Structuring Private Equity Funds for Investment in Renewable Energy Projects: A New Financing Option

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, June 14, 2017
Recorded event now available


This CLE webinar will provide finance and energy counsel with the tools to structure a private equity fund dedicated to investment in renewable energy projects. The panel will discuss the advantages of the private equity model, and the ways in which energy private equity (EPE) funds are similar too and different from traditional private equity funds.

Description

The emerging trend of EPE funds is revolutionizing the renewable energy field. Energy sponsors are increasingly eschewing the traditional project finance structure, in which investment partners and financing are sought for each deal, in favor of a fund structure in which committed capital is deployed by the sponsor in accordance with a specified investment strategy. Private equity has proven to be a more efficient and cost effective way for renewable energy companies to obtain capital.

This trend can be seen as evidence of renewable energy maturing as an asset class. Since EPE funds are relatively new, their terms vary. However, there are some concerns common to EPE funds which distinguish them from traditional private equity funds. Provisions must be tailored for renewable energy investment regarding capital raising, investment strategy, carried interest and management fees, distribution structure, and investment period.

Counsel to renewable energy clients should have a working knowledge of private equity as a finance option, and private equity counsel should understand the structural nuances of an EPE fund.

Listen as our authoritative panel discusses the advantages of private equity over other financing options for renewable energy projects, and the similarities and differences between EPE and traditional private equity funds. The panel will also discuss the ways in which tax credits, regulatory compliance, and other aspects of renewable energy investment should be addressed in EPE fund documents.

Outline

  1. Advantages of private equity over one-off renewalable energy investment structures
  2. Incorporating tax credits and other incentives
  3. Comparison of EPE to traditional funds
    1. Committed capital
    2. Investment strategy
    3. Carried interest and management fees
    4. Distribution structure
    5. Fundraising period
    6. Investment period and fund term
    7. Governance

Benefits

The panel will review these and other key issues:

  • How is private equity preferable to existing project finance structures in renewable energy?
  • What issues are unique to renewable energy as an asset class?
  • How might fundraising, investment strategy, partner consent, and investment period differ in an EPE fund?
  • Are current tax credits and other incentives still available in the EPE fund structure?

Faculty

John J. McDonald, Partner
Troutman Sanders, New York

Mr. McDonald counsels clients on a full range of corporate transactional matters, focusing on private equity and strategic mergers and acquisitions (M&A) transactions, venture capital and other financing transactions, and private equity fund formation. His private equity M&A practice entails representing private equity sponsors in leveraged acquisitions of portfolio companies, “bolt on” acquisitions and recapitalizations of portfolio companies, and subsequent divestitures of portfolio companies. He also has significant experience representing sellers in M&A transactions involving private equity buyers. His strategic M&A practice involves representing publicly-traded and privately-held buyers and sellers in M&A transactions across a broad range of industries, both domestic and cross-border.

Justin Boose, Partner
Troutman Sanders, New York

Mr. Boose is a member of the firm's interdisciplinary Renewable Energy practice. He has considerable experience in drafting and administering key project documents, including PPAs, EPC contracts, interconnection agreements, supply agreements and O&M agreements. He also represents companies on energy trading and derivative matters (electric power, natural gas, renewable energy credits, emissions allowances), including negotiation and implementation of energy trading agreements (ISDA, EEI, NAESB), hedging arrangements, netting and credit requirements and risk management policies. He also represents energy clients at FERC and various state commissions regarding energy regulatory and policy-making matters.

Adam C. Kobos, Partner
Troutman Sanders, Portland & San Francisco

Mr. Kobos focuses his practice on a wide array of tax matters for energy industry clients, including utilities, tax equity investors, and project developers and sponsors. He regularly represents clients who develop, acquire, or invest in renewable energy projects, energy storage facilities, and electric vehicle charging and other alternative fuel refueling facilities. He helps clients qualify for federal, state and local tax incentives and implement transaction structures that maximize the value of those incentives, including partnership flips, sale-leasebacks, inverted leases, and prepaid power purchase agreements. He also represents clients in mergers and acquisitions, debt and equity offerings, transactions involving partnerships, LLCs, and other pass-through entities, and tax controversy matters.


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