and with

proven, scalable technology.

Furthermore, it is happening on

an accelerated basis. Global

renewable energy installations

(excluding hydro) increased by 28%

in 2015 and more than 50% of the

$2.75 trillion to be invested in

power generation capacity from

2015-2020 is expected to be in

renewable energy. The LED lighting

market is projected to grow from

$13 billion in 2014 to over $60

billion by 2020 as costs continue

to steeply decline. The water

and wastewater industries are

undergoing a transformation with

the installation of smart water

meters and the use of real time

data analytics. Global smart grid

investment grew by more than $2

billion to reach $20 billion in 2015

due to an increase in distribution

automation projects in China and

smart meter installations in Europe.

The important point is that

Resource Responsibility is becoming

cheaper and easier every year, and

the list of excuses why companies

and individuals adhere to 20th

century polluting technologies and

wasteful business practices grows

increasingly less credible.

02

5GCA 2015 ANNUAL REPORT

When we think about Sustainable

Infrastructure, we are acknowledg-

ing that the existing energy, water,

food and waste infrastructure

has been built over a century

or more in OECD (Organization

for Economic Cooperation and

Development) countries. There

are long-standing, large and highly

capable incumbents delivering

products and services across the

value chain of our infrastructure

systems. The most successful new

technologies, business models and

companies fit within these existing

infrastructure systems to enable

them to fulfill our needs with greater

efficiency and less environmental

damage to our climate, air, water

and food.

However, there are regulators

whom the large incumbents have

worked hard to effectively manage

over many decades. Sadly, we see

many incumbents, led by late

career executives who, whether

through fear or inertia, have

decided to ignore society’s demand

for Resource Responsibility.

These leaders instead fund

misleading PR campaigns and

lobby actively against Resource

Responsibility. Arguments we have

heard are: “distributed solar is a tax

on poor people” (from a Director

at a large utility), “regulating shale

fracking water disposal would cost

too much” (from a CEO at a shale

oil and gas producer), building

codes that require using vastly

more energy efficient LEDs are

“un-American” (from a U.S.

congressman) and “our margins

are too low” to reduce packaging

waste and carbon intensity

(from an agribusiness executive).

The fight at the municipal, state

and federal level to influence the

regulatory bodies of our infrastruc-

ture systems and the argument to

keep the 20th century status quo is

not only irresponsible but also bad

for business. The truth is that we

can adapt and incorporate 21st

century technologies and business

practices into our infrastructure

systems and use our resources

• Record breaking clean energy investment (beating 2015’s record of $329 billion) from strength in utility scale solar and onshore wind in China, rooftop PV in Japan and the U.S.

• Continued growth in PV and wind installations with technological innovations within solar modules, as well as operational improvements in the wind industry

• Electric vehicles break the half million mark globally driven by increased EV charging stations, strong policy support and growing consumer acceptance

• New asset buyers enter the market Broad investor and consumer movement away from fossil fuels is attracting an increasing amount of interest into renewables. Interest from pension funds, insurance companies, sovereign wealth funds and superannuation funds is expected to continue to lower the industry’s cost of capital

• Grid storage additions double as momentum gathers in small-scale storage markets such as Japan, Germany and Australia; and a number of utility-scale projects announced in countries such as Canada, the U.S., Japan, Italy and Germany reach commissioning

• Corporations and cities buy clean energy Capacity procured by corporate offtakers has doubled every year since 2012 and accounted for ~40% of all PPAs signed in 2015 with demand starting to diversify away from the traditional data center sector into various other sectors, including food retailers, consumer goods, government and health care

• Smart home market takes off New, well designed networked products – connected cameras, video doorbells, smart lighting and locks – double penetration of U.S. homes to 30 million

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03GCA 2015 ANNUAL REPORT

04

more responsibly. Our resources

will last longer, our environment

will be cleaner, and we can lead

the developing world towards a

low carbon development path and

mitigate the climate change impact

of greenhouse gases. In doing

so, we will build companies which

can create more Sustainable

Infrastruc ture systems for our

children and our children’s children,

and these companies will outper-

form their peers and create value.

As Victor Hugo said, “An invasion

of armies can be resisted, but not

an idea whose time has come.”

Resource Responsibility is one such

idea. Those that embrace change

today will become the leaders of

tomorrow.

In closing, we’d like to thank our

clients. We closed 14 transactions

in 2015, bringing our total to over

52 closed transactions over our

7 year history. In 2015, we had

the best sector and geographic

diversity of assignments in our

history. Since inception, 40% of our

transactions have been cross-border,

validating the importance of our

global team and relationship

network. The Partners at GCA,

who have been with the firm for

an average of 5 years, remain

deeply committed to providing

best-in-class advice for companies

seeking to build the future. Thanks

to all the management teams and

boards who put their faith in us in

2015. We are truly honored to

work for you.

“ A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” —WINSTON CHURCHILL

GCA 2015 ANNUAL REPORT 05

AGRICULTURE & CONSUMER

Green chemicals

Green consumer products

Sustainable agriculture

Sustainable forestry

WATER

Distribution

Efficiency

Monitoring and compliance

Treatment

Smart water software

INDUSTRIAL IOT & SOFTWARE

Analytics

Data management

Software

Vertical applications

RENEWABLE ENERGY

Biofuel / Biochemical

Biomass

Geothermal

Hydro

Solar

Wave / Tidal

Wind

ADVANCED TRANSPORTATION

Electric vehicles

Emissions control

Natural gas vehicles

Other alternative propulsion systems

Software

Traffic management

AIR AND ENVIRONMENT

Credits trading

Environmental remediation

Pollution control

Recycling

Waste management

Waste to energy

ENERGY EFFICIENCY

Building management

Demand management

E&C / Energy services

LED lighting

Power electronics

Sustainable materials

Storage technology

POWER INFRA / SMART GRID

Energy storage

O&M services

T&D equipment

Advanced metering

Distribution automation

Grid communications

Sensors / Controls

SECTORS OF FOCUS

Sustainable Infrastructure is everyone’s future – and

it’s our business

06

A VIEW FROM NORTH AMERICA OLAV JUNTTILA

the unsubsidized LCOE of wind

is as low as $43 per MWh. Consider-

ing that the unsubsidized LCOE of

natural gas plants in the U.S. is $65

per MWh, the growth in renewables

does not come as a surprise.

In fact, several positive policy

developments have acted as

contributing factors. Both solar

and wind tax credits (ITC and PTC,

respectively) were extended for

multiple years in late 2015, and

many states are continuing to

push for stronger renewable

portfolio standards. The ecosystem

is clearly changing and there

is a continued shift in positive

outcomes for the sustainability

sector. In America, Millenials have

now overtaken Baby Boomers as the

largest segment of the population –

Trends in U.S. Sustainable Infrastructure

Significant Renewables Growth

2015 marked another year of

significant growth in renewable

energy in the U.S. Over 16

gigawatts (GW) of new wind and

solar capacity were built in the

U.S., reflecting a 25% increase from

2014. In 2016, we foresee another

19 GW of new installations, which is

an 18% increase over that of 2015.

The continued improvements in

efficiency and cost are key factors

for the rapid growth of renewables.

In the last six months of 2015 alone,

the levelized cost of electricity

(LCOE) of solar photovoltaic (PV)

projects in the U.S. fell by 6%. In

Arizona, the unsubsidized LCOE for

large-scale solar PV projects is now

as low as $81 per MWh; in Texas,

and they are vastly more supportive

of sustainability and likely to

contribute to an increasingly positive

sentiment.

Evolving Ownership Vehicles

2015 also marked the rise and fall

of the renewable energy YieldCos

in North America. As investors

chased yields, companies like

TerraForm Power, NRG Yield and

Nextera Energy Partners traded to

all-time highs in the second quarter.

By the end of year, share prices

had dropped by 40-50% or more.

So with so much growth capacity,

why are the YieldCos seemingly

failing?

Renewable energy projects typically

deliver long-term, stable cash

flows with minimal technology

risk. YieldCos were set up to take

advantage of this, while also

providing liquidity to investors.

As the YieldCo class emerged,

many growth-focused investors

contributed to driving up share

prices, with current yields in some

cases dropping below 3% per year.

In July 2015, SunEdison, the largest

YieldCo sponsor at the time,

announced the acquisition of Vivint

Solar, a residential solar installer.

Investors reacted negatively,

questioning the hefty price paid

U.S. Electric Generating Capacity Build by Fuel Type 2013-2018 (GW)

GCA 2015 ANNUAL REPORT 07

for the acquisition, as well as

SunEdison’s overall leverage and

ability to absorb multiple large

acquisitions it had recently closed.

The resulting sell-off created

a negative cycle not just for

SunEdison and its two YieldCos

(TerraForm Power and TerraForm

Global), but also for the broader

YieldCo universe. With falling share

prices, YieldCos were unable to

issue shares to finance new acquisi-

tions, and their growth stories

melted away. Growth investors fled,

and the entire YieldCo segment

came under pressure.

As YieldCo share prices shrunk,

cash yields were back at 4-8%.

At these levels, the asset class as

a whole is much more in line with

the nature of the underlying assets,

and we expect the YieldCos to

remain an important structure

for owning renewable energy

assets. We also see significant

increased interest from large

institutional investors (pension

funds, insurance companies and

the like) in direct ownership of

large-scale renewable energy

assets. To address the needs of

these investors, we are launching

GCA Renewable Infrastructure

Management (“GCA Renewables”).

GCA Renewables will identify,

diligence and invest in operating

renewable energy infrastructure in

North America on behalf of large

institutional investors. This will

be an open-ended vehicle that is

structured to let investors have

direct and long-term ownership

within the assets. The fee structure

will also be very competitive.

Renewed Interest in Growth

Investments

Although the Sustainable

Infrastructure sector has grown

dramatically in recent years,

investment by private equity (PE)

and venture capital (VC) has not

kept pace. In fact, investment

volumes declined from 2009 to

2015, as limited partners preferred

other sectors, such as enterprise

software, mobile and social media.

Looking into 2016 and beyond,

we see significant opportunities

to make attractive growth equity

investments into Sustainable

Infrastructure. Developments in

areas like Advanced Transportation

(electric vehicles, autonomous

driving), Energy Efficiency (LED

lighting technology, networked

buildings) and Industrial Internet of

Things (networked sensors, big data

analytics capabilities) are set to

rapidly transform large parts of our

infrastructure systems. Although

the United States is leading the

innovation in many of these areas,

there is a still a lack of growth

capital available. GCA is launching

the Sustainable Growth Private

Equity Fund in 2016 to make growth

equity investments across all of the

sectors we currently cover.

Summary

Despite low oil prices and volatile

stock prices, we expect strong

growth in the Sustainable

Infrastructure sector in the U.S.

in 2016 and beyond. We are

excited to continue our work as

the largest global advisory firm

focused exclusively on Sustainable

Infrastructure.

Total PE/VC Investments into U.S. Clean Energy 2009-2015 ($ in billions)

2015 Share Price Performance of Selected YieldCos

08

A VIEW FROM EUROPEHERVÉ TOUATI GCA ADVISORY COUNCIL

of E.ON and RWE, the two largest

German utilities, including net debt,

for a fraction of its cash reserves.

In today’s market, where is the

best place to look for investment

opportunities? The European

market is in over-capacity today.

Utilities are bleeding. Contrarian

private equity investors with deep

Not surprisingly, market capitaliza-

tions of utility industry leaders have

suffered: E.ON is at €17 billion,

RWE at €6 billion, having lost

respectively 77% and 85% of their

value since August 2008. By

comparison, since August 2008,

Siemens’ market capitalization

increased by 10%. Today, Google

could easily finance the acquisition

pockets will find it easy, in Europe,

to buy conventional generation

assets on the cheap. The bet

will be that electricity markets

will eventually turn around once

current over capacities are resolved

through plant closures.

This may happen, but such

an investment faces an uphill

battle because the demand for

conventional generation is actually

going down due to energy

efficiency, on-site generation

(solar and batteries, combined with

heat and power), renewable off-site

generation (wind and solar), and,

over time, the increased use

of electric vehicles for back up

battery storage.

A better opportunity is to invest

in areas where new and existing

infrastructure systems can be

leveraged in different ways without

massive capital investments.

The idea would be to invest in

companies that make the electricity

sector more networked, flexible

and efficient, similar to what AirBnB

or Uber have done to lodging and

transportation.

The electricity sector remains in

the Stone Age when it comes to

integrating modern information

technology. Utilities and regulators

have been slow to adopt current IT

technology. It is quite remarkable

that our “smart phones” use much

more sophisticated energy efficiency

algorithms than our homes or

buildings, while using a very small

fraction of the electricity that our

real estate infrastructure consumes.

This is bound to change. And the

technology is not only coming from

the U.S. or Asia. Sigfox, an Internet

The European electricity market does not immediately look like the best place to invest. Demand is not growing. The EU-27 consumption, in the 12 months ending July 2015, was 9.8% lower than in 2003. Wholesale prices are historically low. Contracts in Germany for 2017 forward recently fell to €20.95/MWh, the lowest level since electricity trading was first introduced in Germany in 2002.

GCA 2015 ANNUAL REPORT

of Things company, was able to

raise the second largest investment

round of €100 million in 2015.

ENGIE, one of the largest energy

companies in the world, was one

of the investors.

Another example is Sonnen, a

German company, which is offering

software for residential owners

of PV and battery systems to

form microgrids, which exchange

electricity amongst neighbors.

The electricity sector is on the verge

of a structural revolution that will put

at its center information technology

and customer satisfaction. Winners

will be organizations that are able

to master both. Although incumbent

utilities are not particularly strong

in either area, they are adapting

and competing for these disruptive

technologies. Given current market

dynamics and the inevitable

structural revolution, now is the

time for entrepreneurs and investors

to invest time and money within

the industry.

For the electricity sector, there is

another disruption on the horizon –

the future growth in electric vehicles

(“EVs”). First, contrary to popular

belief, EVs are not going to make

a major difference in electricity

consumption. Even under high EV

penetration scenarios, most fore-

casts do not anticipate EVs creating

more than an increase of 5-10% in

electricity consumption by 2030

(e.g., assuming that 70% of cars in

urban areas are EVs). The reason

is that cars are idle 95% of the time

and EVs are much more energy

efficient than internal combustion

engines. Second, when millions of

cars are connected to the electricity

grid 95% of the time, they represent

a massive battery capacity that can

be used in the electricity system. To

give an order of magnitude – there

are 240 million cars in circulation in

Europe. A standard EV connection

has a power of 7 kW – fast charging

stations can go to 40 kW or more.

Assuming that 15 million EVs (6% of

all cars) are connected to the grid at

any given time, the total capacity to

the grid will be in excess of 100 GW,

which is the order of magnitude of

the power generation capacity in

a country like Germany or France.

While batteries clearly do not

generate electricity, they certainly

can supply it for an hour or two, and

collectively could render the same

services of idling plants (“spinning

reserves”) to the grid. They could

absorb abundant wind or solar

electricity during peak production

times. They could make grid

reinforcement unnecessary. Within a

decade, they could even drive

themselves dynamically to reduce

grid congestion. Thus EVs will

accelerate the transformation

of the electricity sector into a more

intelligent, networked, efficient and

less carbon intensive industry.

We believe EVs will be deployed

faster than anticipated, creating

disruptions – and therefore

opportunities – in the electricity

sector that are only beginning to

be understood. The winners will

be those companies that spot the

trends ahead of the competition

and have the courage to position

themselves appropriately.

“ The electricity sector is on the verge of a

structural revolution that will put at its center information technology and customer satisfaction; winners will be organizations

that are able to master both.”

09

10

A VIEW FROM CHINA EDWARD CUNNINGHAM GCA ADVISORY COUNCIL

stark reality: they need to dramati-

cally reduce the resource intensity

of their national economy.

The recent shifts in Chinese energy

and climate policy, investments,

and behavior reflect a growing

appreciation of the resource

constraints facing the country, and

have resulted in major growth in

the Sustainable Infrastructure

sector. In the past five years, over

40% of global renewable energy

growth came from China, as

Chinese investment in this sector

exceeded that of the U.S. and

Europe combined. China ended

2015 as the largest center of clean

energy investment in the world,

China: Resource Constrained Leader

After two years in power, the

current political leadership in

Beijing is managing the largest

urbanization process in history

while focusing the national growth

model on improving the people’s

livelihood in the form of the

Thirteenth Five-Year Plan (2016–

20). China is home to just under

20% of humanity, yet enjoys only

7% of both the world’s arable land

and fresh water. Constraints are

rising: 8-20% of China’s fertile land

may now be contaminated with

heavy metals; and two-thirds of

underground water and one-third

of above ground water is now

classified as unfit for human

contact. Chinese leaders, launching

the first official “code red” system

for air pollution in the nation’s

capital in late 2015, are facing a

estimated at $101.2 billion – 2.3

times the U.S. figure for that period.

In late 2015, China and the U.S.

committed to a global climate

accord in Paris, while China also

announced a cap and trade

program twice the size of Europe’s,

to begin in 2017. Later this year, one

out of every three wind turbines

operating in the world will be

located in China, and China’s

national installed renewable energy

capacity is already double that of

the U.S.

China’s Strategic Growth Areas = GCA’s Strengths

China’s commitment to such

investments has only strengthened

over time. On January 16, 2016,

Chinese president Xi Jinping

formally launched the Asian

Infrastructure Investment Bank

(AIIB), arguing “Asia’s financing

needs for basic infrastructure are

absolutely enormous.” The bank,

headquartered in Beijing, has

approximately $100 billion in

capital – one-third of which is from

China – despite the fact that the

bank’s investors include 56 other

member states. The bank will lend

up to $15 billion annually for the

first five years of its operations,

Renewables Supply

Source: Bloomberg New Energy Finance

GCA 2015 ANNUAL REPORT 13

beginning in the second quarter

of this year, and support economic

development in the Asian region

through the financing of key

infrastructure. China’s commitment

to the AIIB and Asian infrastructure

came amidst a challenging time –

China is moving to a “new normal”

of lower economic growth, facing

severe environmental constraints

and rising social awareness of the

limits of past growth models. Yet,

as a result of China’s commitment,

the drivers supporting growth

in Sustainable Infrastructure are

strong going into 2016.

More than 100 Chinese cities boast

populations of over 1 million people.

Because of policy changes in

Chinese media coverage, better

enforcement of pollution penalties

and competition for skilled labor

in coastal areas, expectations

regarding health and environmental

quality have begun to shift among

China’s hundreds of millions

of urban residents. The central

government is therefore accelerat-

ing its focus on the seven Strategic

Emerging Industries first announced

in 2013, listed and explained below,

which match the areas in which

1 Energy-Efficiency and Environmental

Technologies. The development of resource

recycling, remanufacturing, hazardous waste

management, pollution control and re-use

2 IT-Enabled Smart Networks. Development

of next-generation IT networks and high

value-added electronics, cloud computing,

Internet of Things and emerging information

services

3 Bio-Tech/Agriculture. Development of bio-

medical engineering products, bio-agriculture,

and medical services and devices

4 Advanced Manufacturing. Development of

aviation, aerospace, rail transportation, marine

engineering and intelligent manufacturing

5 Renewable Energy. Development of energy

storage, new-generation nuclear power, and

solar, wind and biomass energy sources

6 New Materials. Development of advanced

structural materials and high-performance

composite materials

7 New Energy Vehicles. Development of

plug-in hybrid and full-electric vehicles.

China’s Seven Strategic Emerging Sectors

GCA has been a leader for nearly

a decade.

Finally, it is precisely during periods

of slowing economic growth and

lower energy supply risk that the

Chinese government engages in

important energy market reforms

to improve price signals, raise

efficiency and rationalize markets.

Recent electricity reform experi-

ments to introduce competition in

grid transmission and distribution

in Guizhou, Shenzhen and 13 more

regional markets are important

signals in this regard. In conclusion,

changes in China’s citizens’ attitudes,

environmental constraints, invest-

ment vehicles and market regula-

tions are powerfully driving growth

in the Sustainable Infrastructure

sector. Together, such changes

provide critical opportunities for

GCA’s client companies with

leading technologies and business

models well suited to these

growing markets that enable

Chinese customers to do more

with less and reduce wasteful

resource consumption.

Increase in annual water demand 2005-2030 (Billion m3)

Source: KPMG

14

with sensors and communications

protocols that will enable

Autonomous Electric Vehicles

(AEVs) to determine the fastest

routes accordingly. The prolifera-

tion of vehicle connectivity

will have implications across

telematics, automated driving,

infotainment and mobility services.

Of necessity, these trends will

also have a profound impact on

Goods Movement. The increasing

Already, services like Uber,

combined with changing lifestyles

(including home entertainment and

working remotely), have significant-

ly reduced the use of personal cars.

By 2020, there will be a quarter

billion connected vehicles on the

road, enabling new in-vehicle

services and automated driving

capabilities. Gartner forecasts 30%

annual growth from 2015 to 25

billion connected things by 2020.

City infrastructure will be retrofitted

adoption of IoT and connected

consumer devices has led customers

(whether consumer, business,

or industrial users) to have an

expectation that they can get

what they want real time, “in

Amazon Prime time,” whether it

be information, product availability

or delivery. This has a significant

impact on the supply chain which

has been struggling to catch up

with those expectations. For

example, consumer product

companies need to bring products

to market and get them in consum-

ers’ hands increasingly quickly.

Suppliers of goods and services

need to drive efficiencies across

the value chain from manufacturing

to delivery to the end user.

GCA anticipates the following

trends in goods movement,

covering both transportation and

logistics, which we describe as

Intelligent Goods Movement:

• Transport-as-a-Service will

expand beyond Uber/Lyft to

facilitate the movement of

goods

• Incumbent logistics and

shipping players (e.g., FedEx,

UPS, Amazon) will aggressively

embrace new technologies

to defend their leadership

positions

• Urban spaces wil becomel

increasingly multi-use and

adaptable as part of the logistics

network to facilitate the move-

ment of these goods (leading to

mini in-city distribution centers

and urban farming focused on

fragile, fresh produce). Technol-

ogies used to protect smart city

and smart grid infrastructure will

also be used to protect personal

and confidential business data

To date, commentators on trends in Advanced Transportation have focused on the impact of new technologies – Electric Vehicles, Autonomous Vehicles, the Internet of Things (IoT) and Transportation-as-a-Services vendors – on our everyday lives as consumers.

TRENDS IN ADVANCED TRANSPORTATIONDUNCAN WILLIAMS

15GCA 2015 ANNUAL REPORT

The impact of these trends on

goods movement is not yet visible.

In the U.S., light duty vehicle

mileage has peaked, but freight

transportation mileage is still rising.

The Intelligent Goods Movement

will certainly have a profound

impact on our everyday lives as

consumers, and also on the

supporting infrastructure.

What technologies are emerging which will enable more efficient goods movement?

Automation technologies for

freight trucking. Peloton Technolo-

gies is a Mountain View, CA based

startup that electronically links

trucks through a combination of

vehicle-to-vehicle communications,

radar-based active safety systems,

and vehicle control algorithms.

“Platooning” communication links

between two trucks enable the rear

truck to react to the acceleration

or braking of the front truck (think

of it as adaptive cruise control).

Financial backers include Lockheed

Martin, Volvo, UPS, and Intel,

reflecting the broad recognition by

industry incumbents on the impor-

tance of automation technologies.

Peloton claims to reduce collisions

and improve fuel economy

(because the platoons dramatically

cut aerodynamic drag) by >10%

Drones which support more

efficient supply chain and delivery.

Flirtey, an autonomous drone

delivery startup, recently completed

the first federally-sanctioned drone

delivery in a U.S. urban area

without the help of a human to

manually steer it. Additionally, large

companies such as Amazon,

Google and Walmart are exploring

the use of drones to deliver

customer orders.

Advanced data visualization and

analytics software to support

incumbent logistics providers.

FedEx is using analytics software

from Space-Time Insight (STI), a

San Mateo, CA start up, to identify

in real-time the most cost effective

modes of transport for the 4 million

packages and 12 million pounds

of freight it moves daily. With

the 20 million routing combinations

it has to deal with monthly, the

value that STI can provide to FedEx

in optimizing routing decision-

making is clear.

The implications of Smart Infrastructure

However, the implications of these

trends also need to be considered.

The convergence of IoT-enabled

smart cities and AEVs solves many

challenges (noise/air pollution,

urban sprawl, the need to drive)

but “intelligence” (i.e., computing

power applied to everyday applica-

tions) also raises new concerns

(i.e., inattentive drivers, displace-

ment of existing infrastructure,

unpredictable traffic, regulation

and cybersecurity). A transportation

network filled with sensors and

trackers will accumulate a lot of

information about every person,

business and good participating

within that network. Who owns

that information? How does one

safeguard it? Is government

surveillance appropriate? The vision

of Autonomous Electric Vehicles

noiselessly buzzing around cities

delivering goods almost instanta-

neously on demand is exciting, but

it raises some questions about an

Orwellian dystopia.

So what is the outlook?

• Large incumbent players need

to move quickly. There is

significant risk that the leaders,

for example trucking, logistics,

food production and consumer

products companies, are left

flat-footed by these trends. They

will need to embrace change

and work with emerging and

established technology compa-

nies to ensure that their market

positions are not eroded

• Increasing convergence is likely

between historically separate

and in some cases disparate

sectors. The divisions between

Social Media, Industrial Internet,

Advanced Transportation,

Logistics, Analytics Software

and Ag Tech will likely become

blurred with increased

partnerships and M&A between

and across these sectors

• Moreover, venture capital

formation will leverage expertise

from across these sectors,

further accelerating the conver-

gence. Siloed sector expertise

will be replaced by thematic

platform plays

Two things are certain – investment

in Intelligent Goods Movement

will continue to gather momentum

and companies, investors and

consumers will all be beneficiaries.

16

INFRASTRUCTURE RISING – AN ASSET CLASS TAKES SHAPETHOMAS PUTTER GCA ADVISORY COUNCIL

been described as the infrastruc-

ture financing gap.

This is the difference between the

estimated infrastructure financing

needs through to the year 2030

and the available capital to provide

the funding. The estimates of

global infrastructure financing

needs from sources as diverse as

the OECD, E&Y or the McKinsey

Global Institute range from $50

trillion to $70 trillion. Put another

Whilst in the year 2000 only a

handful of funds were raised, the

real growth occurred from 2005

onwards, climaxing with approxi-

mately 70 funds raising almost $70

billion in 2013. In 2015, $48 billion

was raised by some 50 odd funds.

To date, it is estimated that in

excess of $300 billion is under

management in funds focused on

infrastructure investments. The

impressive growth is expected to

continue in the face of what has

way, the current annual global

spend on infrastructure of $2.6

trillion would have to increase to

$4.3 trillion to meet the challenge.

Since there is a correlation

between GDP growth and

infrastructure spending, high

growth markets are concentrated

within developing economies.

The McKinsey forecast spreads

the anticipated investment needs

primarily across roads, rail,

ports, airports, power, water and

telecommunication. Of these,

power and water each represent

a $10 trillion or more financing

demand.

It is interesting to compare these

numbers to estimates of the total

global long term investor asset

base today of approximately

$70 trillion. Within the OECD, the

combined asset base of traditional

long term investors, namely

insurance companies and pension

funds, amounted to roughly $45

trillion, almost evenly split between

the two. But of course these

investment funds can only make

a partial allocation of their overall

assets available to infrastructure.

Demand for infrastructure funding

has grown, particularly since the

financial crisis. OECD governments

have realized that their levels of

indebtedness are not sustainable,

that infrastructure in the developed

world requires modernization, and

view infrastructure investments as

an essential stimulus to economic

growth. The so called “developing

world” requires infrastructure

investment to maintain, if not

accelerate, its own economic

growth ambitions.

Against the background of a record

low interest rate environment, the

private sector investor is now seen

Infrastructure is a reasonably new phenomenon in the financial landscape and has made its mark really only since 2000 in terms of a focus by professional investors raising funds dedicated to infrastructure investing.

17GCA 2015 ANNUAL REPORT

as an important contributor to

funding infrastructure needs.

There is also a growing realization

amongst political elites for the

need to create the appropriate

framework conditions and policies

to promote long term investment.

Finally, a start has been made with

leaders speaking to entities such

as the World Bank and the IMF,

the OECD and the European

Commission.

Regulation and the role of legal

frameworks are a key influence on

whether and how private capital

invests in infrastructure. It was

only 2014 when the Junker’s

commission €300 billion plan put

infrastructure at the center of the

policy agenda. The low interest

rate environment is driving global

institutional investors to continue

to seek alternative investments for

yield and income. It is not surpris-

ing against the background of the

described demand that real asset

strategies such as infrastructure

should experience increasing

interest. Between 2003 and 2013,

the global historical deal volume

grew every year. Transportation,

power, energy and renewables are

key growth segments.

The asset class is evidently viewed

as so attractive that in the last

few years we have seen some of

the largest institutional investors

begin to invest directly with

in-house teams in infrastructure

assets. Today, we have institutional

investors not only co-investing

with established fund managers,

but we are seeing the formation

of consortia including pension

funds, insurance companies and

sovereign wealth funds competing

directly with fund managers

for attractive large infrastructure

asset investments, which are

now becoming a mainstream

asset class.

The other relatively new develop-

ment, post financial crisis, is that

the opportunities available within

the industry have been greatly

diversified. What was a private

equity style investment approach

10 years ago is now much differen-

tiated for infrastructure today, both

as a result of more greatly varied

risk appreciation on the part of

investors as well as the lower

return profiles (in absolute terms).

Where once investors only

searched for operating assets (so

called “brown field”) in developed

markets and believed that these

presented the best return on less

complex and more predictable risk,

the picture is changing. Certainly

there is tremendous competition

for quality assets and this, not

surprisingly, has had an effect on

driving up prices and thus lowering

returns.

It is important to stress the differ-

ence between infrastructure and

private equity. It is one of the

temptations for some investment

managers to describe what is

actually a buyout investment with

heavy asset backing as an infra-

structure opportunity in order to be

able to bid higher prices and put

more money to work. It is not that

one should not entertain this kind

of investment, but it does mean

one should be clear about the risk

one assumes and the appropriate

return profile that one should get.

Ultimately, like any other invest-

ment class, infrastructure investing

is about defining and understand-

ing the particular risks involved and

matching these with an appropriate

return profile. Regulated sources of

investment capital such as insurers

(and in the past banks) have to be

particularly stringent in this exer-

cise, given the solvency capital

costs that they have to bear.

Because of their economic charac-

teristics, it is generally believed that

many infrastructure assets are less

volatile because of their cash flow

and return profile, and therefore

represent an important addition to

an investment portfolio. It is this

characteristic that makes infrastruc-

ture an interesting investment for

regulated investors. The amount of

risk capital that needs to be made

available in support of low volatility

equity investments is less than that

of a private equity portfolio.

The same investors who in the

past bought 20 and 30 year

government bonds to match their

life insurance or pension liabilities

are now looking to alternatives

in the infrastructure space.

Infrastructure Risks

The sensitivity of the infrastructure

asset’s utilization to the general

economic environment and a deep

understanding of the drivers of

demand for that utilization will

define one aspect of an infrastruc-

ture assets risk profile. A water

utility will be at the low end of the

risk spectrum, but a container port

will be subjected to the vagaries

of global trade cycles.

As an infrastructure investment, the

more developed the asset is and

the more operating history it has,

the less risky the asset. Green-field

opportunities are considered more

risky when it is only a plan with no

permitting or contracting for the

build out of the asset, and where

the sale framework of its output is

not yet in place.

A debate is ongoing in the infra-

structure community as to whether

governments “have learned

their lessons” and will no longer

retroactively change the rules of

the game. Governments and the

industry will evolve with time

towards stability and transparency

for private capital to take root.

Investors, in turn, must appreciate

the increasingly politicized nature

of investments in infrastructure,

particularly utilities.

Like any investment category, the

low hanging fruit gets picked first

and it is to the skill and expertise,

investment prowess and know-how

of the investment manager, be

he/she the manager of an infra-

structure fund or a direct employee

of an institutional investor, to seek

out those new opportunities. This

can be geography, an innovative

strategy to create value, or build

scale with which diversification

and synergies are achieved.

It is likely that the historically low

interest environment will continue

for some time to come.

From an institutional investors point

of view, not only can the yield

achievable be interesting, but

historic data also proves that

certain types of infrastructure do

Development finance is still

regarded as a specialist activity

within infrastructure investing and

the domain of deep industry sector

experts. Increasingly, investors

are comfortable with certain types

of construction risks, where the

market has sufficient experience in

construction to gain a comfort level

with such strategies. In the renew-

able energy world, we see this in

particular with the construction of

wind parks or solar parks.

The topic of geographic focus is

much debated. Due to the very

long-term nature of infrastructure

assets, the asset’s risk profile is

highly determined based on the

transparency and comprehensive-

ness of a regulatory regime, the

stability of a political system and

its governance and compliance

record, coupled with a high comfort

level in the rule of law.

Some developed countries,

such as Italy, Norway and Spain,

have changed existing regulatory

parameters. The evolving

renewable subsidy regime has

significantly impacted the value

of fossil-fuel based generation

plants in Europe. UK water

utilities have been subjected to

more difficult price determination

by the regulators.

well in inflationary periods and

hence have defensive qualities.

A measured view of what is

acceptable risk is required and a

creative mind as to appropriate

investment structure and execution.

And as we stand here today, new

opportunities will be thrown up

through the evolution of the

digital revolution, the advent of

smart cities, mass data storage

requirements, and technological

development in energy storage,

to name a few. It is our view that

infrastructure investments via

debt or equity do afford the

opportunity for higher returns

with acceptable risk.

With more investors sharing an

interest in infrastructure, more

liquid secondary markets will be

developed. We will see more

securitisation and innovation

of financial products, bringing

potential liquidity to the market

as well as additional sources for

capital. There will be excesses

(some of the YieldCos in the

U.S. can be debated as to their

risk-return-profile), but overall

the outlook for infrastructure

investing is very interesting.

There is great need on both

the demand and supply side

of the equation and what better

prerequisite than that.

“ Initiative is doing the right thing without being told.” —VICTOR HUGO

18

19GCA 2015 ANNUAL REPORT

A LETTER FROM DAVID SMITH OF GCA INVESTMENT MANAGEMENT

day at GCA Investment Manage-

ment. Identifying opportunities in

the public markets, where assets

are often mispriced, is what we

do best. It is our belief that our

collective experience in the

Sustainable Infrastructure sector

grants us a superior advantage

to identify great opportunities

and unlock value.

Allow me to explain in more detail

the challenges our sector faced this

past year, and how we were able to

navigate through those difficulties.

It is our view that the perception of

low cost fossil fuels interfering with

In fact, there was a strong correla-

tion for two of the eight sub-sectors

in our Funds with oil. Unfortunately,

the performance of these

sub-sectors suffered sharply due

to the perception that lower fossil

fuel costs would lessen the impor-

tance of renewables and energy

efficiency, as well as disable yield

structures to finance their growth.

Great portfolio management lies in

distinguishing between perception

and reality in the markets while

simultaneously maintaining strict

exposure management, great stock

selection and excellent sector

rotation. We aim to do this every

the growth of more sustainable

energy sources misses the point

that underpins the success of

so-called “disruptive” energy

sources: lower emissions, almost

zero variable costs, extremely short

lead times to development, and the

economics that have taken these

new energy sources to the main-

stream. Moreover, despite the

installed base of incumbent coal

and nuclear, the recent rise of

natural gas as a baseload fuel

illustrates even further that the

industry can be, and is, receptive

to change.

Throughout 2015, there were a

multitude of U.S. companies turning

to cleaner energy sources. Namely,

Google, Apple, Ford, Amazon,

Cisco and countless others. Even

old-world manufacturers of welding

equipment, like Lincoln Electric

(L.E.), based in Cleveland, who

predominately sells to companies

like Caterpillar, John Deere and

major automakers, are reflective

of this change to cleaner energy

sources. In fact, a massive wind

turbine dominates the entrance

to L.E.’s corporate campus and

generates clean electricity at

below-grid cost, demonstrating,

without a doubt, an impressive

clean-energy statement for an

old-world manufacturer. Similarly,

utilities including Duke, Con Edison

and PG&E are rapidly embracing

wind and solar into their energy

programs. So by year’s end, the

reality was that renewables had

their best year ever in 2015, adding

121 gigawatts (for $329 billion

of investment, according to

Bloomberg New Energy Finance),

representing more than 70% of

new capacity additions for the year.

This is solid affirmation that despite

the fossil fuel energy rout, what

many perceived as happening, did

not in fact occur. Alongside the

Reflecting on 2015, it is clear that perception and reality in the broader markets diverged materially. Oil ruled as the proxy for all things energy.

20

U.S., Japan and China, emerging

markets are deploying materially

more megawatts than was antici-

pated previously. In fact, even

Saudi Arabia is pointing to an

imminent move to solar during

the next 20 years.

GREEN must be GREEN

Of course, the biggest impetus

for this paradigm shift towards

renewable energy is economics.

Economics open new markets and

technological efficiencies drive

behavior forward. As the global

demand for renewable energy

rises, so does the efficiency with

which it is implemented. To that

end, Bloomberg reports that global

installations of wind and solar rose

30% compared to 2014, yet the

amount invested increased only

4%. Part of this efficiency comes

from lower input costs, and part

comes from research and develop-

ment. Other examples of this

efficiency include wind turbines,

which can now reach taller heights

allowing them to capture both

higher wind speeds with longer

blades, and more wind at slower

speeds. Furthermore, advanced

low-cost thin film solar panels are

now yielding efficiencies higher

than mass-produced polysilicon

solar cells did a decade ago.

And there is more to come – we

recently read of an MIT program

developing ultra-thin solar cells as

light as soap bubbles that can be

placed on any surface. Technology

is not static. Just look at how Apple

has in part changed the way we

communicate globally in only eight

years. Creative disruption for the

energy sector is in its early stages

and is displacing old world coal

and inefficient fossil fuel plants.

Above all, we think that it’s import-

ant to be clear that the opening

of new markets for renewables

and energy efficiency has been

facilitated by cost reductions. Mass

markets do not open for a more

expensive way to do the same

thing – hence, we are less bullish

on science projects that have never

proven to be economically viable.

The recognition by industry

and consumers of the cost versus

benefit cannot be understated

here. Because of these cost

reductions, new business models

in emerging markets are being

introduced in the marketplace.

Today, climate concerns take a

back seat but attitudes are chang-

ing. Record warm temperatures,

melting glaciers and rising sea

levels are forcing the developed

world to finally take notice. The

historical COP 21 agreement is

a step in the right direction,

and while Obama’s Clean Power

Plan has become a political

football, the real decision makers

(consumers and businesses)

are making the real (and right)

investment decisions.

In short, while we are increasingly

convinced the future of electricity is

wind and solar, we also recognize

that natural gas is the lower

emission bridge that takes the lead

in baseload generation for the time

being. With that in mind, we do not

invest in Exploration & Production

companies, but rather companies

seeking solutions to make shale

extraction more sustainable,

whether it is in fluids, transport,

water or methane capture. Amid

“ When the facts change, I change my mind, what do you do, sir?” —JOHN MAYNARD KEYNES

21GCA 2015 ANNUAL REPORT

the low cost of natural gas today,

the economics favor shutting down

coal and the industry is in the midst

of a major coal-to-gas switch at the

power generation level. The

environmental benefits are moun-

tainous, and there is a clear sight to

many more coal closures through

2020. Moreover, stricter environ-

mental regulations mean that coal

is effectively “shut out” of the new

build market. Where coal once

had provided upwards of 45% of

the U.S. energy mix, recent data

shows it below 30% and declining.

Advancement toward energy

storage (lithium batteries) could

disrupt the electric grid even more

in the future. Once seemingly an

impossible scenario, unsubsidized

solar is cheaper than fossil fuels

and has changed the global energy

landscape entirely.

More than Wind and Solar

While the power grid garners

significant attention given the

market size, sustainability has

visibly penetrated other large

markets. While many point to smog

coming from coal destroying the

air in China, the other major

contributors are vehicles and

buildings. Vehicle emissions and

efficiency are now being increas-

ingly eyed by regulators not only in

OECD countries but also emerging

markets. With the Internet of Things

and the potential of lithium battery

storage, vehicle electrification has

gone mainstream. At the end of

March, Tesla introduced its mass

market Model 3. This follows the

Chevy Bolt and the Nissan Leaf.

Like renewables, we see vehicle

electrification gaining traction as

large cities add charging stations

and utilities see opportunities to

“extend the plug.” And consumers

are looking to the home for better

efficiency. While the term “Internet

of Things” has been overused in

the past, the reality today is society

demands ubiquitous connectivity,

both wired and wireless. Some of

the fastest growth industrial

companies we own in the Funds

have benefited by providing LED

lights, efficient water heaters and

air conditioners and advanced

building control systems. Similarly,

water has become an area of

increased attention, most often due

to crises that in 2015 were head-

lined by scarcity in the California

drought and contaminated

municipal systems in Virginia and

Michigan. Lastly, waste has proven

to be a reliable “growth area” in

the Funds for 2015, highlighted by

pricing strength, volume growth

and industry consolidation.

Our mandate remains to find great

companies at good value, and

sometimes exceptional value. We

always look for a catalyst to capture

attractive financial returns among

companies that have barriers to

entry and play in the right part

of the value chain. So while 2015

was a challenging year in terms

of returns, we maintain a high

conviction that companies that

provide sustainable products

and services will grow faster and

more profitably than their peers,

ultimately reaping market rewards

over time.

Crossing the Chasm

The year started with oil stabilizing

after a near free-fall from June

through December 2014. As the

year ended with the COP 21 global

emissions agreement and the

renewal of the U.S. Investment Tax

Credit and Production Tax Credit,

which should aid in the eventual

implementation of the Clean Power

Plan, we believe there is much to

be positive about in the road ahead.

Having covered the industry when it

was first referred to as “Alternative

Energy” and later on as “Cleantech”,

the products and services these

companies provide is now coined

“Sustainable Infrastructure.” As

the industry continues to evolve,

the so-called “Third Coming” has

seen economic viability and broad

market acceptance. Today, solar

and wind are seen as Power

Generation; LED lights and efficient

motors as Diversified Industrial

Products; and vehicle electrification

as Automotive.

Amid a crumbling infrastructure

across most OECD countries,

as well as extraordinary growth

opportunities in emerging markets,

we think the roadmap for sustain-

able products and services is

expanding daily. Oil market

dislocations in 2015 had an impact

on some company valuations that

was more percep tion-driven than

grounded in reality. Quite often,

this can lead to buying great

companies at a reasonable price.

Our past experi ence covering

the many variants of Sustainable

Infrastructure has equipped us

well to see and make sense of the

technological and disruptive

changes that could lead to great

investment decisions in the future.

Just as the enormity of the impact

of the iPhone was unthinkable 10

years ago, so was the concept of

solar panels and wind turbines

replacing coal plants. We strongly

believe the industry is moving in

the right direction and look forward

to being a part of the progression.

22

AN INVESTOR’S PERSPECTIVEION YADIGAROGLU,

CAPRICORN INVESTMENT GROUP

In transportation, there are three

important technology trends

converging, and not a minute too

early given the large and growing

contribution of transportation to

carbon emissions (not to mention

the continued carnage on roads

globally). Tesla demonstrated that

EV drive trains can result in a

superior automotive product in

terms of driving performance,

safety, comfort and even conve-

nience. Uber shifted a truly

The VW crisis may seem like just

another compliance failure without

grander consequences, but we see

it as an important clue to one of the

big trends in clean technology.

Sustainable transportation is being

subjected to large forces and will

as a result undergo a fundamental

transformation in coming years.

The key driver is the adoption of

technologies which have emerged

in the past 10 years and are now

scaling to the point of materiality.

astounding amount of car miles to

their on-demand offering and

convinced millions that ownership

is an unnecessary and perhaps

even negative attribute of the car

experience. Finally, autonomous

driving is captivating everyone’s

imagination in how it can both

finally address safety in a more

fundamental way, and also offer the

next level of convenience.

We invested in these three big tech-

nological themes over the past

decade, although we did not expect

the technologies to show such

multiplier effects on each other,

which is now becoming clear. That

convergence is leading to dozens

of new startups, in addition to the

industry incumbents and large

technology companies deploying

large resources.

The VW story lays bare that diesel

vehicles are no longer able to

deliver progress on the attributes

that society values. Despite an

arguably weak regulatory demand

to reduce emissions, one of the

greatest research and development

programs had to cheat to meet

everyone’s expectations. The truth

is that other Original Equipment

Manufacturers (“OEMs”) are not in

an altogether different place, and

that gasoline is no different than

diesel. The real issue is not what to

do with half a million non-compliant

VW vehicles, but instead how to

change the trajectory at VW and

other incumbents to more convinc-

ingly clean our air, eliminate carbon,

address safety and offer real

advances in convenience and

comfort. The recall itself could cost

VW $10 billion, and the fines up to

twice that amount. That is enough

capital to transform VW, if our

regulators and other stakeholders

can be wise enough to pursue

it over ineffective punishment.

As I write this contribution, we have been waiting for over six months for a proposed resolution of the VW diesel emissions scandal – far longer than anyone had imagined.

23GCA 2015 ANNUAL REPORT

With the Paris agreement and the

distraction of climate change denial

mostly behind us, we can finally

focus on implementation. Besides

sustainable transportation, we must

of course address renewable

electricity production, with land

use being the third leg of global

net emissions. Over $300 billion

dollars was invested in wind and

solar power plants last year, making

renewable infrastructure one

of the largest capital expenditures

globally. The key challenge is

how to double or triple that level

of investment, especially in

the emerging world where infra-

structure costs are higher than that

of the developed world. All of those

assets need to be developed,

supplied, constructed, financed

and sold to long term owners. For

my firm, a central question is what

role new clean technology can

play in this area.

Although wind is still the larger

piece of what is being built today,

solar has benefited from faster cost,

performance and growth curves,

and is about to surpass wind. For

that reason, we have focused

carefully on solar technology and

deployment as the key drivers to

the renewable electricity transition.

The entry of China in solar cell

manufacturing bankrupted many

other players including the venture

backed startups working on new

cell technology. Despite this, we

continued to invest in promising

new manufacturing processes while

recognizing that the current genera-

tion of manufacturing plants would

need new technology that may take

years to debug and validate.

The next wave of manufacturing

processes is now visible ahead in

the form of thin film and hybrid cell

technologies, delivering higher

performance points, lower costs

and with smaller plant expenditures.

Like many, we have been excited

about the deployment of solar

technology in a distributed mode,

especially in the emerging world.

The truth is that this trend has not

materialized, and the largest solar

plants are where most of the total

solar volume has gone – in all

geographies including China and

India. Within “grid scale” plants, the

largest volumes have, in turn, been

in the largest projects. We expect

these trends to reverse and favor

smaller and more distributed

deployment modes, but that has not

yet occurred. We also invested

heavily in deploying solar with

batteries and in conjunction with

fossil generation (hybridized solar),

and this remains a very exciting

area for the near future.

Battery technology is at the core

of what is needed for the last mode

and for further adoption of EVs. The

primary issue is not performance

but cost of storage, which has

dropped from $1,000/kWh in 2006

to below $200 today. Within the

next few years, there are numerous

strategies that are projected to

lower the cost to $100 and below.

The scale-up of global battery

capacity will require very large

investments, in the tens of billions,

and that cycle has not yet started in

earnest. The technology race for

those future plants remains open,

and it is thus a highly dynamic and

exciting area of investment.

Besides wind and solar, there is

surprisingly vibrant investment in

fusion technology. The main

tokamak (toroidal magnetic confine-

ment) approach, which dominated

the sector for decades and won

nearly all government funding,

is basically dead as a design for

future commercial use, but there

are now many options that seem

both realistic and within the time

frames of venture capital already. In

contrast, despite many investment

plans being circulated, we haven’t

seen compelling technology emerg-

ing on the fission side, important

enough to displace the existing

nuclear BWR designs that are

widespread but stalled due to

public acceptance of their tradeoffs.

Efficiency continues to provide an

endless list of opportunities, led by

the LED transition which already

measures in the tens of billions of

dollars and is materially impacting

power use. Whether in appliance,

building or industrial efficiency, we

have invested in several promising

and important products and see no

end to that rich area of opportunity.

The best products tend to combine

multiple positive attributes besides

achieving efficiency, as illustrated

by quantum dots which offer better

color along with power savings

compared to phosphors, or GaN

which allows new designs in

common electronics such as power

supplies and inverters while being

more efficient.

These are truly exciting times to be

active in the sustainability and clean

technology areas. Many companies

are embracing the opportunities

inherent in large scale change.

Others that do not embrace change

will likely have to face similar

challenges to that of VW. There are

many actors, but GCA stands out

for its sustained commitment to the

sector and its unequaled expertise.

We are delighted to be part of

the family.

24

TRANSACTION OVERVIEW

• On July 6, 2015, Mohamed Abdulrahman Al-Bahar

(“Al-Bahar”) made an equity investment in Fluidic Energy

• Al-Bahar invested alongside Caterpillar, among other

investors, in Series D equity

AL-BAHAR OVERVIEW

• Founded in 1937, Al-Bahar is a leading business house in

the Arabian Gulf with a mission to become the number

one provider of customer value in construction equipment,

energy and transportation

• Al-Bahar is the exclusive Caterpillar dealer in Bahrain,

Kuwait, Oman, Qatar and UAE, and distributes products for

a wide range of applications, including electric power

generation

• Al-Bahar employs over 2,800 people

FLUIDIC OVERVIEW

• Founded in 2006, Fluidic developed and commercialized

a high-cycle life rechargeable zinc-air battery

• Fluidic primarily develops systems for telecom

applications

• Fluidic has installed systems at over 600 locations,

comprising more than 35,000 batteries

• Fluidic is based in Scottsdale, AZ and has operations in

the U.S., South East Asia and Latin America

• The investment will allow Fluidic to leverage its

business model advantages to serve new markets such

as microgrids and to scale up distribution channels

GCA’S ROLE

• GCA was the exclusive financial advisor

to Al-Bahar

• GCA was closely involved in all aspects

of the transaction, including structuring,

valuation, due diligence and negotiation

• Leveraging our in-depth knowledge

of the energy storage market, GCA

helped Al-Bahar evaluate Fluidic’s market,

technology and business model

WHAT THE TRANSACTION MEANS FOR

THE ENERGY STORAGE SECTOR

• The transaction shows the growing

interest for energy storage solutions

as economics become attractive across

a broad array of applications thanks to

rapid system cost declines

• Specifically, the transaction signals

a shift toward increasing commercial

viability of microgrids as energy storage

technologies continue to mature and

facilitate the integration of renewable

energy sources

Al-Bahar’s Investment in Fluidic

CASE STUDY

25GCA 2015 ANNUAL REPORT

CASE STUDY

TRANSACTION OVERVIEW

• On October 1, 2015, Allegion (NYSE: ALLE), a leading

global security products and solutions provider, agreed

to acquire SimonsVoss Technologies GmbH from

HgCapital for €210 million

• This transaction will further develop Allegion’s

electronic access controls business in Europe, which

adds leading engineering and technical expertise and

solidifies its global leadership in electro-mechanical

convergence

• Allegion’s demand creation and global distribution

capabilities will benefit the SimonsVoss brand

and accelerate international development

SIMONSVOSS OVERVIEW

• SimonsVoss, headquartered in Munich, Germany,

is an electronic lock company with a leading

position in the growing European electronic

market segment

• The company’s comprehensive suite of solutions

for electronic access control is sold globally. As

a strong brand that’s well-known for innovation,

SimonsVoss brings a legacy of global experts

and technical expertise in the safety and security

business

• SimonsVoss generated sales of approximately

€52 million in 2014 and has approximately

275 employees

GCA’S ROLE

• GCA served as the exclusive financial

advisor to Allegion in the acquisition of

SimonsVoss and helped the company in

structuring, analyzing and negotiating

the terms of the transaction

• GCA supported Allegion’s management

team in managing an accelerated

M&A process. GCA was able to secure and

sign a definitive agreement with Allegion in

one month’s time

• The transaction highlights GCA’s in-depth

knowledge of the building technology

and automation sectors and our ability

to organize and manage client driven

solutions

WHAT THE TRANSACTION MEANS FOR

THE BUILDING AUTOMATION SECTOR

• The acquisition of SimonsVoss will solidify

Allegion’s global leadership position in

electro-mechanical convergence

• More broadly, the transaction highlights the

strong interest of U.S. corporates to acquire

German technology companies and is

emblematic of the continuing trend of digital

technology permeating industrial sectors,

resulting in disruptive change, enabling

more efficient processes and creating

new opportunities for growth

Allegion’s Acquisition of SimonsVoss

26

CASE STUDY

TRANSACTION OVERVIEW

• On April 30, 2015, CLEAResult, a leading North American

energy services company, purchased all of the assets of

Conservation Services Group, Inc. (“CSG”)

• CLEAResult will keep CSG’s existing program delivery

teams intact and plans to further expand the availability

of CSG’s residential offerings across North America

• CSG’s Board of Directors will use proceeds from the sale

to fund ongoing nonprofit efforts at CSG to continue to

support clean energy policy with a focus on residential

energy efficiency and renewable energy

CSG OVERVIEW

• Founded in 1984 as a nonprofit and headquartered

in Westborough, MA, CSG is a market leader in

residential energy efficiency in North America

• CSG manages 70 residential energy efficiency

programs on behalf of utility and public agency

clients, and employs approximately 800 people

across 21 offices in the U.S.

• CSG is one of the largest companies in the U.S.

energy efficiency market, and has served over

3 million single and multifamily dwellings over

the past 30+ years

• CSG has been an industry pioneer with an innovative

“house-as-a-system” approach to comprehensively

optimize homes and buildings and has developed a

best-in-class understanding of applied building science

technology

GCA’S ROLE

• GCA served as the exclusive financial

advisor to CSG to help market, structure

and negotiate the transaction with

CLEAResult

• GCA demonstrated impeccable process

execution, which led to the ultimate

price discovery and identified the most

value-add potential buyer

• GCA navigated a complex structuring

and approval process, given CSG’s status

as a nonprofit, including obtaining consent

from the Massachusetts Attorney General

WHAT THE TRANSACTION MEANS FOR

THE ENERGY EFFICIENCY SECTOR

• The CLEAResult-CSG transaction

unifies two of the most prominent

platforms in the U.S. energy

efficiency sector

• The transaction further deepens

CLEAResult’s residential energy efficiency

expertise and significantly adds to its

execution capabilities

• The effort to execute a structured

transaction for the assets of a nonprofit

service provider demonstrates the focus

and intensity of ongoing consolidation

amongst utility energy efficiency

services providers

Sale of CSG Assets to CLEAResult

27GCA 2015 ANNUAL REPORT

TRANSACTION OVERVIEW

• On June 25, 2015, Infigen Energy (“Infigen”) agreed

to sell its U.S. solar development platform to

SunPower Corporation (“SunPower”)

• SunPower integrated members of Infigen‘s U.S. solar

development team in connection with the acquisition

INFIGEN ENERGY OVERVIEW

• Infigen Energy is a fully integrated renewable energy

developer and operator headquartered in Australia, with

interests in 6 wind farms and one solar farm (~557 MW)

across Australia

• Infigen’s U.S. solar portfolio is comprised of 39

development projects in 11 states totaling ~1.5 GW

• Three of the projects with a total of 55 megawatts

of capacity have contracts to sell power to Edison

International’s Southern California Edison unit

SUNPOWER OVERVIEW

• SunPower is a leading developer and operator of

utility-scale solar power plants around the world. It has

deployed over 1 GW of solar PV cells and panels and

has built over 400 MW of solar PV generating facilities

on an EPC basis

• The acquisition provides SunPower with exclusive

access to a large, geographically diverse development

portfolio and significantly enhances SunPower’s pipeline

through 2020

• The Infigen portfolio brings significant scale beyond

California, with attractive resource and offtake diversity

spanning 11 states

• SunPower acquires a team that has a proven track

record of successful project development

GCA’S ROLE

• GCA served as the exclusive financial

advisor to Infigen Energy on the transaction

• GCA’s direct and extensive experience on

solar sale transactions in the U.S. market

helped Infigen Energy evaluate multiple

strategic options for its contracted

assets, uncontracted project pipeline

and development platform

• GCA combined its transaction expertise

and in-depth solar and project finance

sector knowledge to help design an

earn-out structure that provides Infigen

a clear path to monetization for its

uncontracted project pipeline

WHAT THE TRANSACTION MEANS FOR

THE RENEWABLE ENERGY ASSET SECTOR

• The acquisition of 39 development

projects totaling 1.5 GW by a very capable,

well capitalized developer provides a high

level of confidence in the delivery of future

projects and is a positive signal for the

overall growth of the U.S. solar industry

• The geographic diversity of the portfolio

(11 states) shows that solar is becoming

increasingly attractive across the U.S.

• The transaction attracted a very

high level of interest from the market,

demonstrating the attractiveness of solar

as a high-quality investable asset

• The acquisition highlights a broader

trend of sponsors securing development

pipelines and development capability to

provide visibility on asset development

and reinforce their business model

SunPower’s Acquisition of Infigen Energy’s U.S. Solar Platform

CASE STUDY

28

Gibraltar Industries’ Acquisition of RBI

CASE STUDY

TRANSACTION OVERVIEW

• On June 10, 2015, Gibraltar Industries (“Gibraltar”)

announced its acquisition of RBI Solar, Rough Brothers,

and affiliates (collectively “RBI”) for $130 million

RBI OVERVIEW

• RBI is a leading manufacturer and installer of solar

racking systems and greenhouses in North America

• The company was founded in 1932 as a designer,

manufacturer and installer of greenhouses

• Leveraging over eight decades of experience, RBI

started its solar racking business in 2010

• Headquartered in Cincinnati, OH, with production

facilities in Ohio, North Carolina, California and China

• ~300 employees located in North America, Europe,

Middle East, China and Japan

GIBRALTAR INDUSTRIES OVERVIEW

• Gibraltar is a leading manufacturer and distributor

of products that provide structural and architectural

enhancements for residential, commercial and

infrastructure markets

• RBI broadens Gibraltar’s portfolio of products serving

critical infrastructure markets

• Gibraltar will enable RBI to grow more quickly and

leverage Gibraltar’s global sourcing network and

experience

• Headquartered in Buffalo, NY, with 42 facilities globally

• Gibraltar generated $860 million of revenue in 2014 and

has over 2,400 employees

GCA’S ROLE

• GCA served as exclusive financial advisor

to RBI and was closely involved in all

aspects of the transaction, including

structuring, valuation, due diligence and

negotiation

• GCA’s deep industry relationships and

extensive transaction experience allowed

RBI to attract both strategic and financial

buyers and run a highly competitive

process

• GCA used its in-depth knowledge of the

solar PV value chain to optimally position

RBI in the then high-growth but volatile

pre-ITC extension solar market

WHAT THE TRANSACTION MEANS FOR

THE SOLAR RACKING SECTOR

• The transaction highlights the continued

consolidation of the solar racking market,

driven by vertical integration (SolarCity/

Zep) and expansion of existing players into

multiple market segments (RBI/Renusol)

• Gibraltar’s acquisition of RBI also shows

the interest of industrial companies for

platform acquisitions to penetrate and

capture growth in the renewable

energy sector

GCA 2015 ANNUAL REPORT 29

Solairedirect’s Sale to ENGIE

CASE STUDY

TRANSACTION OVERVIEW

• On July 1, 2015, ENGIE announced its acquisition of

a 95% stake in Solairedirect with 100% voting rights to

become the solar market leader in France and with a

global pipeline in high growth emerging markets

• In addition to the acquisition, ENGIE completed a €130

million capital increase to support the development of

Solairedirect with the aim of developing 125 MW of

utility-scale solar PV per year in the near future

SOLAIREDIRECT OVERVIEW

• Founded in 2006 and headquartered in Paris, France,

Solairedirect is a global solar company active in the

development, construction, operation, maintenance and

investment in utility-scale solar PV parks across four

continents that had revenues of €173 million during its FY

ending March 2015

• Solairedirect has developed 57 solar PV parks, generating

a total capacity of 486 MW, and operates a gross capacity

of 224 MW in France

• The transaction will allow Solairedirect to develop its

pipeline amounting to more than 4.5 GW globally at the

pre-construction phase, 434 MW of which are set to be

built within 6 to 18 months from transaction closing

ENGIE OVERVIEW

• ENGIE is a €39 billion market capitalization company

engaged in the provision of gas, electricity and energy

related services in 70 countries

• In Europe, ENGIE intends to double its renewable electricity

capacity between 2015 and 2025 to reach 16 GW

• In high-growth emerging markets, this acquisition will help

to speed up ENGIE’s development, in line with its strategy

to become the benchmark energy supplier in these markets

• The transaction allows ENGIE to bolster its position in

the solar sector and makes it the market leader in France

with a total gross installed capacity of 383 MW, while

strengthening ENGIE’s global position by leveraging

Solairedirect’s presence in more than 15 countries

GCA’S ROLE

• GCA served as the exclusive financial

advisor to Solairedirect and helped

structure, analyze and negotiate the terms

of the sale to ENGIE

• GCA worked with Solairedirect’s share-

holders and the management team for 15

months, by supporting the company to

refine and implement a new strategy and

develop a 5 year strategic plan

• The transaction highlights GCA’s broad

spectrum of services underlined by

in-depth expertise in the solar sector as

well as capabilities to provide strategic

and financial advice

WHAT THE TRANSACTION MEANS FOR

THE SOLAR SECTOR

• This flagship transaction represents

ENGIE’s largest acquisition in the solar

sector to date and highlights the increasing

focus of utilities on the renewable energy

sector

• It also demonstrates the predominance of

solar as the preferred, most reliable and

cost efficient renewable energy technology

• The transaction provides validation of a

fully integrated business model crystallizing

value along the solar value chain

30

Vestas Wind Systems’ Acquisition of UpWind Solutions

CASE STUDY

TRANSACTION OVERVIEW

• On December 7, 2015, Vestas Wind Systems (“Vestas”)

announced its acquisition of UpWind Solutions

(“UpWind”) for $60 million

UPWIND OVERVIEW

• UpWind is a leading wind Operations and Maintenance

(“O&M”) independent service provider in North America

• Upwind operates and maintains a 3 GW fleet in North

America, including GE, Siemens, Vestas, Gamesa,

Acciona, Clipper and Mitsubishi turbine platforms

• Upwind supplies parts for most major turbine technologies,

performs blade inspections and offers various

performance upgrades

• The company is headquartered in San Diego, CA and

employs about 310 employees

• In 2015, Upwind reported consolidated revenues of

$55 million and EBITDA of $3.4 million

• UpWind’s investors included MissionPoint Capital

Partners, Kleiner Perkins Caufield & Byers, Northgate

Capital and BP Ventures

VESTAS OVERVIEW

• Vestas is a Danish manufacturer, seller, installer and

servicer of wind turbines

• Vestas is a €13.5 billion market capitalization company

established in 1979 and headquartered in Denmark

• Vestas has delivered 66 GW (55,743 wind turbines) in

73 countries and has manufacturing facilities in North

and Latin America, Europe and Asia

• Vestas has identified Operations & Maintenance

services as a core strategic growth area

GCA’S ROLE

• GCA served as exclusive financial advisor

to UpWind and ran a targeted outreach

process to assess strategic interest in wind

power O&M without signaling that UpWind

was “in play”

• GCA developed a bespoke process to

meet the needs of UpWind and its

shareholders such as executing a staged

diligence process to protect commercially

sensitive information and coordinating

senior executive-level engagement to craft

a commercial merger agreement

• GCA provided insight on market conditions

and strategic interest in O&M among

industrial incumbents from multiple

segments of the wind and power services

value chain and evaluated a sale versus a

capital raise for existing shareholders

WHAT THE TRANSACTION MEANS FOR

THE WIND O&M SECTOR

• The acquisition of UpWind gives Vestas

a cornerstone platform to build its

Operations & Maintenance business in

North America, providing the ability to

address multiple turbine platforms and

scale in multiple geographies

• Being part of Vestas will enable UpWind to

grow more quickly and leverage Vestas’

global sourcing network and experience

GCA 2015 ANNUAL REPORT

RECENT TRANSACTIONS

Exclusive financial advisor on its sale to

December 2015

$60,000,000

Strategic and financial advisor on its acquisition of

February 2016

Undisclosed

Exclusive financial advisor on its solar development

joint venture with

December 2015

Undisclosed

Exclusive financial advisor on its sale of UNIRAC to

April 2016

Undisclosed

Exclusive financial advisor on the sale of a 55 MW of solar

PV projects in New Mexico to

December 2015

Undisclosed

Exclusive financial advisor on its sale of an 80 MW solar

PV project in Virginia to

November 2015

Undisclosed

Provided a valuation opinion to the

Board of Directors and existing shareholders

September 2015

Not Applicable

Exclusive financial advisor on its acquisition of

October 2015

€210,000,000

Exclusive financial advisor on its sale of a 103 MW solar

PV project in Georgia to

May 2015

Undisclosed

Exclusive financial advisor on the sale of solar

PV projects

March 2015

Undisclosed

Exclusive financial advisor on its sale to

June 2015

$130,000,000

Exclusive financial advisor on its evaluation of financing options for pellet production

expansion

January 2015

Undisclosed

Exclusive financial advisor on its sale to

September 2015

€200,000,000

Exclusive financial advisor on its sale to

July 2015

Undisclosed

Exclusive financial advisor on the sale of its U.S.

solar platform to

July 2015

Undisclosed

Exclusive financial advisor on its investment in

July 2015

Undisclosed

31

32

OUR SENIOR PEOPLE

Jeff McDermott New York Managing Partner

Sectors of focus at GCA: Large industrials

and energy companies, Broad coverage

of senior leadership

• Over 30 years of transaction experience with

large, complex mergers and acquisitions

Derek Bentley New York Partner

Sectors of focus at GCA: Renewable energy

assets, Distributed generation, Water

• Over 12 years of experience advising power

and utilities companies on M&A, capital

raising and project finance transactions

PJ Deschenes New York Partner

Sectors of focus at GCA: Renewable energy

assets, Power infrastructure, Renewable

energy supply chain, Environmental services

• Over 12 years of experience advising

companies and investors in cleaner conven-

tional energy and environmental services

along with a variety of other Sustainable

Infrastructure sectors

Michael Horwitz San Francisco Partner

Sectors of focus at GCA: Energy software and

services, Energy efficiency, Renewable energy

• Over 20 years of transaction experience,

most recently focused around Energy

Software & Services, Energy Efficiency

and Renewables

Olav Junttila San Francisco Partner

Sectors of focus at GCA: Solar, Wind,

Energy efficiency

• Broad experience within both the renewable

and traditional power generation industries,

including work as an M&A advisor and a

private equity investor focused on these

sectors for over a decade

• Over 15 years of experience sourcing,

structuring, executing and managing

investments, acquisitions, divestitures

and partnerships

Jim Long Zurich Partner

Sectors of focus at GCA: Energy

companies, Utilities

• Over 25 years of experience as an advisor

and investor across the power, energy,

infrastructure, environmental and

technology sectors

Damien Sauer Zurich Partner

Sectors of focus at GCA: Energy efficiency,

Power infrastructure, Renewable energy

supply chain, Smart grid

• Over 18 years experience covering the

European market and advising leading

companies on M&A and capital raising

assignments

Robert Schultz New York Partner and COO

Sectors of focus at GCA: Head of Investor

Relations and Marketing for asset management

• Serves as the firm’s Chief Operating Officer,

and is a Principal of Greentech Capital

Advisors Securities, LLC (U.S. Broker Dealer)

and GCA Investment Management, LLC

(Registered Investment Advisor)

• Over 25 years of experience running and

building successful businesses

David Smith

New York Partner and Portfolio Manager

• Portfolio manager for the GCA Sustainable

Growth Funds

• Over 15 years of investment experience in

Sustainable Infrastructure sectors

Duncan Williams San Francisco Partner

Sectors of focus at GCA: AgTech, Advanced

transportation, Energy efficiency, Industrial

IoT and software, Water

• Over 20 years of extensive advisory and

capital markets experience in Sustainable

Infrastructure and more broadly across the

Technology and Industrials spaces, both in

North America and Europe

3333

34

ADVISORY COUNCIL

Michael Naylor Chairman

• Non Executive Director of the London

FTSE – listed Jupiter Green Investment

Trust plc, where he is Chairman of the

Audit Committee

• A founding board member of the NTR

Foundation

• Board member of University of Cambridge

Institute for Sustainability Leadership (CISL)

Edward Cunningham Member

• Director of the Harvard Kennedy School

Asia Energy and Sustainability Initiative

• Former program officer for the China Public

Policy Program at the Harvard Kennedy

School which trained over 1,000 senior

government officials in China

• Mandarin speaker with 15 years of

experience advising Chinese companies

and government on energy issues

R. Foster Duncan Member

• Senior advisor to EHS Partners and on the

Board of Directors of Atlantic Power

Corporation

• Former Managing Director of Advantage

Capital Partners and Managing Member

of KD Capital, an affiliate of KKR

• Extensive knowledge and investing

experience in the energy sector

David Ho Member

• Former President of Greater China for Nokia

Corporation and COO of Nortel Networks

• Director of China Ocean Shipping, Sinosteel,

Dong Fang Electric, Pentair, Triquint

Semiconductor and Air Products

• Extensive relationships across Chinese

industry and government

Thomas Putter Member

• Former CEO of Allianz Capital Partners

where he was responsible for the

company’s alternative investment portfolio

• Advisor to the German Private Equity

and Venture Capital Association

• Former member of the Advisory Board for

Environmental Technology of the German

Ministry of the Environment

Hervé Touati Member

• Managing Director at the Rocky

Mountain Institute

• Advisor for and/or direct investor in

cleantech startups in Europe

• Founded and was the first CEO of

E.ON Connecting Energies, E.ON’s new

distributed energy business

Bracebridge Young Member

• Chief Executive Officer of Eclat Impact

• Former Chief Executive Officer and a

Partner at Mariner Investment Group

• Former Partner and Managing Director

of Goldman Sachs in Fixed Income in

New York, London and Tokyo

• Board Member of GWAVE and Social

Finance, Inc

GCA 2015 ANNUAL REPORT 35

INVESTOR FOCUS IN 2016

M&A Volume and Trends

M&A volumes in the Sustainable Infrastructure sector

dropped off by 25% from 2014 to 2015. At $59.2 billion,

total activity was comparable with levels seen in 2011,

still remaining higher than that of 2012 and 2013.

The total number of transactions declined by 16%

in 2015, from 167 to 140, depicting the decline in

average transaction value. The largest transaction,

the acquisition of Pall Corporation by Danaher

Corporation, accounted for 23% of total transaction

value. Geographically, the North American market was

once again a bright spot. Despite declining by 9% year

over year, North American transactions accounted for

57% of total transaction volume in 2015, versus 47% in

the previous year. The EMEA region saw a 57% decline

in total M&A volume, a significant drop off following

the 35% and 88% increases seen in 2013 and 2014,

respectively. On the other hand, the APAC region grew

on both relative and absolute terms, representing 17%

of total volume versus 10% in 2014. The total number of

transactions, broken down by value, has remained fairly

consistent since 2013, with 14 transactions coming in

over $1 billion in value versus 15 transactions in 2014.

The wind and solar sectors saw the most activity this

year, representing a combined 44% of total value.

Similarly, both segments increased year over year, with

both solar and wind up 35% and 34%, respectively.

However, power infrastructure declined by an alarming

98% with energy efficiency slightly behind at a 48%

decline. The “other” category increased from 22%

of total activity in 2014 to 37% in 2015, depicting the

increased activity in previously less active subcatego-

ries, such as the geothermal and water sectors.

Source: Clean Energy Pipeline

36

Private Placement Activity

The private placement market for Sustainable Infra-

structure investments increased in 2015 for the fourth

consecutive year, nearing peak levels observed in

2011. The total investment volume increased 29%

year-over-year compared to 2014.

The North American region saw the greatest level of

funding, representing 43% of total investment value. The

APAC region emerged as a close second, with 42% of

total investment, up from 8% of total 2014 investment.

Consistent with trends observed in the M&A landscape,

the wind and solar sectors received the greatest

amount of investor interest, accounting for 10% and

32% of total investments, respectively. Solar again

proved to be the preferred sector for investors, obtain-

ing the largest dollar amount of funding and increasing

year-over-year for the fourth consecutive year.

IPO Activity

Total IPO volume declined to $3.2 billion in 2015 versus

$4.4 billion in 2014. Although still representing 52% of

total volume, the North American market declined from

2014 levels on both a relative and absolute basis. Once

a consistent leader among the geographies, the APAC

region declined in transaction volume for the third

consecutive year. YieldCos continued to account for

a large volume of issuance, with TerraForm Global and

8point3 Energy Partners as the largest and third largest

IPOs of the year, respectively.

Despite total IPO volume declining year-over-year

since 2013, private placement volume has consistently

increased over the same period. These conflicting

trends could be attributed to a number of factors.

First, the volatility and unpredictability around public

valuations has driven companies to seek out private

capital or alternative sources of funding. Further,

companies requiring capital in a short time frame are

avoiding the lengthy IPO process, preferring to pursue

private funding.

Source: Clean Energy Pipeline

Source: Clean Energy Pipeline

37GCA 2015 ANNUAL REPORT

Public Markets

In the GCA Sustainable Infrastructure Index, we break

the index into seven subdivisions: (1) Wind, (2)

Advanced Lighting / Advanced Materials, (3) Smart

Grid, (4) Renewable Power Generation, (5) Biofuels &

Transportation, (6) Solar and (7) Water & Environment.

For the third consecutive year, Wind was the best

performing subdivision, returning 67% during 2015,

versus 25% in 2014 and 218% in 2013. The next best

performing subdivision was Advanced Lighting &

Advanced Materials, returning 12%.

Both the Sustainable Infrastructure Index and the

broader markets struggled this year, with the majority

of decline occurring in Q2 and Q3 of 2015, rebounding

slightly towards the end of the year. Still, the Sustain-

able Infrastructure Index consistently outperformed the

MSCI World Index throughout the year, closing at 6.1

percentage points higher.

Source: Bloomberg New Energy Finance

38

SOCIAL AND ENVIRONMENTALRESPONSIBILITY

The Three-Pronged Plan

Through our advisory and asset management work,

Greentech Capital Advisors is helping the world

transition to a cleaner, more sustainable and

energy-efficient future. In keeping with that mission

we have chosen to operate our business in a manner

that reduces our environmental impact.

Carbon Reduction

Our carbon reduction strategy centers around doing

the little things that add up to big carbon savings.

• New York and San Francisco offices

located in LEED certified buildings

• Our website is hosted from a 100%

solar-powered service

• We use hybrid taxis, rental cars and car service

• We use videoconferencing instead of air travel

• We use recycled paper, double sided printing

and paperless presentations

• We recycle paper, cans and bottles

• Lights off at the end of each day

Our mission is to transform how the world does business and that is why we are a member

of the B Corp community. B Corp companies use the power of business to solve social and

environmental problems. What this means for our clients is that not only are we saying that

we are striving for a common goal of global sustainability but we are proving it as well.

Carbon Offsets

GCA is a carbon neutral company. We have partnered

with First Climate to quantify the size of our carbon

footprint and purchase Certified Emission Reductions

to offset our emissions.

Charitable Giving

Each year our employees direct a percentage of the

firm’s profits to global charities that promote sustainable

development. In 2015, GCA supported the following

non-profits: Brighter Children, Help for Children,

City Meals-on-Wheels.

39GCA 2015 ANNUAL REPORT

“ If you don’t have a real stake in the new, then just surviving on the old – even if it is about efficiency – I don’t think is a long term game.” —SATYA NADELLA

40GCA 2015 ANNUAL REPORT

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