Financing and Advisory
One of the ways we are serving the needs of our clients while playing a critical role in the transition to a lower carbon energy future is through our commitment to supporting clean energy.
Since the inception of the Environmental Policy Framework in November 2005, we have financed more than $26 billion towards clean technology companies globally.
Last year, we extended our long standing commitment by establishing a $40 billion target to finance and invest in companies that promote clean technology alternatives over the next decade. Despite a challenging global market environment and one that was particularly difficult for clean energy, we have continued to identify opportunities to help meet this goal. In 2012, we financed nearly $2 billion and co-invested more than $430 million in the sector. We also served as financial advisor on clean energy transactions valued at more than $1.1 billion. In recognition of our leadership, Bloomberg New Energy Finance ranked Goldman Sachs first in public market transactions and second in mergers and acquisitions for the clean energy and energy smart technologies sector.
With a dedicated Clean Technology and Renewables Investment Banking Group, we are committed to meeting the different capital and strategic advisory needs of our clients in the sector.
Solar: Distributed solar generation for the residential and commercial sectors has seen continued expansion driven by new models which often have no upfront cost and allow consumers to pay less for clean energy than they pay for traditional utilities. The firm has played an important role in helping to fulfill the capital needs of clients in this sector. Last December, we were the lead bookrunner on initial public offering of SolarCity—the largest full-service solar power provider in the U.S.—helping to raise $106 million. The IPO was the first for a distributed solar generation company and the first renewable energy company IPO since March 2012. Earlier this year, we also provided financing to the company to help fund the purchase of inventory.
We are advising Power-One - a leading provider of renewable energy and energy-efficient power conversion and power management solutions - on its announced merger with ABB for an estimated equity value of approximately $1 billion. The combination seeks to create a leading global supplier of solar inverters and power, as well as, automation technologies that enable utility and industry customers to improve performance while lowering environmental impact.
Transmission: Connecting renewable energy sources to the grid is an important part of the broader enabling environment for the scale-up of clean energy. Last July, the firm helped raise $98 million in debt financing for Citizens Energy Corporation (Citizens) to purchase a 30-year, 50 percent leasehold interest in a portion of the 120 mile Sunrise Powerlink electric transmission system. The high voltage transmission line, which is being constructed by San Diego Gas & Electric Company, will link as much as 1,000 megawatts of clean energy sources in Imperial Valley to load centers in San Diego and reduce transmission congestion. Citizens has committed to use 50 percent of its profits to assist with the energy needs of low-income and senior homes in the region, and has begun a program to install rooftop solar panels on homes to reduce electric bills by up to 50 percent.
Advanced biofuels, chemicals and waste to energy: Since helping to open the public capital markets to advanced biofuels and feedstock companies with the IPOs of Amyris, Kior and Solazyme, we have continued to focus on the sector, serving as lead left bookrunner on the $75 million IPO for Ceres in early 2012. The company develops next generation seeds for the production of high-yielding, dedicated energy crops that can enable large scale sustainable feedstocks for biofuel producers. Proceeds from the transaction will be used to grow the business via further commercialization of existing products, support increased sales and marketing and fund next generation research and development. In January 2013, we served as sole underwriter on Solazyme’s $125 million convertible debt offering, which will fund project-related costs and capital expenditures to contribute towards the company’s growth objectives. In 2012, we also helped raise $125 million of capital through private placements for Harvest Power, an organic waste to renewable energy company that diverts discarded organic materials from landfills to produce renewable energy, soil, mulch and natural fertilizer products.
Electric vehicles: In May 2013, we helped raise over $1 billion in new financing for Tesla Motors, the Palo Alto, California, manufacturer of high-performance, fully electric vehicles and advanced electric vehicle powertrain components. We were the sole manager for Tesla’s $360 million common stock offering and lead left book-runner for their $660 million convertible senior notes offering. This was the fourth common equity offering we have led for the company, including acting as an underwriter for them on their initial public offering in 2010. In September 2012, we were also the sole manager for the company’s $225 million common equity offering.
Smart Grid: In March 2013, we served as lead-left bookrunner on the $93 million initial public offering for Silver Spring Networks. Silver Spring Networks provides a leading networking platform, and other solutions, that enable utilities to transform a power grid infrastructure into the smart grid; thereby, connecting millions of devices that generate, control, monitor and consume power. Strong participation in and oversubscription of the offering suggests investors’ interest for market leaders focused on the modernization of electrical grids.
Wind: Last November, we helped China Longyuan Power Group, the largest wind power generator in Asia and second largest producer globally, to successfully price $400 million of perpetual senior securities. China Longyuan Power is playing an important role in China’s endeavor to diversify its energy mix and meet its growing energy needs by expanding renewable energy.
Water: Extreme weather events, such as Hurricane Sandy and drought conditions affecting more than half the continental United States, highlight the urgency for long-term planning for more resilient infrastructure. Compounding these challenges is the aging water and wastewater infrastructure system, which, according to the U.S. Environmental Protection Agency, will require $633 billion in capital improvements over the next two decades to maintain current levels of service. We have continued to play a meaningful role in identifying new sources of capital to address these critical infrastructure needs.
One example of the kind of innovative collaborations that have begun to tackle these issues is the partnership announced last November by the City of Rialto, California. The City is working with Table Rock Capital, Union Labor Life Insurance Company (ULLICO) and Veolia Water on a 30 year concession to manage Rialto’s water and wastewater systems. Goldman Sachs helped finance the newly formed partnership, which included $146 million in debt financing through the private placement of notes and a $26 million equity investment from Table Rock and ULLICO. A portion of the proceeds will be used to upgrade water systems, reduce water loss from leakage and improve operations. Another example is Poseidon Resources’ $780 million tax-exempt bond offering for its Carlsbad reverse osmosis desalination plant. The proceeds from this offering are going to the development of the desalination plant, as well as infrastructure related to the pipeline to transport treated water to San Diego County. San Diego County Water Authority will buy 100 percent of the desalinated seawater treated at the plant under a 30 year water purchase agreement. This arrangement showcases increasing interest from both public and private sector participants for partnering to provide investment in water infrastructure.
This document is posted to GS.com for information only and is not for redistribution. This document has been prepared by the Environmental Markets Group at Goldman Sachs and is not a product of the research department of Goldman Sachs. This document should not be used as a basis for trading in the securities or loans of the companies named herein or for any other investment decision. This document does not constitute an offer to sell the securities or loans of the companies named herein or a solicitation of proxies or votes and should not be construed as consisting of investment advice.