Asian Development Bank, 17 June 2014
Public
Sustainable Energy for the BOP:LGT Venture Philanthropy’s Criteriafor Renewable Energy Investments
Energy for All Investor Forum 2014 | Session #3
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LGT Venture Philanthropy – Introduction: Our mission
Our mission is to increase the sustainable quality of life of less advantaged people
“All human beings should be able to live under dignified conditions and
be given a fair chance for personal development in their lives.
Wealthy individuals have an economic, political and moral responsibility
to champion the cause of disadvantaged persons. In developing
countries in particular, the scale of poverty is alarming and the need for
help is great. There are limits to the contributions that governments and
development agencies can make.
This means that helping the disadvantaged in developing countries and
assisting social advancement is also a challenge for the private sector. In
this respect, it is vital that the invested financial resources generate a
high and sustainable social return and do not create any false or
unnecessary dependencies nor distort local markets.”
H.S.H. Prince Max von und zu Liechtenstein
CEO LGT Group & LGT Venture Philanthropy’s initiator and board member
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LGT Venture Philanthropy – Introduction: Our challenge
4 billion people live on less than 2 USD a day; they need solutions that are scalable and sustainable
The gap is widening. We strive to narrow it.
8% of the world’s population owns
80% of the world’s total wealth.
4 billion people live on less than
2 USD a day.
LGT Venture Philanthropy: Our team
Our global team is based in six regions and passionate about creating societal impact
LGT Venture Philanthropy is supported by different competence centers within LGT Group such as HR, accounting, marketing, legal
department and asset management.
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Board members
Countries with local
team members
LGT Venture Philanthropy: Our impact
Since inception, 40 LGT VP portfolio organizations have improved the quality of life of more than 4.5 million less advantaged people
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2008 2010 2011 2012 2013Time
*Most organizations have several donors/investors; therefore, the # of people reached is not only correlated with our donations or investments.
Portfolio
organizations
Impact *
(cumulative)
1’100 lives
improved
300k
lives improved
900k
lives improved
1.7m
lives improved
2.7m
lives improved
4.5m
lives improved
USD allocated
(cumulative)
USD 2.2m USD 5.3m USD 8.3m USD 12m USD 16m USD 19m
# of
organizations
1 10 18 24 31 36
2009
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LGT Venture Philanthropy – We implement
Our venture philanthropy approach provides tailored long-term support for young, rapidly growing organizations
Venture
Philanthropy
Focus on few
organizations
Financing combined
with management
know-how and
networks
Intense local due
diligence to build
knowledge and
relationship
Continuous
controlling
Long-term
engagement
Tailored financing:
Equity, debt
and grants
Optimization
of long-term social &
environmental return
Young, rapidly
growing
organizations
“We want to be as
efficient and
transparent as possible
in our impact
investing/philanthropic
efforts.
With this objective in
mind we have applied
many proven principles
and processes from the
venture capital and
consulting industry to
our impact investing/
philanthropy
approach.”
H.S.H. Prince Max
von und zu Liechtenstein
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LGT Venture Philanthropy – We implement
A multi-step investment process focusing on deep analysis to select the best organizations was applied thousands of times
Due Diligence 6 – 12 months
Main
activities
Preliminary review
Deal execution
Portfolio controlling &reporting
Exit
Tools/
Documents
Process
Timing 5 – 10 years 1 week – 3 months
Deal sourcing
� Monthly reports
� Quarterly KPI
� Annual report
� Post investment
monitoring
− Business, risk and
capabilities
assessment
− Depth and scale of
Impact assessment
�Continuous
support/meeting
(management
know-how and
networks)
� Each investment
manager covers on
average 5
investments,
spending min. 0.5
day/week with
each organization
� Business, risk and
capabilities
assessment
� Depth and scale of
impact assessment
� Termsheet
� Investment Memo
(~30 pgs)
� Contract(s)
� Intensive on-site
due diligence
�Reference calls for
each management
team member of
investee
� KPI and milestones
determination
� Final investment
decision
board/client
� Preliminary Review
(~7 pgs)
� Evaluation of
business plan/
proposal
� Intensive
discussions with
senior mgt team
members
� Stop-go decision
board/client
� Factsheet (~2 pgs)
� Capabilities
Assessment (light)
� Screening of
organizational
information
�Gathering of basic
information
�Calls or first
meeting with
senior mgt
members
� Stop-go decision
team/partners
� Tracking database
� Quick-screen
checklist
� Sourcing of
potential deals
� Information
exchange with
cooperation
partner/ reference
calls
� Stop-go decision
partners
� Contract(s)
�Options for exit
are:
− MBO
− Sell to social
strategic buyer
− Sell to social
investor
− Exit is clarified
and agreed on
with the
organization
upon deal
execution (pre-
investment)
# deals
to date 700 70 40 30* 10*5‘000
Deal screening
* 24% grants, 17% debt, 39% convertible debt, 20% equity (including the Accelerator Program deals with average deal size USD 50k )
** Exit: 1 equity, 1 equity/ debt, 6 grants, 2 only intellectual capital
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LGT Venture Philanthropy – We implement
Before engaging with an organization, we conduct detailed due diligence on the ground
Problem and solution
� Which problem does the organization want to solve? What are its root causes?
� What solution does the organization offer? Does it solve the problem?
Team
� What is the track record and experience of the team?
� Which capabilities are important to manage and grow the organization?
� Does the team have those competences? What is missing?
Risks
� What are threats to the success and impact of the organization?
� How can those risks be mitigated?
Impact
� In which way does the organization affect the lives of the beneficiaries?
� How can we measure the impact of the organization?
� What is the impact of the organization now? What can it be in five years?
Growth plans and needs
� Where is the organization now? How did it get there?
� What can the organization achieve in the next 5 years?
� What do they need to get there?
Model and market
� What is the business model of the organization?
� Which other organizations are undertaking similar work in that region?
� What are relevant macroeconomic factors, regulations, local challenges?
“We focus on few,
promising
organizations. Deep
analysis helps us to
identify risks and
understand what is
needed to create long-
term positive impact.”
To get a deep understanding of the organization, we ask many
questions, such as:
Analysis Impact
Risk# of organi-
zations
Inderpreet Singh
Investment Manager
India
LGT Venture Philanthropy – We implement
We measure impact along two dimensions: reach & depth of impact – Depth of impact example Por Ti Familia
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*) [d ¦ i ] = direct or indirect beneficiary
[ l ] = long-term benefits on individual (built on the progress expected by the short-term outcomes)
[ s ] = short-term impact; this is default and doesn’t have to be added to the outcomes
LGT Venture Philanthropy – Accelerator Program
LGT VP launched the Accelerator Program to unlock the potential of social
enterprises, create the pipeline, and build the ecosystem of impact investing
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Social impact
Time0.5-2 YEARS 1-5 YEARS 3-7 YEARS
Early phase
Expansion
phase
Idea / start-up
phase
Mature phase
Financial
support
Grants, seed fundingUSD 2k – USD 50k
Angel investorsUSD 50k – USD 200k
Expansion fundingUSD 200k - USD 10M
Intellectual
support
Mentoring, business plan writing, strategy consulting
Research and development
With
early-stage support
Without
early-stage support
Accelerator
ProgramLGT VP Core
Investment Area
Organizational capacity-building, HR, systems and infrastructure
Institutional fundingUSD 10M and up
� Since 2007, LGT VP has evaluated more than 5’000 opportunities in 6 regions, but only invested in 26
� Young organizations struggle to scale-up due to lack of clear plans / strategies, unproven business models, and weak / inexperienced
management teams
� Angel investor networks for social enterprises are not yet functioning well in many regions
� Working capital needs of social enterprises / SMEs not completely met by commercial lenders (PHP 67 billion – 180 billion)*
*PhilExport and DTI
BLUEPRINT VALIDATE PREPARE SCALE
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LGT Venture Philanthropy – Portfolio organizations
M-KopaKenya
IMPACT
� Improved income opportunities for low-income households
� Re-directed energy expenditures from inefficient, wasteful and unsafe sources such
as kerosene lamps towards purchase and ownership of clean and affordable solar
home systems
� M-Kopa has sold over 61’000 home solar units to low income households across
Kenya
� M-Kopa estimates that the existing customers will saves a combined USD 30m in
projected energy expenditure over the next 4 years (*based on the average annual
individual savings in energy expenditure on lighting and phone charging)
� M-Kopa estimates that it provided about 23 million hours of bright, fume-free lighting
by December 2013 (estimate based on average of 125 hours of lighting per system
per month)
Improved material well-
being:
Increases household productivity and income
Improved physical well-
being:
Reduced health risk though cleaner energy and light
sources
Improved social well-
being:
Increased social interactions due to micro-enterprise
activities
Improved security: Secure access to electricity and light
Improved freedom: Greater freedom of choice of products through pay-
per-use system
PROBLEM
� Over 63% of Sub-Saharan Africa’s population are rural, lower-end consumers with small
inconsistent incomes/revenue streams. These masses can barely afford basic goods
and services but nevertheless spend up to 70% of their income on inefficient, low-
quality goods
� For example, about 110 million households across Africa spend USD 160 or more
annually on kerosene for lighting despite the poor quality of light provided by kerosene
lamps alongside the related health risks of smoke fumes
SOLUTION
� M-Kopa primarily targets low-income consumers in emerging markets, enabling them
to purchase productive assets like solar systems through an affordable and convenient
pay-per-use system that matches their income and expenditure patterns
� M-Kopa’s inaugural product, a home solar system, will seek to address the energy
needs of low-income households, with plans to reach over 300’000 un-electrified
households with clean, affordable solar energy
ENGAGEMENT OF LGT VENTURE PHILANTHROPY
� USD 500’000 debt and USD 37’500 equity investment to fund roll-out of M-Kopa’s
inaugural commercial product targeting low-income households
� USD 1m in debt funding from LGT VP clients towards M-Kopa’s working capital
requirements
� M-Kopa has access to LGT Venture Philanthropy’s ICats Program, LGT Venture
Philanthropy’s network as well as ongoing mentoring support
Depth
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LGT Venture Philanthropy – Portfolio organizations
Husk Power Systems (HPS)Bihar, India
IMPACT
� Cost savings by using electricity instead of kerosene for lighting households
� Improved lighting conditions and elimination of indoor air pollution caused
by kerosene lamps
� Employment generation in villages
Improved material well-being: Increased income
Improved physical well-being: Relief from indoor air pollution
Improved social well-being: Enables education, entertainment
Improved security: N/A
Improved freedom: N/A
PROBLEM
� Approximately 480 million people in India across 125’000 villages (44.5% of
the population) do not have reliable access to electricity
� Indian government has designated 18’000 villages as “economically
impossible” to reach via conventional means of grid electrification
� Current power options such as kerosene lanterns or diesel generators are
detrimental to people’s health, environmentally unfriendly, and uneconomical
SOLUTION
� HPS has developed proprietary technology to convert locally produced
agricultural waste (like rice husk) into electricity
� HPS generates and distributes electricity from its mini-power-plants (35kWh-
100kWh) and micro-grids, targeting the villages in India’s “Rice Belt” consisting
of the states of Bihar, West Bengal, Orissa, Uttar Pradesh, and Madhya
Pradesh
ENGAGEMENT OF LGT VENTURE PHILANTHROPY
� Convertible note of USD 300’000 in 2010 for scaling up to 67 plants; in 2012
follow-on investment of USD 700’000 as part of Series-A for further
expansion
� HPS has access to LGT VP’s ICats Program, its network as well as ongoing
mentoring support
2012 2013 2014e
# of power plants 41 35 54
# of connections 9’661 9’800 34’125
Depth
Reach
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LGT Venture Philanthropy – Portfolio organizations
One Renewable Energy Enterprise, Inc. (‘OREE’)Philippines
IMPACT
� OREE makes solar energy available to low-income households, increasing
productive work days and improving income opportunities for them.
� OREE enables households to increase savings of at least USD 94 p.a. from
reduced spending on kerosene, etc.; reduces risk from smoke inhalation
and house fires and increases time to study and operate businesses.
PROBLEM
� Approx. 3.1 million Filipino households (16% of the population) do not have
access to electricity. Given the Philippines’ archipelagic nature, connecting all
citizens to the grid would be costly and difficult to maintain. Hence,
electricity prices are among the highest in Asia, and access is particularly
limited in rural / remote areas.
� Kerosene lamps are currently used as a substitute, but have negative effects
on the environment and people’s safety / health.
SOLUTION
� OREE distributes, installs and maintains solar PV products across the
Philippines. OREE’s 3 business lines are: (1) Wholesale trading of solar lamps
and solar home systems, (2) Turn-key projects for solar lighting systems,
water pumps, etc., and (3) Service projects, i.e. design, installation and
aftersales support.
� OREE delivers triple bottom line impact by providing renewable and
affordable energy to rural low-income households, and reducing
environmental damage through larger renewable energy projects.
ENGAGEMENT OF LGT VENTURE PHILANTHROPY
� USD 50’000 convertible debt to fund operational expenses, marketing and
inventory, enabling OREE to take advantage of upcoming business
opportunities.
� OREE has access to LGT Venture Philanthropy’s ICats Program, LGT Venture
Philanthropy’s network as well as ongoing mentoring support.
Depth
2011a 2012a 2013a 2014e
# of units sold 493 8'106 5‘678 8’584
# of beneficiaries 2’465 42’995 28’390 42’920
Savings p.a. (USD ‘000s) 46 808 1’296 1’340
Reach
Improved material well-being: Increases productivity hours leading to a potential
increase in household income
Improved physical well-being: Replaces the use of kerosene, which results in
improved public health
Improved social well-being: Improves health and longer studying hours help
attain higher education
Improved security: Improves physical security of people, property
and well-being
Improved freedom: Provides independence from high electricity rate,
increases access to information and opportunities
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LGT Venture Philanthropy: Contact
Contact information
It all starts with a personal conversation. Contact us to arrange a meeting. We look
forward to learning about your organization.
Joan Yao Phone: +63 917 811 5831
Investment Manager Email: [email protected]
Yoshitaka Tabuchi Phone: +63 917 856 7890
Accelerator Manager Email: [email protected]
Website: www.lgtvp.com
Support
LGT Venture Philanthropy is funded through substantial contributions from each of the following LGT Group companies: LGT Bank Ltd., LGT Bank (Switzerland)
Ltd., LGT Bank (Austria) Ltd., LGT Bank (Singapore) Ltd., LGT Capital Management Ltd. and LGT Capital Partners Ltd.
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Legal Information
This document is intended solely for the recipient and may not be duplicated, distributed or published either in electronic or any other form
without the prior written consent of LGT Group Foundation. This publication is for your information only and is not intended as an offer,
solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has
been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking
or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this
publication relates may change at any time. Once published, therefore, information shall not be understood as implying that no change has
taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-
making in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of
this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of
investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future.
Forecasts are not a reliable indicator of future value developments. The risk of price and foreign currency losses and of fluctuations in return
as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount
they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or
consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation
that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication
shall therefore be obliged to find out about any restrictions that may apply and to comply with them.
It is up to potential investors to obtain comprehensive information and appropriate advice in their home country, country of residence or
country of domicile about the applicable legal requirements and any tax consequences, foreign currency restrictions or foreign exchange
controls and any other aspects that are of relevance prior to any decision to subscribe to, purchase, own, exchange or redeem such
investments, or enter into any other transaction in relation to same.
The securities and rights mentioned in this document may not be purchased or held by investors or for investors domiciled in the USA
and/or with US citizenship, nor may such securities and rights be transferred to them.
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Picture description
"Double Portrait of Emperor Joseph II (1741–1790) and his Brother Leopold, Grand Duke of Tuscany (1747–1792)"
POMPEO GIROLAMO BATONI, WORKSHOP 1708–1787
In March 1769 Emperor Joseph II undertook an unofficial visit to Rome together with his brother Leopold, Grand Duke of Tuscany. During this visit, Batoni's workshop produced a double portrait, for which the two aristocrats posed for the painter. Because of its representative character, this is not so much a memento of a grand tour, but rather an official portrait of rulers. The portrait shows the brothers shaking hands, wearing the simple uniforms of their regiments without the insignia of power. They are standing on a terrace, with Castel Sant'Angelo and St. Peter's Basilica visible in the distance behind Joseph's II shoulder. The Emperor is supporting himself by leaning his left arm on a statue of the goddess Roma. In the foreground, an unfurled map of the City of Rome hangs over the edge of a writing desk, indicating that the two are strangers to the city. The workshop copy of the portrait probably came to the Princely Collections as a gift of the Imperial Family to their advisor Prince Joseph Wenzel I of Liechtenstein.
© Sammlungen des Fürsten von und zu Liechtenstein, Vaduz–Wien LIECHTENSTEIN. The Princely Collections