2. Executive Summary
• SunShare is a renewable energy company offering the unique opportunity for individuals to invest in
small shares of a photovoltaic power plant (investments range from 2,500 € to 100,000 €):
o Contributing to a clean environment
o Limiting risk
o Receiving a high annual dividend of 12%
• Due to the attractive regulatory framework, the Italian photovoltaic energy market is a sound investment
opportunity. Maximum profitability will be achieved by building in 2010 thanks to high government
incentives (fixed for 20 years) and a large decrease in plant set-up costs in recent years
• The company’s business model is based on two key activities:
1. Fundraising, managed by a team with different expertise in private equity, consultancy and
entrepreneurial ventures
2. Operations, managed by a well-known industrial partner (Solar Ventures) that would act as the
general contractor, managing the project down to the smallest details:
o purchase of pre-authorized land
o supply of solar panels and all required equipment
o plant installation and maintenance
• Target investors are private investors looking for a high-return investment opportunity or people who are
environmentally conscious. Investors will be reached through innovative channels
• Total investment is 4 million €* to be financed through 20% equity and 80% leverage
• The overall risk of the project is considered medium-low because 80% of the revenue stream is given by
incentives that are guaranteed by law
• The exit strategy for investors would be through sales of shares to other investors or sale of the entire plant
to a bigger company for a high premium
• We believe in this project so much the we are investing our personal money.
* Plus 440.000€ VAT that will be reimbursed by the government at the end of the first year
3. Agenda
• The Opportunity
• Market Trend
• Industry Profitability
• Investment Benchmarking
• The Investment
• Business Model
• Team
• Industrial Partner
• Target Investors
• Financials
• Risk Analysis
• Exit Strategy
3
4. SunShare offers the opportunity for individuals to invest in
green energy production at a 12% return
1 2
SunShare is:
1. building a 1 MWp
photovoltaic power plant in
Apulia, Italy
2. contributing to a clean
environment
3. offering small shares to
individuals (2,500 € -
100,000 €)
4. rewarding them with an
annual return of 12% at
limited risk
4 3
4
5. Due to an attractive regulatory framework, the Italian solar
energy market is a robust investment opportunity
“Investors are
looking for a
12% return”
“The returns of
projects in green
energy are among
the highest in
Europe”
… …the return on
equity in the photo-
voltaic sector is
around 11-12%... and
in some cases, the
return reaches 18-
20%”
5
6. The renewable energy market is expected to keep growing
fast…
Italy
European Union
Consumption of renewable energy out of
total (%)
• EU target of renewable energy
-9% consumed out of total production =
20%
20,0 20,0
17,0 15,4 • Incentives from the Italian government
8,5 in order to achieve this target:
5,2 o fixed amount per unit of energy
produced
2005 2020 Target 2020E o duration of 20 years post-
construction
Solar power plant installation trend (MWp) • The incentives have resulted in a 142%
CAGR of Italian solar installations,
but this is not enough for Italy to reach
the 2020 target. For this reason, the
2.750 government could not significantly
+142%
decrease incentives. Italy together
1.600
with Belgium, Luxembourg, Malta,
900 Bulgaria and Denmark are the only EU
418
80 countries that are unlikely to reach the
EU target
2007 2008 2009 2010E 2011E
Source: http://www.terna.it/default/Home/SISTEMA_ELETTRICO/statistiche/dati_statistici.aspx;
http://ec.europa.eu/energy/renewables/transparency_platform/forecast_documents_en.htm 6
http://qualenergia.it/UserFiles/Files/Which_Member_States_will_meet_their_targets.pdf
7. …and maximum profitability will be achieved by building
in 2010
Drivers Description Trend
• In 2008 the government set an Incentives -2%
Government incentive per KWh produced, € cent
Incentives fixed for 20 years 40 36,0 35,3 34,6
• Plants going live in 2011 will
benefit from different incentives 20
(still to be determined) • These drivers make
0
2008 2009 2010 2010 the most
profitable year to
complete
€ Million construction
• The set up cost for solar power -20%
per MWp
plants dropped by 20% per 5,5
Set-up Cost 5 4,5 • Next year,
year over the last two years 3,5
incentives will be
reviewed and
0 profitability for future
2008 2009 2010 plants will be
reduced, as law-
makers take lower
• The current low interest rates IRS set-up costs into
20y % -9%
positively impact the financial account
Interest Rates 4,8
structure for this operation 5 3,8 4,0
(project financed with 80%
leverage)
0
2008 2009 2010
* incentives decreased by 2% per year as stated by the initial law
Source: Borsa Italiana, Interviews with suppliers 7
8. The Opportunity: Investment benchmarking
Investment benchmark (100€ invested, end of 2005)
We compared available investments and 5-year
their return over the last 5 years: Euro Investment return
• Solar power plant (our project): This Solar Power
150 +48%*
option has less risk because it is not Plant
linked to the volatility of the stock market
and has a fixed rate of return. It is less Bond (20 y) +30%
liquid than an investment in listed stock 125
and it starts distributing dividends in year
2.
• Bond (20 years): The reference base rate
for bonds with 20 years expiration date 100 100
(IRS) plus a 2% spread (average of EU).
• MIB 30: Average of Italian Blue Chip -28%
listed companies Cir (Sorgenia)
75
• CIR (Sorgenia): The industrial group that MIB 30 -29%
owns Sorgenia, the first green electricity Enel -34%
producer/distributor. The market price
reflects the entire portfolio of businesses, 50
of which Sorgenia is only a small part.
• ENEL: The Italian incumbent electricity
producer is one of the most traded stocks 0
in Italy due to its low risk and stable 2005 2006 2007 2008 2009 2010
business.
Source: www.borsaitaliana.it
* Assuming dividend 0% the first year and 12% the following four 8
9. Agenda
• The Opportunity
• Market Trend
• Industry Profitability
• Investment Benchmarking
• The Investment
• Business Model
• Team
• Industrial Partner
• Target Investors
• Financials
• Risk Analysis
• Exit Strategy
9
10. SunShare‟s business model is based on two key
activities…
Value Chain Description
1 This is our innovation. We will raise funds from
private investors, through small individual
investments (average investment of 10,000 €)
using both typical and innovative channels: Key Success Factors
Fund
• Our personal network (friends, colleagues)
Raising
• Social networking (LinkedIn and Facebook) • Innovation: we are offering
a new opportunity to private
• Environmental associations (their members)
investors to have a high
We have contributed 27,500 € as initial capital return at low risk with a
2 green investment
The operations will be outsourced to an industrial
partner that will deliver a turn-key solar power • Key trusted partners:
plant. They will manage the following aspects of o Industrial: Solar Ventures
the project: o Financial: two of the
Operations • Project financing with banks largest banks in Italy will
• Supply of materials (panels, inverters, provide us with the
wires...) required support to
• Pre-authorized site preparation and plant finance the project
construction
• Connection of the plant to the electricity
network and testing for overall efficiency
10
11. 1
…the team will manage fundraising leveraging its expertise
Marino Giocondi Suzanne O‟Brien
Marino graduated with a degree in Suzanne graduated cum laude from Iowa
Business from LUISS in Rome, and is State University with a degree in Advertising
currently attending the International MBA and is currently enrolled in the International MBA
program at IE Business School. He has program at IE Business School. Through her
worked for P&G, Accenture and McKinsey & Company. experience working as a project manager in marketing, she
Through his experience as a strategic consultant he has developed strong negotiation skills, increasing revenue by 30%
developed outstanding problem structuring and solving and reducing costs by 23%, while managing a budget of over $1
skills. He has also developed considerable management million. More recently, Suzanne has gained further experience
skills during his entrepreneurial experience as founder of the working 3 years for the Center for Education Abroad, responsible
renewable consulting company Renova Power (2007) and for developing and maintaining partnerships resulting in a 17%
as the Executive Director for the start-up uSport S.r.l. (2009). improvement in revenue.
Giovanni Miserotti Fabio Pisi Vitagliano
Giovanni graduated cum laude in General Fabio graduated cum laude in Mechanical
Management from Università Commerciale Engineering (specialization in Energy) and is
Luigi Bocconi in Milan and is currently currently attending the International MBA
attending the International MBA program at IE program at IE Business School. He has been
Business School. He has developed significant expertise working for 5 years for Accenture, leading teams of up to 18
working as a management consultant for McKinsey & members and interacting with clients daily. He has, therefore,
Company. He has been assigned to nine projects diverse in a solid quantitative and managerial background. Moreover he
industry and function, thus developing both problem solving has improved his financial skills and his knowledge of the
skills and a multi-functional business perspective ranging energy market, having interned at an investment fund
from strategy and operations to marketing and sales. External focusing on projects in renewable energy.
collaborators e.g.
associations would
be leveraged for
fundraising 11
12. 2
…whereas the industrial partner (Solar Ventures) will
manage all operations
“One of the top 50 pioneer European companies to have
invested in renewable energies, as classified by CNBC
European Business.” - Italian Trade Commission
Project pipeline (MWp ready to be built) • The company has a strong market share
and reputation in the Italian photovoltaic
market
Q1 2010 47 • It has the required skills to act as the
89 MWp to be built general contractor, following the project
during 2010 in Italy down to the smallest details:
o site screening
Q2 2010 42 o purchase of pre-authorized land
o purchase of solar panels and equipment
o plant installation and maintenance
International presence:
Deal ready • 21 MWp in France • The management team is very
121 experienced and it is lead by Michele
2011 • 100 MWp deal
Appennino:
signed in Jordan
o ex McKinsey partner
o founder in 1997 of the first venture
Total 210 capital fund focused on Internet
companies (215 million € raised with
the highest IRR in Europe in the sector)
12
13. We are targeting individuals like you
Potential investors Description
• Investment funds do not represent a target investor for
Investment funds SunShare because they focus on larger investments and
they have already invested in the renewables market, thus
proving the opportunity in this field
• Renewables represent a very interesting investment
Companies opportunity for companies to diversify their risk, assure high
returns on capital and promote a “green” corporate image
• Nevertheless, the financial crisis is having a strong impact
on their financials, thus making injection of funds in core
business a priority
• Companies represent therefore a secondary channel to
find potential investors for SunShare
• Opening the opportunity of investment to the mass market
Private investors represents the real innovation
• Private investors will have the possibility to contribute,
investing in small shares of a photovoltaic power plant
(average investment of 10,000 €) while diversifying their
assets with a low-risk, high return project (minimum 10%)
13
14. Fundraising plan
Potential investors Approach & Marketing actions
• Founders
• Family
Phase 1 • Relatives
• Friends • The capital raised in phases 1 and 2 will serve as a
strong foundation for the broad fundraising efforts of
phase 3
• Professional network
• Academic network
Phase 2 • Social network
• Mass market (to • Free publicity together with a further injection of
broaden our audience) credibility is required (e.g. articles in newspapers, green
Phase 3 and consumer associations*)
• Marketing actions are based on viral marketing and the
extensive utilization of WEB 2.0
* Such as Legambiente, Greenpeace, Altroconsumo
14
15. Fundraising will be completed by June 30th
Steps and deadlines for fundraising
€ thousand
800
The team itself
contributes 300 Fundraising activity
€ 27.5K as includes three steps:
initial capital - Personal network
300 - Professional
200 network
- Mass market
The equity needed, €
Personal Professional Mass Total equity 800K, will be gathered
network network market by June 30th
Deadline for May May June
each step 10th 31st 30th
16. The investment is € 4.44 million, to be financed through
equity and project financing
Solar power plant total investment Solar power plant total source
breakdown (Mln €) breakdown (Mln €)
Set Up 3.60
Equity 0.80
Authorization
0.40
for Land Project
3.20
financing
Turn-Key 4.00
Short term
0.44
• VAT is to be
debt
VAT 0.44
paid upfront;
the government
will refund it in1
year Total 4.44
Total 4.44
• Financed by
short-term debt
16
17. EBITDA is 88% of the total revenues
Revenue and Cost stream (thousand €) SAMPLE YEAR #2
Sample year # 2 % of Revenues Description
Around 80% of the total revenue comes
Incentives 498 78% from government incentives fixed for 20
Revenue stream
Electricity years
139 22% Around 20% of the total revenue comes
Sales
Transmission from electricity sales, it is assumed that
5 0% the price increases 2% annually
contribution**
Total
642 100%
Revenues
Maintenance is outsourced to the general
Maintenance 46 7% contractor to ensure a high level of
Operating cost*
productivity, security and daily monitoring
Insurance 16 3% Insurance is required by the financing
banks, to reduce risks associated with
Land rent 12 2% weathering, vandalism, etc.
Transmission 0%
1
costs**
EBITDA 567 88%
*All costs are based on an assumed growth rate of 2% per year
** Rebalancing between revenues and costs with transmission network company
17
18. Net Income is 23% of total revenues
SAMPLE YEAR #2
Net Income breakdown (thousand €) % of Revenues Description
EBITDA 567 88%
Italian law allows a 5% accounting
Accounting depreciation per year, while the fiscal
203 31%
depreciation depreciation of 9% minimizes taxes for the
first 10 years
EBIT 364 57%
Long term debt assuming 6,7 % fixed
Project financing
203 32% interest rate per 18 years*
debt interest
VAT short Interest due to short-term excess or need
0 0%
term debt of cash. In the first two years small debt is
Debt/Credit required, after that the balance will become
6 1% positive (credit)
interest
EBT 167 26%
Taxes 17 3% Taxes during the first 10 years are low due
to the high depreciation of CAPEX and the
tax shield given by high leverage
Net Income 150 23%
*In the first year there is an upfront fee (1,5% of the loan) to be paid to the bank 18
19. Free Cash Flow to Firm stabilizes after year 1
Free Cash Flow to Firm (FCF2F) trend („000 €)
FCF2F
EBIT
1.100 Taxes
The green line shows the Free
1.000 Depreciation
Cash Flow to Firm, while the 806
Variation in
bars represent its components: 900 Working Capital
• EBIT slightly decreases during 800 Capex
the 20 years 700
600 440 437 434 432 431 431 431 432 472
• Taxes correspond with EBIT 415 415 409 407 404 402 399 396 394 391
500
• Depreciation has a positive
400
impact for the first 20 years,
300
becoming zero in year 21
200
• Variation in working capital
100
is negative in the first two
0
years due to VAT
reimbursement from the Italian -100
government -200
• CAPEX refers to the initial -300
investment in the plant -400
-4.501
-4.600
2010 2015 2020 2025 2030
19
20. Free Cash Flow to Equity becomes positive in year 1
Free Cash Flow to Equity (FCF2E) trend („000 €)
FCF2E
EBT
Taxes
The green line shows the Free 4.000 Depreciation
Cash Flow to Equity, while the 3.900 Variation in
Working Capital
bars represent its components: 3.800
103 Capex
• EBT is growing for 20 years 700 Debt
• Taxes increase accordingly 600
213 119 110 261
418 419
with EBT 500 144 136 128
181 180 178 160 157
400 196 192 188 184 183
• Depreciation has a positive
300
impact for the first 20 years,
becoming zero in year 21 200
100
• Variation in working capital
0
is negative in the first two
-100
years due to VAT
-200
reimbursement from the Italian
government -300
-400
• CAPEX refers to the initial
-500
investment in the plant
-600
-700
-4.600 -756
2010 2015 2020 2025 2030
20
21. The two main sources of risk are revenues and delays in
project completion
SAMPLE YEAR #2
Description of financials
• Risk #1: government incentives,
Revenues 100 which account for ~80% of
revenues, decrease
Operating
12 • Risk #2: electricity sales, which
Costs
account for is ~20% of revenues,
EBITDA 88 decrease
• Risk #3: plant operative at the
Depreciation 31 beginning of 2011 due to
extraordinary circumstances
EBIT 57
Financial • We believe that the best option for the
31
Costs project is to seek financing with a fixed
rate that would be slightly higher at the
EBT 26
beginning, rather that a floating rate, due
to the nature of the investment (known
Taxes 3 revenues and fixed costs)
Net Income 23
21
22. Risk on revenues #1: government incentives decrease
Solar power plant financial return
IRR % • IRR of the business is
IRR (FCF2E) positive even if the
20 government incentives
decrease by 40%, which is
15 highly unlikely
• If we consider the new
10 incentives in the draft of the
IRR (FCF2F) new law (31 € cents per
KWh produced), and the
5
average drop in plant
Incentives (€ construction costs (-36% per
0 cent per KWh year), the IRR would not be
produced)
0,15 0,20 0,25 0,30 0,35 impacted significantly
22
23. Risk on revenues #2: electricity price falls
Solar power plant financial return
IRR %
25
• A reduction, even down to
zero, in the electricity price
20 would still result in a high
IRR (15,6% in the case of
IRR (FCF2E) free electricity)
15
• Sales of electricity account
for only 20% of revenues,
10 thus explaining the low
impact of price changes on
IRR (FCF2F) the IRR
5
Electricity
0 market price
0 -20 -40 -60 -80 -100 decrease (%)
23
24. Risk on revenues #3: plant operative in 2011
IRR FCF2F
Potential scenario Description Return on the project IRR FCF2E
• If the solar power plant starts 22,1
4-month delay in
operating in the first four 17,1
construction months of 2011, government
incentives will be lowered by 8,1 7,1
9,2% due to the ongoing
revision in the legislation
2010 Up to April
2011
22,1
• If the solar power plant starts
8-month delay in 15,5
operating in the second four
construction months of 2011, government 8,1 6,8
incentives will be lowered by
10,6% because of the ongoing
revision in the legislation 2010 Up to August
2011
Target equity • The solar power plant will not be
not reached built
N/A N/A
2010 2011
24
25. Development plan
Excess of cash generated by the
Scenarios analysis Shareholders profitability business
• 12% from year 2 to year 20 • Lower than expected, just enough
Worst Case • Share buy back in year 20 at to buy back the shares in year 20
100% nominal value
• 12% from year 2 to year 6 • Aligned with expectations and able
Base Case to finance the building of 1
• 50% increase profitability every
6 years until the maximum of additional power plant every 6
24% years*
• 12% from year 2 to year 6 • Exceeding expectation and able to
Best Case • 50% increase profitability every finance the building of 1 additional
4 years up to the maximum of power plant every 4 years*
24%
* assuming same operational profitability and 50% cost per MWp installed compared to the first investment
26. Exit strategy
Option 1:
• Shares can be traded in the
peer-to-peer market facilitated
by SunShare
• High proven return will attract
existing and new investors
Option 2:
• Sell to a large electricity
provider/producer
• Large suppliers can directly
distribute power and charge a
premium for green energy
26
27. Summarizing…
What we are looking for:
• Fund raising 800.000€ from individuals willing to
invest in solar power plants in Italy around 10,000€ each
shares from 2,500 € to 100,000 € are available)
What we are offering:
• A high annual return of 12% on the investment (based on
our current projection)
• A low risk stake in a project that will be started only if we would be
able to guarantee a minimum of 10% annual return (based on the final
agreements with bank and general conctractor), otherwise we will not
start building the plant
27
28. Our pioneer investor…
Ignacio de La Vega - IE Business School
Entrepreneurial Management Professor
Director of the International Centre for
Entrepreneurship and Ventures Development
“I see the innovation in your Business Model and
like the industry potential and above all, the
passionate team”
28
29. Our contact information
Marino Giocondi marino.giocondi@googlemail.com
In Italy (+39) 346.4136355
Giovanni Miserotti giovanni.miserotti@libero.it
In Italy (+39) 346.5053585
Suzanne O‟Brien sobrien.imba2010@alumno.ie.edu
In Spain (+34) 656.651194
In USA (+1) 215.789.9821
Fabio Pisi Vitagliano fpisi.imba2010@alumno.ie.edu
In Italy (+39) 339.7800076
In Spain (+34) 658.593309
29
