SOURCE: Cascadia Capital

Cascadia Capital

January 18, 2012 09:00 ET

Cascadia Capital Forecasts Top Sustainable Industries Predictions for 2012

Despite Turmoil in Europe, Sector Will See Growth in Solar and Energy Efficiency, and Acceleration of M&A

SEATTLE, WA--(Marketwire - Jan 18, 2012) - Cascadia Capital, a diversified, boutique investment bank serving both private and public growth companies around the globe, today announced its Sustainable Industries predictions for the coming year. Cascadia Capital's Chairman and CEO, Michael Butler predicts that upcoming political and economic debates will drive increasing interest in Sustainable Industries throughout 2012. Cascadia believes that financing and M&A will continue to accelerate, led in part by activity in the solar and energy efficiency sectors.

Sustainable Industries Predictions for 2012:

1. Renewable Project Financing Market in Turmoil as European Banks Pull Out

It's no secret that banks across Europe have been experiencing the stress of the region's ongoing economic crisis and fluctuating capital markets. To prepare for further market volatility, European banks are increasing their capital ratios and turning their focus back to their core business. As a result, many European banks are pulling out of the US project finance market for renewable energy products, which will likely result in an overall downturn in financial activity across the sector.

However, Cascadia expects that this void in European investments will be filled by US regional banks along with private placements / 144A financing throughout the next year. These investments will likely come from insurance companies such as John Hancock, Metlife, and Prudential. Union Bank, Wells Fargo, and Key Bank have also indicated that they will be expanding their project finance teams. Furthermore, tax-exempt bonds are now being used to fund qualifying projects. This was evidenced in 2011 when UTS Biogas issued a $24 million bond to finance its two California biogas projects.

Two recent biomass financings illustrate that private equity investors are also stepping up to provide debt. Starwood Energy joined Prudential in providing debt to its Berlin Station biomass plant, and Carlyle recently provided construction financing for the Plainfield Renewable Energy Project, developed by Enova, through the Carlyle Energy Mezzanine Opportunities Group. Cascadia expects this to continue throughout 2012.

2. Renewable Energy Climate Change Comes Back into Public Focus as XL Pipeline Protests Gain Attention

Cascadia predicts that the attention around the XL pipeline will draw interest to the controversy that surrounds broader natural gas and fracking related issues. In the last several months, conservationists and conservatives alike have come together to object the XL pipeline, framing it as an energy-intensive, pollution creating oil extraction process. In 2012, this debate will challenge the U.S.'s commitment to a clean energy economy as natural gas continues to make inroads in the mainstream energy matrix.

3. Renewable energy M&A accelerates, lead by energy efficiency

2011 saw a shift in transactions as money left capital-intensive sectors, such as biomaterials, biofuels and wind, and was invested in asset light sectors such as energy efficiency. As a result, Cascadia predicts managed services providers, like Honeywell, Siemens, and Johnson Controls, will look to acquire energy efficiency companies to meet growing customer demand for real-time energy solutions. Schneider Electric's acquisition of Summit Energy Services is the strongest signal to date that the energy efficient sector is ready to go to market, and is putting pressure on other large corporations. Cascadia also believes that companies like Eneroc and Serious Energy, which have not traditionally been involved with the energy services category, will begin to move into the energy efficiency sector through acquisitions.

4. Despite speculation, solar continues to dominate the renewable energy mosaic

As the cost curve of panels decline, Cascadia predicts the growth of solar will continue to accelerate and reach price parity with traditional energy sources in certain geographic regions such as California and areas in the Southwestern United States. While many are weary of the solar market due to Solyndra's failure, it's important to keep in mind that the company did not fall victim to a weak solar market, but failed to prepare for a decline in panel pricing. While solar projects have bright futures, investors will still look for sound business models, technological innovation, and continued cost reduction. Policymakers must also provide the kind of regulatory stability that attracts investors and encourages these projects to develop. Cascadia believes the current situation is part of an industry maturation process, and that the category has significantly outperformed all expectations and will emerge stronger than ever.

"Renewable energy will come to the forefront of many political and economic discussions in 2012 due to the presidential election, environmental policy debates, and decreased investment by European banks," said Michael Butler, CEO of Cascadia Capital. "Despite some uncertainty in the market, we believe renewable energy project financing will remain steady in 2012 due to investment from alternative sources. We expect this dynamic industry landscape to be highlighted by M&A in energy efficiency, and continued adoption of solar as the barriers to entry rapidly decline."

The rate of policy adjustments, technological adaptation, and strategic transactions that impact the Sustainable Industries sector has been staggering over the past several years. Cascadia Capital assists their clients in navigating this dynamic market through constant dialogue and strong relationships with venture capital, growth equity, private equity, debt and corporate investors who operate in this market sector on a global level.

About Cascadia Capital, LLC
Cascadia Capital is a diversified, boutique investment bank serving both private and public growth companies around the globe. Cascadia's business is diversified in terms of the industries the firm covers -- Information Technology, Sustainable Industries and Middle Market -- and in terms of the range of advisory services it provides -- Mergers and Acquisitions, Corporate Financing and Strategic Advising. This diversification provides the firm with stability amidst market fluctuations. Cascadia is a pure advisory firm, and unlike other investment banks, is not conflicted by trading, lending, research or cross-selling business. For over a decade, the firm has delivered the best outcomes for clients based on its transaction experience, domain expertise and commitment to building long-term relationships. Cascadia always acts in the long-term interests of clients, and honors its position as a trusted advisor. For more information, visit http://www.cascadiacapital.com.

Contact Information

  • Contact:
    Ali Kramer
    Barokas PR for Cascadia Capital
    Email Contact
    206-264-8220