Don Roberts desperately needed a break in the summer of 2008. The top-ranked forestry analyst for CIBC World Markets Inc. had been covering industry for 18 years and there wasn’t much he hadn’t seen. “I had gotten to the point that if I had to listen to another quarterly conference call, I would gag,” he says with a laugh.
Roberts, now 53, persuaded his bosses to give him a one-year sabbatical, coinciding with the bank’s 2009 fiscal year, ended Oct. 31. It was an unusual arrangement. Roberts would use much of his time off to develop a business plan for CIBC World Markets to exploit opportunities in clean technologies. But he would also lead a study on behalf of the Forest Product Association of Canada that would explore how to fix the ailing industry’s business model.
“I wasn’t even sure I’d necessarily come back to CIBC,” Roberts says. What persuaded him to do so was the bank’s reaction to his conclusions: CIBC had to get serious about committing to the new cleantech sector — and do it as soon as possible. “People bought into it more than I thought they would.”
Last month, CIBC named Roberts vice chairman responsible for renewable energy and cleantech — which covers everything from biofuels to making the energy grid more efficient. Roberts is starting with a dedicated team of 10 individuals who will scour the globe for promising deals, ones that will see CIBC World Markets offer capital and advice. Roberts estimates that renewable energy and cleantech firms already generate $60 million annually in Canadian bank fees related to mergers, acquisitions, initial public offerings and other financial services. “That’s enough to get my interest in an industry that’s just starting to grow,” he says.
Roberts says his group will make a profit in fiscal 2010, but — at least, initially — the details will not be made public.
CIBC certainly isn’t the only bank to make a public commitment to cleantech, merely the most visible. Royal Bank of Canada — which has raised debt and equity for cleantech firms for years — recently helped launch CleanTech North, a consortium of industry experts, with a view to helping early-stage cleantech firms grow.
Nevertheless, there’s no denying the impact of CIBC’s move to promote Roberts to vice chairman, with responsibility for ensuring the cleantech message permeates the bank’s thinking throughout its business.
The impetus is what Clean-tech Group of California calls the “new space race.” That “race to dominate the emerging clean economy has already begun,” said Nicholas Parker, executive chairman of CGC, which developed cleantech as an investment theme eight years ago. “It’s no longer about trading our way out of the carbon crisis; it’s about inventing new industries.”
Roberts wants to be in the middle of it all. He hosts a conference call with his new team every week to discuss potential deals, legislative updates with an impact on cleantech and other matters of interest. There is lots to discuss, not least because there are more than 250 pieces of legislation worldwide designed to encourage investments in renewable energy and cleantech. These range from subsidies for solar and wind power to incentives for using unconventional power sources in cars.
The bank already has some transactions in the pipeline. For instance, soon it’s expected to announce it will finance a wind-power project in eastern Canada. Indeed, since the firm unveiled its cleantech strategy, Roberts has received inquiries from several conglomerates, cleantech firms and a Florida-based outfit keen on arranging financing for an Ontario energy deal.
The growing interest provides insight into an important issue for CIBC World Markets: how to pick the right projects. “On the technology side, there are a lot of horse races out there,” Roberts says. “For instance, I’ve got nine pathways to produce energy from biomass. Where do we put our money?”
Indeed, almost every environmentally friendly sector — wind, solar, biomass, wave power — has a multiplicity of potential suppliers, suggesting that many may be ripe for consolidation. For bankers, that translates into merger-and-acquisition fees.
Accordingly, one of Roberts’ most important roles will be to form links with specialists, including venture capitalists, academics and government research bodies that can provide clues about where the cleantech industry is going. “It’s possible we haven’t yet identified the companies that are going to be the big players in five to seven years,” Roberts says. “We’ve got to do our due diligence up front.”
New moves: From forestry to cleantech
Analyst Don Roberts took a year to do the research before pitching CIBC on a new venture
- By: James Bagnall
- May 3, 2010 March 1, 2019
- 10:36