It may seem like an odd time to launch a boutique investment banking group, considering the mounting Wall Street layoffs and market turmoil putting a crimp in corporate M&A and public offerings.
But with fuel and energy selling at sky-high rates, cleantech investment bankers have reason to believe their sector will outperform in these bearish times.
That, at least is the take from Gary Vollen, managing director of the cleantech practice at
Vollen spoke recently with PE Week Senior Editor Joanna Glasner about the hot cleantech space.
Q: What do you do for venture-backed companies in the cleantech space?
In some ways it’s traditional M&A advisory and public offerings. In cleantech there’s also a lot of private capital raises, and bridging the gap between traditional venture and project financing. We might have a company with a proven technology that now needs $50 million to start production. It’s typically a different profile from what the Sand Hill Road VCs do.
Q: What kinds of investors do you see coming in for these larger, later rounds?
A: There’s a lot of private equity out there. Also, a lot of the smarter and bigger hedge funds are moving into the private equity issues, as are the established energy companies.
Q: Few cleantech companies have had exits recently. Do you think the climate is poised to change?
Yes, the M&A climate will start to get better. You’re looking at a large base of industrial-type companies as acquirers. They’ve traditionally been reticent to pay high multiples for startups. But now they’re recognizing the possibilities and those issues are starting to go away.
Also, in the solar sector, SunPower and First Solar are now at a stage where if they wanted to make acquisitions, they could. You couldn’t have said that two years ago.
Q: Are private market cleantech valuations a cause for concern?
Well, last fall we had a dip in solar energy valuations, but since then they’ve gone back up. That makes sense, I’d argue, because the private companies in the sector have started to execute better.
Q: Any private companies you find particularly intriguing?
My wife and I are having solar panels installed on our house in San Francisco, and we decided to go with Solar City. They have a model where they basically put up the solar system and pay for the up-front cost, and we get a share of the savings on our power bill.